Economic challenges and consumer behaviour are closely linked, and in markets such as the UK and Europe, brands and consumers are finding themselves navigating a landscape shaped by the escalating cost of living.
These challenges have triggered a change in spending patterns, where individuals adopt cost-saving strategies and explore alternative product options. The impact is far-reaching, with sectors like luxury, premium, travel, and fashion bracing for a decline in consumer expenditure.
Against this backdrop, the surge in online discussions around off-brand products and the thriving second-hand apparel market underscore a shift towards affordability and sustainability.
But not all hope is lost - despite these changes in spending habits, it’s evident that brands capable of building trust still hold a competitive edge in 2024, especially among the discerning Gen Z demographic.
Take a look at our four predictions for 2024.
In this dynamic economic climate, the impact of inflated living costs is reshaping consumer dynamics. Recent findings from PWC highlight a considerable 69% decrease in non-essential spending, prompting a shift towards alternative purchasing behaviours.
Luxury, premium, travel, and fashion sectors are anticipated to witness a decline in consumer expenditure - and the rise in popularity of off-brand and second-hand products, as seen in the projected $351 billion second-hand apparel market by 2027, highlights a growing preference for affordability and sustainability.
The below graph highlights the second-hand apparel market’s value worldwide from 2021 to 2027 (in billion US dollars).
Additionally, online discussions around off-brand and dupe products increased dramatically, the #dupe has been viewed on TikTok more than 4billion times, indicating a consumer trend that involves seeking budget-friendly alternatives without compromising quality.
The looming issue of shrinkflation - the reduction of product quantity while maintaining the same prices as before - has fuelled negative sentiment and prompted a shift towards off-brand and alternative choices. The Office for National Statistics revealed a significant number of products - 2,529 - reduced in size while retaining the same price, sparking conversations in online communities like Reddit where users spoke about brands they no longer purchase from as a result.
In 2024, French supermarket chain, Carrefour, took a bold step by removing PepsiCo products from its shelves, citing an ongoing shrinkflation controversy.
Hungary, too, is addressing shrinkflation concerns by mandating warnings on products that have shrunk in weight or volume, from larger food retailers with a sales revenue larger than Ft1bn ($2.89m).
Despite financial and product apprehensions, brands committed to building trust still have the potential to attract and retain consumers in 2024. The GlobalWebIndex (GWI) indicates a consistent preference for familiarity over lower prices. Notably, Gen Z emerges as the generation most willing to ‘pay more for a brand they know’, offering a promising strategic advantage for brands invested in cultivating trust and recognition.
Cost of living pressures continue to reshape consumer habits across the UK and Europe - the surge in discussion around off-brand products online, a thriving second-hand apparel market, and heightened awareness of shrinkflation have contributed to this evolving landscape. Yet while many consumers are reducing the amount they spend on non-essential products and services, brands who invest in building trust and familiarity still stand a chance to thrive, especially among the Gen Z demographic.
Brands should adapt to changing consumer habits through focusing on value-driven strategies. Brands should shout about where they are price competitive and highlight value-for-money when not, for example if you offer a more durable item, highlight the number of item wears or uses and the cost-per-use versus comparative products. Reward and encourage customer loyalty through rewards programes to protect your current customer from being swayed by price-point or heavy discounting.
If impacted by shrikflation, focus transparency and communication through acknowledging the change highlighting value and emphasise the value proposition, for example did the formula improve? Or has the product been created more sustainably?
Understand the demand for dupe and off-brand products and if your brand is impacted.
For example Olaplex understood the demand for cheaper versions of their products from social listening and responded with their with their Oladupe campaign, targeting dupe searches with an Oladupe microsite where visitors could secure a free bottle and learn why Olaplex formulas can’t be replicated.
Video first and creator formats
We’ve seen a notable, yet steady, rise in demand for short-term videos over the last few years, driven by industry shake ups from TikTok - and the appetite for quick, engaging video content is projected to soar even higher throughout 2024. This trend has spurred platforms to respond through the likes of Instagram Reels and YouTube Shorts, with marketers strategically aligning themselves to ride this wave.
Platforms are on the frontline, adapting swiftly to this trend. According to HubSpot data, 33% of surveyed social media marketers are gearing up to intensify their investment in short-form video content in 2023.
Consumers are also changing how they engage with brands. In 2023, a staggering 66% turned to marketing videos to gain insight into products and services, signalling a shift in the way information is sought during the purchase journey. Even when it comes to product descriptions, video content - considered to be more authentic and trustworthy - has surpassed traditional text-based descriptions.
Looking ahead to 2024, the stage is set for more artificial intelligence (AI)-generated content. This innovation promises to revolutionise the video creation process, automating tasks from scriptwriting to video editing. This not only enhances efficiency but also unlocks the potential for brands to capitalise on the rising demand for video content, achieving scalability and cost efficiencies in the process.
The preferences of younger generations, specifically Gen Z and Millennials, are reshaping the digital entertainment landscape. This demographic is diversifying their engagement across TV, gaming, and user-generated content. For brands, this presents a golden opportunity to expand their video production efforts by strategically partnering with Creators and Influencers who resonate with these dynamic audiences.
The trajectory’s set for an exciting evolution - short-term videos, fuelled by the TikTok revolution, are not just a passing trend but a cornerstone of the digital content landscape. Platforms are adapting, marketers are gearing up, and consumers are expressing a clear preference for the authenticity of video content.
The integration of AI in 2024 promises to elevate this landscape further, offering brands new opportunities for efficiency and growth. As younger demographics diversify their digital engagement, brands embracing creator content across the entire media ecosystem are able to forge lasting connections with the communities they seek to engage.
The future of video use in marketing is dynamic, interactive, and firmly anchored in the power of compelling visual storytelling - and it’s on the rise!
Brands should partner with creators who are authentically part of, and have built trust with, communities you want to build relationships with. To underpin this - know your audiences values, interests and content consumption. Diversify your partnerships from micro to marco influencers to reach both niche and broad audiences and integrate with your wider digital strategy outside of just social.
Prioritise creating short-form video and adapt your messaging and storytelling accordingly to tap into platforms like TikTok, YouTube Shorts and Instagram Reels. Think platform-first when creating content, for example, the TikTok algorithm prioritises content that feels authentic and native to the platform, not just applicable to creator content, brand videos should be shot vertically, captilise on trending sounds, effects and editing styles. Experiment with live video such as product demonstrations or behind-the-scenes access.
Environmental consciousness will continue to be at the forefront in 2024 - with Gen Z leading the charge in favour of eco-friendly practices. Even though the road to sustainability faces hurdles, with affordability emerging as a key barrier, this shift isn’t just a trend, it's an important factor influencing purchasing decisions.
Consumers are increasingly holding brands accountable for their role in sustainability and are more wise to greenwashing than ever before. According to HubSpot data, 60% of Gen Z - the generation known for its proactive stance on environmental issues - have expressed a higher likelihood to support brands actively reducing their environmental impact, and 46% are more likely to purchase products from small businesses.
The significance of sustainability is evident, but affordability remains a hurdle. Despite its importance, cost is cited by 62% of consumers as a barrier to adopting a sustainable lifestyle. This reveals a delicate balance between eco-conscious choices and financial constraints.
The ways in which sustainability is being embraced are diverse. Consumer attitudes are evolving, with 76% considering repair services, 39% reselling unwanted possessions, and 34% opting for second-hand products.
These shifts indicate a growing awareness and willingness to align with circular practices. Yet, this positive momentum is marred by the prevalence of greenwashing. A substantial 47% of UK consumers would discontinue purchases from brands exposed for false sustainability claims.
Brands, however, can navigate this landscape authentically. Transparency becomes a beacon of trust, as shown by Swedish clothing brand, ASKET. Since November 2023, ASKET has provided customers with an 'impact receipt,' meticulously outlining the environmental cost of each item of clothing. This commitment to transparency is a powerful strategy to counteract greenwashing and foster genuine consumer trust.
The synergy between consumers and sustainability is undeniable, with Gen Z leading the charge for eco-conscious choices. Affordability remains a concern, highlighting the delicate balance brands must strike. As consumer expectations rise, brands engaging in greenwashing face the consequences, with transparency emerging as a key antidote.
In the case of sustainability, genuine commitment, coupled with social responsibility and ethical practices, forms the bedrock for building enduring consumer loyalty. The evolving landscape demands more than token efforts; it requires brands to authentically champion the cause, demonstrating a shared commitment to a sustainable future.
The age of AI
As we head deeper into 2024, the consensus among consumers is clear - AI is not just the future of technology, it's reshaping the way we interact with products and services.
However, while many acknowledge AI's pivotal role, there's a prevailing uncertainty about whether society is prepared for its widespread adoption. This hesitation stems from concerns about potential misuse and the far-reaching implications for data privacy.
At the forefront of AI engagement are Gen Z and Millennials, who are quick to embrace generative AI. For brands targeting these younger demographics, integrating AI capabilities is not just an option, it's a strategic must. The key lies in leveraging AI to enhance customer experiences, drive engagement, and offer personalised interactions.
A standout example is Montreal-based online retailer SSENSE, which has seamlessly incorporated ChatGPT Plus into its platform. The result? A chatbot who’s an expert at assisting customers with their styling queries and providing tailored clothing recommendations.
Brands that create products and experiences that add value to consumers through AI have an opportunity to gain a competitive advantage in 2024. However, if you go about integrating, ensure you have the appropriate filtering, moderation and limitations in place so you don’t fall into costly pitfalls such as the below example:
The landscape of online product searches is evolving, thanks to emerging tools like ChatGPT and Google's Search Generative Experience. Users are shifting from simple queries to engaging in nuanced, two-way conversations.
There’s also an expected rise in complexity, as we see a leap from searches such as ‘green long formal dresses’, to potentially asking for ‘green bridesmaid suitable dresses, ideal for hot climates and available in a size 8’.
This shift demands marketers to adapt their PPC strategies, capturing long-tail and conversational keywords. Google's Performance Max campaigns and the anticipation of new formats within Google, particularly with the broader rollout of Search Generative Experience, become integral components of a forward-thinking marketing strategy. Beyond PPC, the spotlight is on onsite content, where brands can establish themselves as reliable sources by focusing on expertise, authoritativeness, and trustworthiness.
Cautious optimism surrounds the growth of AI, with concerns looming over data privacy, over-personalisation, and the potential erosion of human connection. As a result, brands stand at a critical juncture.
The path forward demands a delicate balance—leveraging AI for its transformative potential while prioritising responsible data practices and maintaining human connections.
As brands unlock the full potential of AI, they pave the way for truly impactful campaigns that resonate with consumers in a way they couldn’t before. The journey ahead is one of strategic adaptation, technological prowess, and a commitment to ethical engagement.
In the ever-evolving world of consumer dynamics, the surge in demand for short-term videos and AI integration is reshaping the marketing landscape - and this is something that’s likely to continue throughout 2024 and beyond.
The allure of quick, engaging video content has prompted platforms like Instagram Reels and YouTube Shorts to respond swiftly. Simultaneously, AI's transformative potential is poised to revolutionise video creation, offering brands unprecedented opportunities for efficiency and growth.
Yet, as we step into the age of AI, the cautious optimism surrounding its growth is tempered by concerns over data privacy and the potential damage to human connection. Brands need to leverage AI's prowess while prioritising responsible data practices.
2024 is set to be a big year in marketing. What’s next?
If your brand needs support in any of the areas mentioned in this article, or in digital marketing more generally, don't hesitate to get in touch.