By Sasha McKenzie, Principal at H Venture Partners
I’ve been mulling over how the pandemic was going to impact consumer trends, both in the short- and long-term, since it began. Some trends we knew were fleeting -- like sourdough baking, fun though it was -- but others I could see were here to stay. For instance, being stuck in our homes was driving product trial, leading to the productization of services, and products like at-home hair color that were both effective and delivered value were going to stick.
As a consumer investor, the pandemic prompted lots of questions: How has the way we work been impacted on an ongoing basis, and in turn, how does that affect how we view our homes? How will emerging technology continue to impact consumers? (It's no surprise that e-commerce was accelerated due to the pandemic, and pushed supply chains and logistics to it’s breaking point.) Will the hyper-focus on health and wellness driven by the pandemic outlive Covid-19? I think so. In fact, I think there are several major takeaways from the wild year that was 2020 that we’ll see push us forward into 2021.
Trend #1: Circular Economy
In 2021, I’m expecting a renewed focus on the circular economy. For a while, many brands and experts have been focused on sustainability and reusability in apparel, but I imagine the circular economy transcending apparel to encompass all products, like footwear, home goods, packaging and more. We will be thinking, how do we prevent all products from going to landfills if they don’t need to?
There are ways to push sustainability farther, beyond simply constructing products out of recycled materials, like Rothy’s shoes. I talked to a new footwear company embodying exactly what I’m talking about: not only was the team making shoes out of recycled and reused materials, but they were also taking the shoes back, breaking them down and recycling them, allowing the consumer to be part of the entire journey.
With the need for increased sustainability to combat the effects of climate change, I am excited to see these ideas broaden into other categories. As more and more retailers begin to get engaged in this circular economy, it will have a ripple effects, as well; with more brands and consumers participating, it will become more economical. Industries will start working in this way, and sustainability will become a way of life and not a burden.
Trend #2: Infusing Health
It was hard to ignore health amid a global pandemic in 2020, and I’m anticipating continued focus on health and wellness throughout the coming year. In many ways, I expect consumers to demand more from their products, and we’ll see health increasingly infused into our lives. Think: at-home tests, mental health services, functional food and beverages, holistic health offerings, a renewed focus on the importance of sleep in well-being, and a continued focus on sanitation and cleanliness; old, new habits die hard.
Consumers will want to monitor their health more from home, too, as they’re getting used to at-home health. For instance, if one wants to know if they’re getting the right level of Magnesium, can they test at-home and get a supplement service delivered to their door -- and not just a supplement, but a highly personalized multi? How accessible and inexpensive can we make mental health services, whether it’s therapy or a guided app?
When I think about food and beverages, we saw a shift to comfort in 2020. People wanted to indulge in a way that they haven’t in the past -- just look at the surge in Campbell’s sales during the pandemic -- but I foresee a reversion back to healthier food and beverage in 2021, and a desire for more multi-functional options. Think kombucha that delivers gut health, immunity, and the mental health benefits of sipping tea.
Trend #3: Focus on Aging
As an investor, there are two sets of products and services that intrigue me when I think of the aging population. First, obviously, we have a growing population of aging adults, who will need products and services to make their lives easier. With a lot of wealth and increasing need, I expect to see increased demand for better products and services to aid aging adults. Maybe that’s a better way to manage their medications -- or, perhaps something like a recent startup I discovered, which is billed as a “TaskRabbit for grandparents.” This aging population will also want to utilize tech, but in a streamlined way; not all 65+ adults want to learn everything about the latest gadget on the market.
Secondly, how do we support millennials as they shift to taking care of their aging parents? On the flip side, perhaps it’s a gadget or service that allows kids to remind their parents of important tasks. Carezone is a startup that was acquired by Walmart in 2020, making it easier to manage medications. Millennial caretakers have been able to leverage the platform to notify parents when it’s time to take their medications giving them comfort and reprieve that their parents are taken care of.
Trend #4: Digital Everything
When the pandemic struck, we saw a rapid acceleration into all things digital. Doctors appointments were being converted to telehealth. People got comfortable buying all products online, from food and beverage to beauty they might otherwise test in-store.
As the world has shifted to cater to consumers in this new, tech-forward way, expect shoppers to demand increased sophistication around online shopping experiences. Brands -- like snack food, for instance -- that once relied on impulse grocery store purchases may have to retool their marketing strategies to stand out to digital consumers. We might expect to see more digital advertising tools emerge. We’ve learned in 2020 that the consumer will purchase beauty products online without trial, for instance. Brands that can bridge the gap between online and real-world experiences, while also being able to connect with consumers by building in opportunities for discovery and interaction, will win the market.
Trend #5: The Evolving Home
Consumers spent a significant amount of their purchasing power on home investments during the pandemic, from cookware to at-home fitness and design projects. The lines between home and work are becoming increasingly blurred, as well, and the implications are massive. Folks have now grown accustomed to being at home; not commuting is convenient (and good for the environment), so where will consumers be allocating their vehicle budget? With less professional apparel, will consumers spend more on their appearance from the neck up on cosmetic services like botox and juvederm in addition to more casualwear from the waist down? How has staring at ourselves on Zoom for multiple hours a day impacted how we want to present ourselves? Realizing gyms aren’t necessary, where will Equinox-goers be putting their dollars in 2021? There’s a lot of spend up for grabs in this space.
With a dramatic increase in pet adoptions and more time at home, pets have also won the pandemic in a big way, becoming an even more integral part of our lives; we've now spent days on end with them, which has accelerated the “humanization of pet” trends. I’ll be keeping my eyes out for trends to support this shift: vet telehealth, convenient ways to feed and care for pets, and how the veterinary experience may change, shift and improve to care for these important members of the family.
Overall in 2020 we saw both an acceleration and a reversion of consumer trends. In 2021, I expect preferences to continue to shift and evolve as we potentially come out of the pandemic and begin to embrace aspects of our lives we lost in 2020 like travel, spending time with folks outside our own households and dining out. There is no doubt that as we move back towards our pre-pandemic ways in some respects, the consumer has been forever changed by 2020 and I can’t wait to see what new brands emerge as a result.