”Circularity will shape and community building will decide the winning brands in 2023”
On what to expect in consumer and retail tech this year
March 01, 2023
Who are you?
— I work in venture capital as platform and marketing manager at Maki.vc, a Nordic seed-stage fund investing in deep-tech and brand-driven companies. I’m also a Slush alumna and my roots are in the Finnish startup ecosystem. Today, I work closely with Maki.vc’s founders from startups like Ogoship, K Line Europe, and CarbonCloud, which are shaking up industries like e-commerce, dentistry, and food tech. Consumer brands and retail technology are constantly on my radar, and my forte is in structuring early customer success and marketing steps for new ventures.
So, what’s new in the consumer and retail tech space?
— After a digital makeover and a 3-year surge during the COVID-19 era, consumer tech and retail tech are now struggling to keep pace. That’s not to say they are performing poorly. In fact, the consumer tech market was projected to cash in $505 B by the end of 2022. Meanwhile, retail tech bagged an all-time high $109B in investment and funding alone the year before. However, this growth has started to stabilize since then. Why? Well, on one side there are inflationary pressures, economic and geopolitical instability, supply chain disruptions, and a sheer lack of workers. On the other side are rapidly evolving consumer preferences, attitudes, and buying behaviours which demand the utmost creativity, originality, and inventiveness from brands. Consumers may be spending more but they are also asking for more socially-anchored and purpose-led solutions delivered to them through engaging and hyper-personalized experiences. This is keeping consumer tech and retail tech companies on their toes right now, says Heiskanen.
Circularity is transforming many industries across the world. What’s special about how it’s shaping these specific areas?
— To be clear, it’s the growing consumer demand to learn about and lower the environmental impact of the purchases that’s truly driving this change. Consumers want companies to own sustainability — in their products and services, channels, and across the entire brand.
— In the consumer and retail tech space one business model gaining a stronger foothold is re-commerce. 65% of all shoppers already use resale and re-commerce services, and merchants need to step up their game to offer even smoother resale opportunities. In the Nordics, we’ve seen a rise in new ventures built around resale and re-commerce services, such as Mjuk and Rentle, as well as established names, like Marimekko with its Pre-loved concept, rolling out their own second-hand marketplaces. This is a trend that’s sure to keep growing in 2023, says Heiskanen. She continues:
— While consumers have a steady appetite for circularity, they still want it at a competitive price. This has prodded companies to offset the cost of sustainable innovations by, for instance, reusing, repairing, refurbishing, and recycling existing materials and products; creating extremely efficient processes; scaling, fast; opening their own direct-to-consumer channels, to name a few.
— Consumer and retail tech is a really unique space where brands, consumers, and technologies all intersect. When it comes to what and how we use, produce, and manage the afterlife of things, we’ll always look to these industries to set the standards.
What is a win for a modern-day brand? And how does community building help with that?
— The measure of a winning brand, as we know it, isn’t challenged — it must be, at the least, popular, or even obsession-worthy, a trailblazer in its industry, very profitable, and maintain a loyal customer base. What has changed is how to get there.
— Consumers want brands to provide the best value while sticking to morals and ethics. They also want a stellar customer experience that makes them feel like the brand’s most treasured customer. In an extremely crowded consumer and retail tech market, community building helps brands to get unique insights, earn engagement and stay ahead of the competition. Customer experiences at various touch points may bring consumers to the company’s halo. But in order to build deeper relationships, learn from each other, and convert into brand advocates, consumers need to feel like they’re a part of something bigger — a certain sense of belonging.
But what sets ’new age communities’ apart from ’customer followings’ that companies have maintained for years?
— We’re not talking about a group of customers who are looking into a company from the outside — not the ones that may or may not receive a greeting card once a year or an exclusive offer in their inbox. It’s a multi-directional stream between the company and its community members, and between the members themselves. The mark of a truly successful community is that the brand is no longer at the centre of the conversation, but rather acts as the facilitator connecting consumers, creators, researchers, industry experts, and other stakeholders, Heiskanen explains. She adds:
— Community building requires brands to open up and share the highs and lows of building a company. After all, trust, loyalty, and value addition go both ways. Personally, I follow founders like Babba Rivera and Dianna Cohen, who are brilliant at sharing content and experiences with their followers — and giving a glimpse of the company they’re building.