Tue May 18 2021 Michael McQueen

The empowered consumer is a trend that has been changing the marketplace for years. As consumers have a louder voice, more access to information and a larger array of options than ever before, the relationship between businesses and customers is changing and the balance of power tipping in favour of the customer. COVID accelerated this to a new level altogether.

In their book, How Companies Win, authors Rick Kash and David Calhoun suggest that the twentieth-century model for business success centred on protecting, controlling and defending distribution channels at all costs. They point to companies such as AT&T, Ford and IBM that succeeded by doing just this.[1] In the years to come, however, a protectionist approach simply won’t work. The days of controlling the market by restricting options are over.

The age of ‘disintermediation’ means that consumers have the option to deal directly with service providers by circumventing the established channels of old. Take travel agents for instance. Almost half of the respondents in a wide-ranging survey indicated that when researching a trip online, they prefer purchasing travel services such as accommodation, flights or tours directly from the supplier rather than through a travel agent.[2]

The age of empowered consumers means product and service providers can no longer simply be gatekeepers standing between suppliers and end users. On the contrary, middlemen must be adding real value in the distribution process if they hope to remain indispensable rather than become irrelevant and redundant.

When last year’s COVID crisis shut down all the usual shopping and distribution methods we had collectively favoured for years, the empowerment of the everyday consumer accelerated like never before.

A survey in late 2020 by consulting firm McKinsey & Co. found that roughly three in every four consumers had tried a new shopping method in the preceding 12 months. One of the biggest COVID-inspired trends was the growth of curbside pickup. A staggering 70% of consumers who embraced this new way of shopping intend to continue doing so in future.[3][4] 

Prior to 2020, online grocery purchases accounted for just 6% of the broader grocery market but this number skyrocketed as lockdowns took effect worldwide. As a result, online-first grocery players like Instacart and FreshDirect become dominant players almost overnight. In March 2020 alone, Instacart’s order volumes increased by 150% and the company was forced to hire an additional 300,000 personal shoppers to accommodate the demand.

American retail giant Macy’s saw eCommerce sales increase from 25% to 43% of total revenue over the course of 2020 – an uptick which forced them to rapidly improve their online presence and same-day delivery capabilities.[5]

This shift toward a direct-to-consumer (DTC) business model is a key element empowering the consumers of today, and as stores were forced into closing and workers forced into their homes, COVID saw manufacturers and brands embrace this model with greater enthusiasm than ever.

2020 saw iconic brands ranging from Pepsi to Kraft Heinz and Nike ramp up new DTC initiatives. In the first quarter of 2020 alone, Nike’s DTC sales grew by 36% and the company’s CEO John Donahoe says their goal is to drive 50% of the company’s revenues from online DTC sales by 2025. Dismissing views that things will return to pre-COVID normal for retailing, Donahue argues “The accelerated consumer shift toward digital is here to stay.”[6]

Many businesses fear that embracing a DTC model will cannibalise their existing business, be a drain on resources or damage channel partner trust. Although these concerns can be valid, the model offers benefits that can’t be ignored. These include:

  • Brand consistency and connection: By dealing directly with the consumer, businesses have far greater control over the brand messaging and experience of the end-user. This is one of the driving motivators for Nike who have long worried that an ever-growing number of distribution partners was diluting the crisp identity of the Nike brand and leading to inconsistent customer experiences. A meaningful connection with the end consumer offers brands greater potential to build strong affinity and trust with their marketplace by localising and personalising their offerings.
  • Data-driven insights. DTC models allow businesses to get much clearer insights into consumer behaviour and expectations when compared with dealing through traditional distribution channels. This has certainly been L’Oréal’s experience with the company’s Worth It Rewards This initiative allows registered online customers to qualify for special offers, product updates and loyalty rewards. The more information customers give, the more rewards they receive. This enables L’Oréal to gain tremendously valuable data insights into the likes, preferences and behaviour of their customers. Similar initiatives by fashion brands such as Maje, Sandro, and The Kooples allow for personalised and targeted offers for registered online customers based on data insights. 
  • Additional revenue and better margins. Well-executed DTC initiatives offer significantly higher profit potential than traditional approaches where margins are pinched by intermediaries. For instance, having learned from the disruptive impact of the Dollar Shave Club experience, Gillette recognise this and now actively encourage shoppers to subscribe to their razor-blade delivery by periodically offering free kits that incentivise loyalty. The benefits of approaches like this are hard to overstate considering the cost of acquiring a new customer is generally 5 times higher than the cost of retaining an existing one.

However, as much as the DTC business model offers benefits to the company, it offers them equally to the consumer in empowering them in their relationships to businesses. As they are increasingly not having to rely on middlemen in business to connect them with their desired products, they have a new level of access and authority that requires businesses to step up in their value offerings. The increasing prevalence of DTC models means that traditional stores and retail channels need to be offering a unique experience to customers that can not be imitated through online formats, especially emerging out of COVID.

According to McKinsey, COVID-19 condensed 10 years of consumer behaviour change into just 3 months. Stefan Larsson who heads the fashion brands Calvin Klein and Tommy Hilfiger suggests that COVID-19 has permanently changed shopper expectations and behaviour. “Consumers won’t go back to shopping the way they did before the pandemic,” he said. “They will go forward into the new normal.” 

The proliferation of the direct to consumer model is not something to be feared and it brings many benefits to brands themselves, but it does spell out a need for adaptation in many businesses. The businesses and brands that are set for success will be those that move with the tides of consumer empowerment, adapting to the emerging business models or offering customers in-person experiences that can’t be ignored.


Michael McQueen is a trends forecaster, business strategist and award-winning conference speaker.

He features regularly as a commentator on TV and radio and is a bestselling author of 9 books. His most recent book The New Now examines the 10 trends that will dominate a post-COVID world and how to prepare for them now. 

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[1] Kash, R. & Calhoun, D. 2010, How Companies Win, HarperCollins, New York, pp. 2–3.

[2] Ibid.

[3] 2020, ‘24 Industries & Technologies That Will Shape The Post-Virus World’, CB Insights, 9 August

[4] Torry, H. 2020, ‘Pandemic Speeds Americans’ Embrace of Digital Commerce’, The Wall Street Journal, 15 November.

[5] Torry, H. 2020, ‘Pandemic Speeds Americans’ Embrace of Digital Commerce’, The Wall Street Journal, 15 November.

[6] Arora, A. 2020, ‘E-commerce: How consumer brands can get it right’, McKinsey & Co., November.