It’s been said that the global upheaval caused by the COVID-19 pandemic propelled many aspects of the world’s economy 5–10 years into the future. Trends just starting to reveal themselves (i.e., remote work, eCommerce, and streaming entertainment) exploded into established elements of our lives in months.
Virtually every industry continues to feel these effects, and the retail sector is no different. Mobile technology and the increasing prevalence and versatility of the Internet were already driving several changes in the retail market before the pandemic. After the pandemic, everything changed. Today, economic uncertainty and rapidly rising inflation are two other significant factors impacting decision-making. Many retail professionals are trying to discern what consumers will look for in 2023.
In-store/brick-and-mortar vs. eCommerce
Retail sales in brick-and-mortar stores have been declining for some time as many customers have grown accustomed to the convenience of online ordering and eCommerce. This, in turn, led to many brands closing their physical stores and creating what has popularly been known as the “retail apocalypse.” However, some organizations may be starting to rethink that decision. In 2021, research showed that brick-and-mortar sales grew faster than eCommerce.
Recently, there’s a stronger sentiment among consumers in favor of returning to in-person shopping. Although eCommerce has the advantage of convenience, many customers are looking for that social interaction lacking in recent years. That said, eCommerce sales remain strong. The pandemic saw eCommerce sales grow in historically uncommon sectors, including groceries. The market is clearly in favor of a hybrid solution.
Brands, for their part, started to recognize the importance of creating a memorable experience for their customers—both online and in-person. This led to converting traditional retail spaces into event spaces where brand-loyal communities can gather and share experiences such as art shows, concerts, workshops, and more. This transition also includes adding digital elements to enhance the in-store experience, such as virtual reality, augmented reality, and other interactive technologies.
While digital technologies enhance the physical experience, retailers also use advanced innovations to improve online retail. One of the limitations of online shopping is that you cannot physically see the objects in your environment. With augmented reality features, brands enable customers to see what furniture would look like in their homes before buying and even try on clothes virtually. We expect that this kind of experiential enhancement will continue strongly into 2023.
Sustainability
Sustainability has been top-of-mind for many consumers in 2022, and this issue will likely continue to impact buying decisions in 2023 and on into the future. Retail brands have been increasingly focused on incorporating eco-friendly principles into their product development processes. We asked 1,000 US shoppers for their thoughts in this sustainability report. More than half of them believe living a sustainable life is important.
Market research continues to show that most consumers are making buying decisions based on sustainability and that a significant minority of consumers are even willing to pay more for the same product if it is sustainable. In retail, many brands are innovating with packaging to use more renewable resources and recycled materials. This push for sustainability also includes ethics in the sourcing and manufacturing of the products. Consumers are researching and looking for products that support fair trade and treat employees with the dignity and respect they deserve.
Although producing and releasing more sustainably-minded products can benefit businesses, organizations must watch for “greenwashing.” Greenwashing is the term used to describe a brand that presents its products as more environmentally friendly than they are. The results of this kind of misrepresentation can be disastrous, with many customers altogether dropping your brand and turning to competitors.
Personalized Shopping Experiences
Technology has enabled greater personalization for the retail shopping experience, and consumer demand is growing. Many brands react to the trends by providing custom product options and recommendations based on your past preferences. Some online retailers are even creating wizards and applications that allow you to completely customize a product’s colors, materials, and other factors.
These new customized experiences must make the shopping experience more convenient and enjoyable than before. Furthermore, these new features must be easy to use for customers enabling them to have fast access to precisely what they want. This customization element represents a real opportunity for brands who are willing and able to capitalize on it. Research has shown that around 25 percent of consumers would be willing to pay more for products to have that personalized shopping experience.
Moreover, although personalization can be beneficial for brands, extra features like this cannot be allowed to get in the way of fundamentals. Market research also shows that essential elements of the retail experience, such as customer service, are some of the biggest factors impacting whether a customer will remain loyal or not.
Seamless omnichannel customer journeys
Another trend in the retail industry to watch out for is a push for seamless omnichannel customer journeys. The customer journey is the path a consumer takes from first interacting with a brand (i.e., seeing an ad on TV) to converting and eventually becoming a loyal customer. A seamless omnichannel journey involves the brand communicating and interacting with its customers across various channels. For example, a customer might see an advertisement for your retail business on a billboard while driving on the highway. This inspires them to look you up online and learn more about your products. Then, they visit your brick-and-mortar store and do some shopping until they make a purchase.
As you can see, the customer journey can cross over many marketing channels from beginning to end. The goal of seamless omnichannel customer journeys is to reduce the friction between these different channels. To achieve this, brands will need to invest in marketing across various channels. These campaigns will also need to feature customization and be carefully designed to appeal to the needs and preferences of real customers.
Social commerce
The rise in eCommerce sales is also inextricably linked to the rise of social media influencers. This combination is leading to a hybrid known as Social Commerce. More and more consumers are purchasing products to use to promote their own social media content and brands. Instead of just bringing marketing to the world of social media, social commerce enables organizations to sell their products and services directly on the platforms that people are using every day.
This provides an even more seamless shopping experience as you can simply scroll through content, spot a product, make a purchase, and then return to what you were doing. There are now more social media channels than ever before, such as the video application TikTok and the streaming service Twitch have both dramatically increased in popularity.
Furthermore, the rise of the metaverse is also creating opportunities for retail brands to innovate in social commerce as virtual stores within virtual worlds start selling real-world products that are shipped right to your door. Ultimately, we expect many of these social commerce trends to continue gaining strength in 2023 and beyond.
