Consulting Insights

Ovative Outlook August 2023

The media landscape is ever-changing. Each month, Ovative reports on the essential considerations for today’s marketers, and what action they can take to unlock success.

Consumer Trends

Trend: Consumers continue to feel confident in the economy

  • As we mentioned in last month’s Ovative Outlook, consumers feel more optimistic about the economy according to University of Michigan and Conference Board survey data suggests. Contributing factors may include a lower, steadier inflation rate (3%) and strong labor figures (3.5% unemployment rate).1, 2

Trend: Consumers are prioritizing essentials when they spend, but splurging on deep discounts

  • July’s marquee retail event, Prime Day, was the biggest in history by revenue and outpaced inflation with sales up 6.7%.
  • Household essentials were the top Prime Day category, but consumers also spent heavily on apparel (+10% YoY) and health & personal care (+24% YoY).3

As we predicted last month, consumers shifted their discretionary spend from experiences like travel and dining back to retail categories like beauty and apparel.

Ovative Retail Category Analysis

Ovative Outlook August 2023

What can Prime Day tell us for the upcoming holiday season? We expect the trend of increased retail spend to continue into back-to-school and Holiday as consumers will look to take advantage of deep discounts and balance practical spending with feel-good “little treat” purchases.4, 5

Action

  1. Consumers are spending big during key moments but pulling back in between them. Marketers should invest in strategies to generate awareness leading up to these key moments while driving conversions from loyal customers during these quieter in-between periods.
  2. Outside of essentials, consumers are spending on retail items like apparel and personal care products. Teams should consider messaging which frames these purchases as a “little treat” to capture conversions from price-sensitive consumers.

What to Know for Back to School

Trend: Sales were slow during last year’s Back to School (BTS), and this year’s forecasts vary

  • Last year, BTS saw slow sales growth as consumers responded to high prices and pulled back, particularly on categories like electronics.6
  • This year, back-to-school forecasts vary widely. The National Retail Federation (NRF) anticipates a 10.8% growth in spend, while Deloitte forecasts a 9.3% decline. Insider Intelligence expects modest growth at 2.9% (flat when adjusted to inflation).6, 7, 8
    • Electronics are a particular area of focus: NRF expects 70% of consumers to spend on big-ticket electronics items, while Deloitte and Insider Intelligence highlight that electronics stores’ sales are down 2.7% YTD.

Trend: Consumers have and will continue to concentrate their spend on specific moments like Amazon Prime Day

  • 62% of consumers said they were going to do some BTS shopping during Amazon Prime Day, which was followed by strong performance in leading BTS categories such as apparel (+10% YoY) and electronics (+4% YOY).6
  • As an early indicator of BTS sales, Prime Day performance suggests that consumers are used to higher prices and will be willing to spend on key BTS essentials like clothing and dorm furnishings, both of which outpaced inflation.
  • This reflects a continued trend of consumers prioritizing essentials while splurging on retail items during key moments.

We expect moderate growth during Back to School driven by strong apparel and home goods sales.

Action:

  • As consumers concentrate their shopping on specific moments and big discounts, marketers should invest in strategies to capture the “big” BTS purchases.
  • Consumers are prioritizing essential purchases; marketers should consider messaging which highlights value in their BTS products.

Headlines We’re Watching:

  • Apple is removing tracking parameters in iOS 17, a move that could make it difficult for digital marketers to track the customer journey. As part of its new “Link Tracking Protection” feature, Apple will strip user-identifiable information from URLs in Safari private browsing. The move represents a continuation of Apple’s privacy changes in recent years, such as its App Tracking Transparency feature in iOS 15.9
  • Google finally kicked off its first phase of third-party cookie depreciation. Google has discussed removing third-party cookies since 2020, and in July, rolled out its Privacy Sandbox toolkit to allow companies to test replacements. The toolkit includes several new features, including “Topics,” which allows companies to generate signals for interest-based advertising without third-party cookies, and “Protected Audiences,” a way to activate specific audience segments without personally identifiable customer data.10
  • TikTok introduced text-only posts. While primarily a video platform, TikTok is trying to compete with Twitter / X and Threads. The social media “portfolio” model is continuing to gain steam as Meta, ByteDance, and XCorp (Elon Musk’s dedicated social media company) seek to dominate the space.11

Both Apple and Google’s privacy developments underscore the need for brands to leverage first-party data in their marketing to drive both customer acquisition and retention. Ovative can work with your team to best leverage first-party data from data clean-up to leveraging emerging opportunities like data clean rooms in Retail Media Networks for the holidays.

So, What’s Next?

At Ovative, we are keeping a pulse on what is happening in the marketplace so we can best keep our clients ahead of the curve. Ovative can help your brand understand what’s going on in the media landscape and, more importantly, how to take action and drive impact with your marketing spend.  Connect with us to ensure your marketing is reaching its full potential!

Sources: [1] UMICH [2] Conference Board [3] Numerator [4] U.S. Census Bureau [5] Numerator [6] National Retail Federation  [7] Deloitte [8] Insider Intelligence  [9] Marketing Dive [10] The Verge [11] The New York Times

Leander Cohen

Sr. Analyst, Retail Media

About the Author

Leander Cohen is an Sr. Analyst on the Retail Media team at Ovative.

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