This year is likely to be one of strong economic growth for the consumer products (CP) industry, even amid continued supply chain disruptions, rising energy costs, and labor shortages. The past two years brought challenges and uncertainties that no one was prepared for, but bold moves made across the industry are starting to pay off. With a glimmer of light now appearing at the end of the pandemic tunnel, the CP industry is poised to enjoy a year of strong financial performance, with many of the largest companies predicting high revenue growth and an increase in operating margins. Against this backdrop of renewed optimism, five key digital trends will leave their mark on the industry before 2022 is done.

E-commerce now makes up approximately 6.6 percent of all CP sales, which indicates the shift toward online shopping is anything but a short-lived pandemic response. Consumers are shopping online more than they did before the pandemic, and 92 percent believe they will shop online the same amount or more in the future.

Despite the rise of e-commerce activity, the online buying experience remains pretty underwhelming. Although brands have made significant gains in addressing consumer demands for fast, convenient, and anywhere/anytime commerce, few have managed to deliver online experiences that truly delight the consumer.

In 2022, we’ll see a melding of e-commerce and entertainment, with the strategic focus shifting to building engagement. Brands will begin to invest in dynamic content, immersive technologies like augmented and virtual reality (AR/VR), gamification, livestreaming and shoppable TV—all designed to make e-commerce experiences entertaining, exciting, interactive and memorable.

Hyper-personalization allows companies to move away from simply selling something to anticipating discrete needs and offering highly relevant choices and solutions at an exact time and place. Historically, the absence of first-party data and unified customer profiles made this difficult. An increased focus on first-party data acquisition and investment in customer data platforms (CDP) to stitch together data from multiple sources will help organizations make strides toward hyper-personalization at scale.

The biggest breakthrough in hyper-personalization is likely to emerge from the increasing democratization of artificial intelligence (AI). AI helps brands deliver personalized content, services, and experiences by consolidating data from multiple channels, harnessing insights, and identifying practical strategies. As AI becomes more accessible and affordable, expect to see an increasing prevalence of AI tactics across the industry.

Trends to watch out for include AI for enhanced voice and visual search; dynamic content optimization; microtargeting; and expanded engagement through chatbots, voice assistants and messaging apps.

As e-commerce becomes saturated with competition, D2C brands will lean on brick-and-mortar retail to stand out. Physical stores allow D2C brands to appeal to new audiences, establish intimate and personal consumer connections and further differentiate the brand narrative. They also allow consumers to test products in person before purchase and serve as an additional marketing channel, which can help alleviate the high advertising costs associated with acquiring customers exclusively online.

Last year, footwear and apparel brand Allbirds continued its physical expansion by opening stores in several cities throughout the U.S., and D2C intimates brand Knix opened its first U.S. store. This year, beauty brand Fenty announced plans to open stores in five U.S. cities, and “new body brand” Billie announced a deal to sell its products at Walmart.

The blurring lines between digital and physical retail just got a lot more interesting with Amazon’s plan to launch its first physical clothing store in Los Angeles later this year. Dubbed Amazon Style, the new store concept brings technology to the forefront, primarily by using a shopping app to allow customers to curate a personalized shopping experience. The movement of digital-first companies to brick-and-mortal retail is further evidence that brands are realizing that winning mindshare and achieving relevance in today’s marketplace means having a distinct presence everywhere your consumer operates—both online and offline.

Many companies have manifested and reinforced commitments to brand purpose and sustainability through acts of philanthropy, education and restructuring during the pandemic. With global issues still very much at the forefront, expect to see even greater prioritization of purpose and sustainability as a strategic imperative, with purpose-driven brands elevating efforts to become “movement-driven.” This means creating connections between the brand, the consumer and the wider community, and when possible, developing new business ecosystems that bring together shoppers, government agencies, academia, special interest groups, and other companies (often across multiple industries) to help solve society’s most challenging problems.

In this new model, brand relationships evolve from “direct-to” into “direct-with,” with purpose becoming increasingly democratized and inclusive. Social media, interactive content, and direct channels will help create consumer communities united by a common purpose and action. Track-and-trace solutions, including blockchain and smart packaging, will provide consumers with greater transparency, reassurance, and empowerment over their purchase decisions. Also expect to see a higher emphasis on cocreation and consumer collaboration, with AI-enabled technology allowing customized connections that alert shoppers of their individual contributions, leading to a greater sense of identity, impact, and empowerment.

It seems like every year, technologists predict there will be at least one emerging technology that will turn the world on its head before the year is through. In recent years, AR/VR, 5G, IoT, AI, and blockchain have all claimed this aggrandized status. This year, it seems like it is all about the metaverse.

The metaverse is envisioned as the future of the internet: an array of technologies that creatively combine to produce a 3D digital version of our physical world. Through cutting-edge technologies like AR/VR, 3D construction, AI, IoT, blockchain, and non-fungible tokens (NFTs), consumers can explore virtual spaces, play games, go shopping, attend concerts, visit museums, hang out with friends, and do much more.

The metaverse opens up a seemingly infinite number of exciting possibilities to interact with consumers in surprising and engaging new ways. Ralph Lauren designed a virtual clothing line for 200-million-user South Korean social network Zepeto. Campbell Soup Company auctioned off NFTs in collaboration with artist and illustrator Sophia Chang. Barbie manufacturer Mattel partnered with French luxury clothing brand Balmain to launch an NFT auction of three unique Barbie avatars clad in digital renditions of the physical collection. And this year, P&G Beauty took its first step into the metaverse with the launch of a virtual storytelling world called BeautySphere, where consumers can interact with the company’s brand portfolio through live simulated content, livestream panel discussions, and a gamified challenge.

What’s exciting and encouraging about the metaverse is that nothing is set in stone.,. Exciting new features will emerge as the technologies that power the metaverse advance. In 2022, expect to see more brands explore its potential to reach new audiences, revitalize brand perceptions, build craft distinctiveness, create long-lasting relationships with consumers and build communities. With the metaverse still proving its utility to consumers, brands must tread carefully and ensure they prioritize consumers and their experiences over everything else.

Digital technology continues to redefine and reshape the consumer products industry—inspiring new experiences, fueling investment in innovative products and services, giving rise to new channels and touchpoints and transforming supply chains. Brands must manage the demands of an increasingly sophisticated, environmentally conscious consumer across a proliferation of new channels. They will need to drive efficiency, visibility and resiliency in manufacturing and supply chain operations. They will need to prioritize data and invest in adaptive digital platforms to deliver seamless and personalized experiences across the end-to-end shopping journey. And they will need to increase the sustainability of product and packaging to reach corporate environmental goals.

There will undoubtedly be winners and losers in the months ahead, but those that thrive will do so by striking the right balance between short-term business goals and long-term innovation. For all the magic and excitement of emerging technologies, brands must remember to focus on end consumers and understand the opportunities to make a positive difference in their lives. Brands must not forget their broader responsibilities to the planet and to the society in which we live. And they must not forget to imagine, for it is through unbridled creativity and imagination that we uncover our true selves and begin to transform possibilities into realities.