Perspectives

Understanding the evolving outlook for consumer demand

22 April 2021

Throughout the COVID-19 pandemic, stay-at-home orders and social distancing have disrupted the traditional consumer experience and ways of transacting. The need for consumer-facing companies to adopt effective omnichannel and digital strategies to better understand consumer interest and behaviour has grown exponentially.

At Macquarie’s Sixth Annual Consumer Bright Ideas Conference, members of Macquarie’s US Equity Research team examined the key trends impacting consumer-facing businesses and the demand outlook for the sector as the global economy reopens.

Positive demand outlook as recovery continues

Chad Beynon, US Gaming, Lodging and Theatres analyst and Deputy Director of Macquarie US Equity Research says, “companies used the period during the pandemic to reassess their competitive advantages and realign business goals.”

According to the US Equity Research team, strong fundamentals across future bookings, season pass sales, and rising passenger screening counts by the US Transportation Security Administration indicate consumer-facing companies will emerge in a strong position as consumers look to reengage as pandemic restrictions subside and vaccinations increase.

While the pandemic structurally impacted the way many consumer-facing businesses operate and resulted in long-term changes to digital strategy, Macquarie US Consumer and Lifestyle analyst Paul Golding said, “executives in attendance noted they are pleased with the outlook for their businesses and there is clearly pent-up consumer demand for out-of-home leisure activities.”

 

Growth of omnichannel consumer experiences

As companies look to engage with and build lasting relationships with their consumer audiences, developing omnichannel experiences which incorporate an integrated user experience across multiple platforms will play a key role in unlocking greater value, particularly for betting operators.

The sports betting and iGaming market in the US is experiencing a period of expansion as legalisations roll out at the state level. As this pattern continues, media companies have become key partners for gaming operators looking to advance their customer acquisition strategies.

“Partnerships between gaming operators and media companies are emerging as a powerful way to enhance consumer experience and drive customer loyalty,” Beynon says.

This type of omnichannel experience allows consumers to view a sporting event during which on-air media personalities advertise their network’s preferred sportsbook partner, embed sportsbook odds within the user display and promote unique content and proprietary bets which can be placed directly by the consumer on a second screen.

Beynon notes these partnerships can increase the visibility of a gaming company’s digital offerings, optimise fan engagement on in-play betting and expand revenue opportunities.

“The consumer is looking for a single provider through which to access sports betting and iGaming content. As a result, vertical integration and consolidation within the sector will continue, and joining forces with media outlets places gaming operators in a better position to deliver an integrated, seamless user experience.”

Macquarie US Equity Research estimates these intersecting industries can drive approximately $US30 billion of sports betting and iGaming revenues by 2030 compared to the industry’s 2019 total addressable market of $US1.4 billion.

 

Transitioning towards a cashless society

While the pandemic has accelerated the shift towards e-commerce—by nearly five years according to IBM—technology, by way of facilitating social distancing, has also supported a transition toward digital wallets within the in-person leisure sector.

“Digital ways of transacting and the platforms that support consumer spending will continue to grow in relevance, highlighting what we expect will be the continued growth and utilisation of digital wallets,” says Golding.

Greater digitisation and the movement toward mobile have emerged as key components of the consumer experience across several theme park operators and cruise lines, which have developed applications to comply with safety protocols. These include offering virtual booking, queuing and ordering options, as well as contactless payments and contact tracing.

Beynon and Golding note that digital wallets provide consumer-facing companies with a greater understanding of the value and behaviours of their customers.

“The industry is getting smarter. Not only do digital wallets improve user experience, but they also provide an infrastructure upon which companies can track consumer spend at their gaming and leisure properties,” says Beynon.

According to Statista, contactless technologies are projected to generate over $US220 billion in transaction value by 2023.1

“Across industries, technology is streamlining user experiences and will unlock efficiencies for both consumers and corporations,” Golding says.

  1. Statista (Statista, 2021, US proximity mobile payment transaction value 2018-2019 with forecasts to 2023. Available at: https://www.statista.com/statistics/244475/proximity-mobile-payment-transaction-value-in-the-united-states/