For 2024, Data is King

The pandemic has fundamentally altered consumer-brand interactions, setting new expectations for consistent shopping experiences across all channels with expedited delivery times. To meet these demands, companies have employed innovative technologies, such as automation, AI, and data analytics, to provide hyper-personalized experiences. 

Before the surge in online shopping, Mexico’s e-commerce market was valued at US$17.9 billion in 2019, projected to reach US$37.3 billion by year-end 2023. As brands integrate digital strategies into logistics, online purchases, from groceries to luxury items, have become increasingly popular. both nationally and internationally. Compared to three years ago, Mexicans show a 78% increased likelihood of making online purchases, indicating growing consumer trust in these channels.

Amid automation and AI adoption, collecting and understanding data remains a challenge for retailers. "Data is the heart of the operation and technology is an enabler. Both are important for the retail industry," says Diego Halftter, Chief Data and Analytics Officer, Jüsto. Future trends are expected to revolve around leveraging data for strategic modifications. 

Change in Customer Behavior

Post-pandemic, consumers exhibit two clear changes: a preference for multiple channels to compare products and prices, and an increase reliance on social media apps like TikTok and Instagram, where influencers showcase products. 

The surge in inflation has driven growth in hard discount retailers and e-commerce as consumers seek cost-effective options, according to Nielsen IQ (NIQ). This contrasts with last year’s trend where spending increased after years of constraint. 

Livestream shopping has emerged as a growing trend, combining live video streaming with e-commerce. Influencers or sellers conduct live presentations, allowing real-time interactions with viewers for inquires and purchases. This marketing strategy presents mixed results as a new consumer approach, according to Insider Intelligence. It may require time to mature but is poised to become a crucial channel for online retail. 

TikTok is investing US$500 million in its TikTok shop endeavors in the United States, including the development of logistics centers and the potential restriction of access to external e-commerce sites within the app. “The new maxim for the post-pandemic e-commerce age is that all commerce is social commerce,” said Eric Dahan, CEO and co-founder of influencer agency Open Influence. “Real social commerce success will come from understanding your customers, leveraging influencer relationships for trust and validation, and being willing to experiment on emerging networks, especially TikTok.”  In Mexico, Facebook holds the most significant influence on shoppers at 52%, followed by Instagram at 18%, YouTube at 12%, and TikTok at 10%. 

The live shopping market was worth approximately US$5 billion in 2020 and could reach US$17 billion by the end of 2023. By 2026, it is expected to grow exponentially to US$55 billion, according to Statista. In the following years, McKinsey believes live shopping will expand into new sectors like healthcare, engineering, and finance, with innovative formats like augmented reality, and micro- or nano-influencers. 

Omnichannel: Same and Faster Experience

As customers' expectations shift, companies are forced to adapt. Apart from live shopping, consumers use marketplaces to compare products, prices, and delivery times. The Mexican Association of Online Sales (AMVO) notes that increased foot traffic in malls does not necessarily translate to sales. Webrooming, showrooming, and boomerooming illustrate various customer behaviors.

“Omnichannel strategies improve customer satisfaction by providing a consistent experience across all touchpoints, generating loyalty, and increasing sales opportunities. It also enables companies to collect and analyze useful data from multiple channels, facilitating informed decision-making and personalization of customer interactions,” says AVMO.

Post-pandemic growth rates for physical and online retail have been converging. Insider Intelligence notes that before the pandemic, Mexico’s e-commerce sales grew by 35%, while total retail sales grew by 1%. In 2020, e-commerce sales spiked to 65.2% and total sales decreased by 9%. In recent years, as businesses recover from the economic downturn caused by the pandemic, online sales rose by 16.2%, and total retail sales by 4.5%. Insider Intelligence foresees stabilization in 2027, with online sales up by 10.3%, and total retail sales up by 3.2%.

Diversification of channels and closer relationships with an audience give companies a chance to reach more customers. This allows them to collect more data, better understand the customer demands, and keep up with new trends, positioning them higher in the market. 

Big Data and AI

The surge in data collection prompts companies to make specialized offers based on customer interests, ensuring more certain purchasing possibilities. However, many struggle to turn this knowledge into a strategy, leading to “analysis paralysis” due to the overwhelming amount of data. 

“Personalization allows for a better consumer experience because users can see what they are interested in, thus streamlining their communication with the brand,” says Pablo Ribeiro, Founder, M3 E-commerce. Emerging technologies like data lakes, data warehouses, predictive analytics, and machine learning (51%), according to a Denodo survey. These, aided by the power of AI, provide organizations with the capacity to securely store, govern, and analyze extensive datasets. 

Key performance indicators (KPIs) play a crucial role in determining the return on investment (ROI) of data. By identifying the most important metrics and using them to track progress toward specific goals, retailers can better understand how their data is driving business results. Developing a robust data strategy taking into account two types of data, customer and retail data, which involve behaviors and preferences and sales information, respectively, is key, says Marco Gelosi, General Manager Mexico and Central America, Swarovski during this year’s Mexico Business E-commerce and Retail Forum.

As the market changes regularly reassessing data strategies and adapting analytical models helps retailers stay ahead. By taking these steps, retailers can unlock the full potential of their data, gaining a competitive advantage in the marketplace.

Ultimately, everything is connected. The pandemic shifted consumer behavior towards increased online shopping without completely abandoning physical stores. Brands must focus on data strategies and processing to succeed in the coming years.