What is Happening in the US, Right Now?
For the past few months, I have avoided writing about the US. This is due in large part to the election, and the feeling that no matter which way it went, things might be different after. But make no mistake, I have been watching the market for trends, in particular post COVID trends, that are specific to the US and to small businesses operating within this market. And so, what are the relevant post COVID trends for small businesses in the US? And what should businesses be focused on moving forward?
As a highly innovative and action oriented culture, the US tends to respond to crises in very extreme ways (whether this is positive or negative is up to the reader), but make no mistake, general mindsets in the US have been shaken up, and there will be a change in consumer behaviour and preferences as a result.
For the first time, the millennial and Gen Z generation (among others) have gone through a collective worldwide experience akin to a war. This means that these generations have experienced something so all encompassing such that it will/has produced a change in the collective consciousness. This further means that this change, having been more traumatic to experience, will be deeper and more long lasting.
To follow, the easiest way to approach this topic is to do a simple breakdown like I have done before. Therefore this article will read less like a thought piece and more like a powerpoint, but for the sake of distilling a large amount of information, this makes the most sense.
And so, what has and will change in the US more specifically? What are some of the new trends that will shape US consumer behaviour and preferences moving forward? In particular, what are those preferences at a micro level?
Back to Nature:
-The US is seeing in increased focus on the environment and 'back to nature' movements in response to increased digitization and generalized uncertainty
- There has been steadily increasing demand for sustainability and accountability in all consumer goods segments, driven in particular by the millennial cohort
-66 percent of respondents to a McKinsey US survey (and 75 percent of millennial respondents) say they consider sustainability when making a luxury purchase, for example
-Consumers now have a 'less is more' approach to consumption- they are willing to pay a higher price for products that have the least negative impact on the environment
-The 'conscious consumer' is here to stay. One that cares about the people, how the product is made, and the environmental impact of the business from which they choose to consume
The World at Home:
-People have begun to take joy in a smaller, better curated life. Staying at home, spending time with family, cooking, meditating, and mindfulness are all part of the new world
-Consumption of apparel and other non-essentials has markedly declined, and will likely not return for some time. 35% of consumers are in a 'save and stockpile' mode, and are worried about the long term effects of COVID 19
-Further, consumers at home are now looking for any way to connect to others or feel safe- either through social media or through their consumption choices
-Due to this hyper focus on on wellness and mental health during the pandemic, we see consumers looking for reassurance and protection from products they spend their money on
-Successful products should therefore focus on the self-beneficial aspects of purchasing, for either physical or mental health
-In this pared back world, products that have utility, meaning or spiritual significance thrive, and the focus of spending is now on local consumption, helping the planet, and self care (for emotional or physical wellbeing)
Localism is King:
-Again, consumers are looking for a socially responsible shopping experience
-Macro trends like eco-anxiety and decentralized working conditions are driving consumers to connect with their localities and focus on the person(s) behind the product. This is particularly so in a more 'world conscious' environment
-Rather than prioritizing newness when purchasing apparel, certain society cohorts are gravitating towards more sustainable, community-driven initiatives and stores
-Desperate to redefine the global ‘hustle hard’ work cycle, Millenials & Gen Z are looking to plant roots in their community without sacrificing their careers, and they are driving a new era of localism in the process
-Consumers will are therefore prioritizing products with a story, those made locally/regionally, and those made transparently with care, or those that connect them to their community
To Follow- The Business of Community:
-In the American landscape, brands that focus on community connections, sharing, and personal stories dominate
-As a response to decentralized working conditions and lack of organized religion in the US, businesses focused on community and sharing have taken the fore pre covid
-Examples such as Soulcycle and Glossier attract consumers through their values and focus on community building, and what buying their product says about you
- These community focused businesses show no sign of slowing in the post pandemic world, with the addition that the community focus will now be required to have more real world meaning and impact
-In a generation that is looking to self express through consumption (Gen Z), what your purchasing decisions say about who you are and what community you belong to is all important
Digital Product Discovery & Emotional Connection:
-Due to increased time online, consumers are now discovering products primarily via social media and apps- which is disrupting traditional product discovery routes
-Increasingly, consumers’ emotions in real life mimic those felt in the online world. The separation is becoming less and less
- Brands now need to double down on their online strategies- in particular in the interactive and digital storytelling segment
-The way customers connect emotionally online affects their purchasing decisions. Emotional connection to a brand or product drives 70% of repeat purchases
Social Media for Social Activism:
-In the wake of the Black Lives Matter movement, it is clear that Instagram is no longer used primarily for social sharing, but also as a platform to express deeply held beliefs
-Young audiences on Instagram are receptive to social justice issues, and use social media as a place to both connect with friends, and to share stories of social importance
-Instagram has always been a platform of sharing and inspiration, but now users look for more in the content they consume and share. Content must have deeper meaning or be in support of relevant social causes, and no longer for pure entertainment purposes
New World Optimism and Change:
- Despite expected financial hardship, Morningstar Research found that 81% of Gen Z reported being happy and optimistic about their future
- Gen Z is optimistic, purpose driven, and want to be empowered by the products they consume
-As people start envisioning a better world, it will be more important than ever to create products and experiences that sustain local communities and the planet
- As McKinsey states, “A new global ethos is emerging, and billions of people are using consumption as a means to express their deeply held beliefs”
- Spending is now an expression of identity; and consumption is a measure of ethical concern
And please- read that last line again because it is all important:
Spending is now primarily an expression of identity, and consumption a measure of ethical concern.
It is no longer vogue to be a conspicuous consumer, and the days of consumer capitalism (in the US at least) are over. New businesses in particular should be highly mindful of and respondent to these changes.
I, for one, am wildly excited to see the businesses and communities that spring up in the USA as a result of these headwinds. Of course, there are more trends I could have shared particularly at the macro level, but for small businesses these are several of the key focuses of future consumption.
