Top Retail Trends in 2023

With 2023 presenting a refreshing outlook compared to the pandemic period between 2020 and 2022, there is yet another aspect to grapple with – rising global inflation, which is impacting consumers in more ways than one. For some consumers, inflation may mean opting for cheaper options in order to stretch every dollar, in order to continue spending on experiences like travel and eating out. In 2023, there are expectations for spending on travel and experiences to continue rising as a share of total consumer spending, while the share of bigticket durable goods declines.

In rising above these developments, retailers need to understand their customers better in terms of influencing factors for purchase decisions and the types of experiences to deliver, while embracing more agile processes. However, the impact of inflation, interest rates and consumer spending will be felt di erently across the globe depending on several factors such as scal policies and income levels.

Understanding Consumers

Although inflation — the increase in the prices of goods and services — is expected to so en in 2023, prices are largely expected to remain higher in comparison to the pre-pandemic period. With the rapid economic changes, retailers are expected to rely mostly on omnichannel, near real-time testing to comprehend the best ways to respond to consumer purchasing decisions. Pricing strategies may also start adjustments based on economic trends. In fact, inflationary conditions may inspire consumers to respond better to o ers and promotions that appeal to their preferences.

One way to attract customers would be through personalisation, which has become a key success factor for many businesses. Many brands today strive for 1:1 personalisation. Once personalisation e orts are set in motion, further gains can be achieved through arti cial intelligence and deep-learning recommendation algorithms. In fact, retailers will look beyond digital channels to deliver personalized experiences every time a consumer interacts with their brand (store, web, mobile, email). Traditional brick and mortar and other assisted channels have the opportunity for innovative advancement through the integration of digital capabilities, further enhancing the uni ed customer journey.

Reaching Out To Consumers

Today, brands are investing in social commerce as consumers spend more time on social channels. Brands are now on Instagram, TikTok and other platforms, constantly interacting with consumers and vice-versa through strategic content placements and influencer networks. As social commerce continues to grow, more retailers are expected to expand their presence on these platformsin 2023.

Retaining Customers

When customers experience a delightful journey with retailers, it speaks a thousand words and earns long-term loyalty with a deeper relationship. According to a study by Gartner in 2022, although some customers may seek cheaper alternatives for at least one product category, others will still continue to protect their favourite brand. In the face of inflation and higher costs, some retailers may be tempted to reduce expenses on loyalty initiatives, but bear in mind, customer loyalty is not a cost-centre, instead it is a pro table, revenue-generating avenue as well as a powerful customer engagement tool.

In keeping customers, retailers are also encouraged to reward behaviours and not just spend. Consumers now expect brands to recognise their loyalty through small meaningful gestures that o er immediate grati cation. For instance, this can be achieved by o ering rewards for in-app purchases or referring a friend.

With the world going all abuzz about sustainability, retailers are expected to seek ways to participate in environmental and social e orts, thus demonstrating their commitment towards sustainable practices. For instance, discounts on the purchase of sustainable products or donating a certain amount towards sustainable e orts, can create a huge impact.

Another avenue to consider in keeping customers is paid memberships, also known as subscription or premium loyalty, which helps to create powerful value for customers that are willing to pay a fee to unlock bene ts.

In 2023, more brands will look to link their loyalty programmes to payments, while others will add a wallet to their loyalty programme to enable customers to pay with points or a combination of points and cash. Meanwhile there are also retailers who are looking for solutions for getting customers to identify themselves early in the payment process by swiping a loyalty card or scanning a QR code and then incentivising them to attach payment credentials.

Payments

As digitalisation rapidly spreads across payment systems around the world, retailers are expected to provide customers with a myriad of payment options, be it cards, e-wallets, contactless payments, bank transfers, cash or QR codes. Another popular feature hat is flooding the market is the “buy now, pay later” option that o ers customers flexibility, motivating them to make purchases. A survey has indicated that respondents would prefer a single mobile app that will let them do all their shopping, ordering, paying and banking functions.

IN-STORE SHOPPING OR THE VIRTUAL EXPERIENCE

The distinct lines between in-store and online purchasing will become more blurred as in-store adopts many digital features in the future. Adopting more digital elements in traditional stores is occurring due to reasons such as simpli cation of retail operations and making the consumer journey easier. Even retail workers are going through a renaissance as traditional roles like personal shoppers are moving to virtual environments to grow brands’ social commerce.

Conclusion

2023 will be the year to watch in retail as inflation and consumer pent-up demand create unusual dynamics. The year presents interesting experiences for di erent approaches to understanding consumers, reaching them in new ways, personalising their experiences and earning their loyalty.

Credits: *MasterCard Top Retail Trends in 2023: Thought Leadership (December 2022)