Views on the latest Consumer Trends report from Coefficient Capital and Dan Frommer

At the risk of dating ourselves, there was a time when the release of Mary Meeker’s Internet Trends report was a stop-everything-and-go-read-this type moment.

It’s been a long time since we’ve had that feeling about any trends report, but it came back to us this week when Dan Frommer and Coefficient Capital released the follow-up to their Consumer Trends report, this one being “The (Partial-) Reopening Special.”

While the entirety of the report is worth your attention, there are few points—fairly well connected—that are worth highlighting. Especially when read in conjunction with the original report (“Consumer Trends 2021”).

  • Even with a correction from the pandemic highs, ecomm growth is still ahead of historical trajectory. YOY comparisons are hard for a lot of brands right now, especially those who are battling supply chain issues, rising COGS, and less efficient acquisition channels, but the macro view tells more of a story than the micro: As long as you’re slightly ahead of the wave, or even just riding it, you’re in better position than you think. 

  • While other segments have experienced some regression since last year, online grocery hasn’t slid back from its sea change moment. It’s now a habit.

  • Though the shopping cart is becoming more unbundled (and our grocery spending is happening in more places), retail has largely benefited from this behavioral shift. 

  • As such, they’re investing in faster reordering experiences, like “Buy Again” buttons and shoppable order histories, to protect those gains and build switching cost moats—both around them as a preferred retailer, but also around basket size and brands that comprise it. These capabilities will quickly become core competencies in DTC, so brands can do the same.

  • A K-shaped recovery is being paired with market bifurcation. From our Morning O’s issue in March: “Large CPG innovation and hyper-targeted small CPGs” are increasing premiums at the top-end of the market, while more value brands and private labels are capturing more of the rest of the market. Positioning and pricing strategy, then, may become the biggest strategic value driver for the foreseeable future.

In the original trends report, Frommer and Coefficient Capital posited that “small brands with hero products will continue to succeed.” We certainly agree. (And also hope it’s true: the world is more interesting when that happens.) 

As more behavior shifts occur, though, and as retailers begin influencing those shifts with consumer experience improvements, small brands will need to adopt those changes and adjust their larger strategies to stay ahead of the inevitable risks around share of wallet shifts that will occur due to convenience and habit.