These are the biggest marketing challenges facing retail and e-commerce brands in 2023

Digital brands were presented with an opportunity during the pandemic to build loyalty with consumers and convert them over to online shopping, but many now face declining sales and the impact of the cost of living crisis.

As part of The Drum’s Evolution of E-commerce Deep Dive, we ask jurors of The Drum Awards what they see as the biggest marketing challenges that will face retail and e-commerce brands in 2023.

Laila Mignoni, global head of brand communications, Bacardi: As a spirit company, we are in a unique position [in the US] because we cannot legally sell directly to our consumers, unlike other goods in marketplaces. We sell to distributors who sell to retailers and who then sell to consumers online via e-commerce platforms like Drizly and Instacart, which grew leaps and bounds during the pandemic when people realized they could order spirits directly to their doorstep!

At Bacardi, our biggest marketing challenge is how to connect consumers throughout the funnel – from discovery to purchase – and maintain a meaningful relationship even though we eventually ’hand them off’ to a retailer or e-commerce partner to finalize the transaction. We are finding that it’s more important than ever that we start, build and maintain consistent conversations with our consumers so that we’re always top of mind.

Michelle Whelan, chief executive, VMLY&R Commerce: As we face an economic downturn over the next few quarters, things are going to get ugly. There could easily be a race to the bottom as companies sacrifice margins to protect volume. I’d say the biggest challenge for brands is to hold their nerve. We know that continuing to invest in advertising – especially advertising that strengthens long-term equity – magnifies the post-recession bounce. The same applies to other aspects of brands’ commercial activities, especially since we’ve reached a pivotal moment in retailing.

Brands need to identify what’s going to generate the greatest value for their customers – and what’s going to give them the greatest distinctiveness versus their peers – and then be brave enough to make that the focal point for investment. Many people are going to want and need brands to give them a helping hand. That creates the opportunity for smart brands to get much, much closer to their consumers. If they can understand their audiences’ micro behaviors and respond with speed and accuracy, they can build more valuable and longer-lasting connections.

Saving people time, money and effort will obviously be part of this. That could be via bundles (which are still under-exploited in e-commerce) or more imaginative data and loyalty play (following Tesco’s Clubcard example). Whatever the solution, it needs to be delivered with complete transparency. Brands need to communicate precisely what they’re doing and why. The more honesty and respect they show consumers in these tough times, the greater the rewards they’ll reap.

Lizzie Widhelm, senior vice president, ad innovation and b2b marketing, Pandora: The biggest marketing challenge facing retail and e-commerce brands in 2023 is connecting with consumers with messaging that meets them in the moments that matter. To achieve this, brands must keep a pulse on what is most relevant and important to their consumers and determine what to prioritize in this increasingly complex landscape.

For instance, how will these brands balance their messaging in a year where inflation, rising bills and reduced spending power are expected to hamper the shopper spirit? Do they focus on tech innovations like the metaverse/web3/NFTs, or do they set their sights on maintaining consumer demand given inflation and preparing for and responding to pandemics or global conflicts? These choices extend to the tone of their message and whether or not it should uplift, spark joy or tackle today’s realities head-on. This challenge of not knowing where to focus when so much is changing so rapidly will further complicate all of the downstream individual challenges that brands face.

Brands also face the challenge of balancing ROI-driving efforts with opportunities to innovate and learn. They need to ensure that they are driving ROI without ignoring ’what’s next’ or shying away from testing channels and formats that aren’t as proven to find new customers.

Brands will find success if they align with media partners that deliver timely and valuable insights focused on building an authentic consumer connection. Publishers with advanced measurement capabilities, testing and learning opportunities, and the ability to prove our ROI for brands will have a strong advantage.

Emily Chang, chief executive, McCann China: There is a need for redefinition. With the ever-changing face of retail and commerce, marketing leaders must constantly evolve. Yet we’re humans who fall into habit and tend to repeat patterns of previous success.

That’s why we must intentionally and regularly redefine our strategy and plans. What is working and what should I change? What used to work, but doesn’t work any more? And, what’s changed in the office, the marketplace or with competition that should inspire me to redefine the way I go to market?

I’d also encourage marketers to shift two traditional paradigms. The first is that leaders are always right. We must become familiar with being wrong and failing because if we’re never wrong and never fail, we’re not pushing ourselves enough! So, let’s stretch to where we’re in a discomfort zone of learning and iteration. Along the way, pause to reflect on learning, define what we’ll do differently next round, and share with the team every step of the way.

We also must work hard. We should walk away from the adage of ’face time’, when we celebrated martyrdom and demonstrated how hard we work. Rather, let’s work smart, celebrate efficiencies, and reward those who find better ways of doing things.

For more on the Evolution of E-commerce, check out The Drum’s latest Deep Dive.