From the panic of the pandemic to the roller coaster of recovery, disruptions have hit retailers in significant ways during the last years. New consumer buying patterns that began before Covid-19, such as a shift toward buying online, have intensified. Customer expectations have been impacted too, as many shoppers look for personalized treatment and instant communication. With supply chains in flux, in-store shelves are frequently either bare or overstocked.
It’s undeniable that the events of recent years, coupled with new technologies, have triggered adjustments on nearly every level. A reflection on the past, along with insight on current happenings, provides insight into the future. What exactly will 2023 bring for retailers? Will there be further tides bankruptcies? Which companies will be ready to face the realities of today and tomorrow?
Here, a look at five trends on the horizon.
The breadth of change that is reshaping the consumer goods industry has already dismantled some retailers. For those that have not filed for bankruptcy, strained budgets and forecasts remain top of mind. During the past five years, margins across the segment have, on average, shrunk by two to three percentage points per year (or more), according to research by McKinsey.
Retailers that are unable to undergo and maintain a tech transformation will lag the digitally advanced players. Between 2016 and 2020, retailers with robust tech generated 3.3 times more for their shareholders than those that had not made advanced digital implementations, per the Digital Quotient Survey by McKinsey. The discrepancy will increase as consumers lean into ecommerce and expect a seamless omnichannel experience.
Transforming for the digital world, however, requires far more than putting up a website and digitizing processes. Taking advantage of technology to avoid negative profit margins begins with a step back to survey the organization. It ponders questions such as:
After a thorough exploration of purpose, a vision can be set or reexamined. Technology to support the established mindset can then be implemented. When this takes place, retailers reduce their chances of falling off the digital bandwagon—and never getting up.
The relationship between a customer and a retailer is of utmost importance—and when it falters, shoppers shift. Among consumers, 64% reveal they have switched to a competitor due to a poor experience, according to the 2022 State of Digital Customer Experience Report by Verint. However, the same survey indicated that 78% say they are more likely to be a repeat customer if they have a high-quality digital customer experience. Shoppers base their satisfaction on factors like quick response time and the ease of communicating as well.
Retailers that want to build positive relationships with new customers, and then retain them, will pay utmost attention to these expectations. Better yet, as the calendar rolls to 2023, company executives that aim to stay in tune with consumers will take a walk—in the shoes of their customers. That means strolling through a retail store and viewing it from a shopper’s eyes. What’s readily available? What’s missing? Where is help available? Are there opportunities for video discussions with store associates, or other interactive devices? The same is true for online experiences: What do online shoppers see on a website? How can their questions be answered? How will find what they are looking for?
And then there are post-sale opportunities. Retailers that lead the industry will be quick to lend an ear to customers. Video surveys to ask repeat buyers about their experiences, interactions to see what they might want to buy, and opportunities for sneak peeks at new products all present ways to nurture those increasingly valuable relationships.
It’s the device that consumers have on them (nearly) all the time. It’s the first object many grab when they wake up, and the last thing placed down before the day ends. Welcome to the world of mobile. In this reality, consumers socialize, work, plan, play, and shop—all from their phone.
Given its omnipresence, retailers that want to increase profitability will be keen on understanding the importance of this small, powerful device. In the upcoming months, products that can easily be discovered on a cellular will gain advantages over those that are hard to view. It’s also essential to think about the transfer to other devices. Customers might look at a product on their phone while riding public transportation to work during a weekday morning. They put it in a shopping cart and decide to make a purchase that evening from their laptop in their own home. Being able to pull up the same product on a different screen or view it in the same shopping cart on a new device could lead to a seamless sale.
In 2019, more than 60% of internet activity was related to video, according to the Global Internet Phenomena Report that year. Furthermore, CISCO estimated that video consumption would account for 82% of internet traffic in 2022. Clearly, consumers are growing more accustomed to going online—and watching stories unfold on their screens.
This presents a key opportunity for retailers who are ready to jump in. Store associates don’t have to be stationed at a certain place in a brick-and-mortar place; they simply need to be available for a video chat to answer a shopper’s question. Finding the right pair of shoes, choosing a specific color, learning about an item’s measurements—all of these can be clarified through a quick online meeting between a customer and a sales representative.
Influencers play a role here too. Shoppers look to see what their friends buy and recommend online. They also pay attention to social media influencers. Nearly all consumers (98%) planned to make a purchase through social shopping or influencer commerce in 2022, according to data from Sprout Social. Moreover, those social interactions and transactions aren’t going to slow down, per the data. Retailers that lack a social media presence will likely be looking to develop one, asap.
Digital shopping means that previous physical boundaries have been broken down, and this opens new potential for retailers selling specific products. Items are no longer bound to store shelves and can be sent just about anywhere in the world. This means retailers that sell niche items have access to new markets.
The key to success lies in connecting products to those who are interested in them. The right keywords and phrases, along with an engaging digital storefront, can make this feasible. Avoiding cultural barriers and using easy-to-understand language are also essential for niche products to sell well.
While many forecasts remain uncertain, one factor is clear: those who are agile, flexible, and ready to adapt will have increased chances for survival. Companies with creative talent and the right mindset will be ready to face these trends and proactively move through the upcoming year.
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