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5 Important Retail Trends for 2023

February 27, 2023

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The retail sector continues to play a vital role in the American economy, driving growth, creating jobs, and supporting consumer spending. This boosts economic development, so it comes as no surprise that analysts and policymakers have started to voice concerns as sales began to drop. According to Bloomberg, worries are now on the rise that the economy is losing steam due to the effects of the current Federal Reserve policy. The fact that US retail sales declined 1.1% month-over-month in December seems to support this theory, but retailers may still have some aces up their sleeves.

Retailers Are Preparing for Economic Instability

According to a recent study conducted by Square and Wakefield Research, retailers are already preparing for economic turbulence in 2023. Fearing they will be affected by the lack of financial security disrupting the global economy, they are taking strategic steps to strengthen their businesses. When questioned on their plans to survive an economic downturn, 44% of retailers identified increasing prices as their primary strategy this year. However, the decision to raise prices should not be taken lightly, as there is a delicate balance between what a business needs to survive and what customers are actually willing to pay.

Blindly increasing prices due to inflationary pressures could damage customer relationships, McKinsey research shows. However, subtle approaches can strengthen those relationships and improve overall margins. This guide will explore these strategic solutions and how retail brands can leverage them. 

Retailers Will Adopt Inclusive Strategies

More retailers will probably adopt inclusive strategies this year, as the need for inclusive retail websites and brick-and-mortar stores are still growing. Inclusivity, which involves ensuring equal access for groups that may be generally excluded or marginalized, is a prominent trend in the industry. According to a Coresight Research examination of the advancements made in 2022, this year’s projections include changes in areas like adaptive, gender-neutral, and plus-size offerings. Extended sizing will provide retailers with numerous opportunities this year, and the gender-free category will continue to expand to luxury items.

It should be noted that research shows millennials are opting for brands that demonstrate inclusion and diversity in terms of their promotions and deals.

Physical Stores Are Important in 2023 and Beyond

A recent survey conducted by Shopify and Ipsos confirms that 82% of businesses believe that physical stores will continue to play a leading role in boosting future commerce growth. Not only have brick-and-mortar stores made a strong recovery since the lockdowns were lifted globally, but their growth has even outpaced e-Commerce. However, the role of physical stores has changed with time, and consumers are now using them in conjunction with digital channels. Brick-and-mortar stores are especially essential when it comes to physically presenting products and services, hosting events and panels, and creating a joint space to build strong customer communities.

Recruiting and retaining talent for physical stores is one of the biggest challenges that retailers are facing right now, with 67% of businesses currently being short-staffed, according to the study.

Authentic Automation Can Improve Customer Experience

There is no question that new and improved technologies like automation are influencing various industries around the world. Retail is no exception, and the 2023 Future of Retail report conducted by Square and Wakefield Research shows that 73% of consumers actually favor local stores that use automation instead of human employees for at least one task. However, Global Lead of Retail and Digital Consumer Insights Michelle Evans says authentic automation is preferable because it promotes a balance between hiring human workers and using automated systems.

“Machines offer more convenience and speed, but really we shouldn’t underestimate the power of emotional connection with a brand. Ultimately it comes down to authenticity,” she adds.

Retailers Are Expanding to New Sales Channels

The most vital trend in retail, according to the 2023 Future of Retail report, is the fact that multiple new opportunities are now available for retailers. 81% of the businesses polled are going to expand to new digital channels in the next 12 months. Moreover, 43% of retailers are counting on a different marketing approach when it comes to younger consumers. “Amid economic uncertainty and changing consumer preferences, the current macro landscape is giving retailers a hard reality check that it’s not enough for brands to be present in one place. Beyond a physical store and online presence, brands need to be seen and heard on social media platforms,” says Roshan Jhunja, GM of Square for Retail.

Research shows that 50% of Gen Z consumers make their purchases on their smartphones, making retailers likely to expand their business to e-Commerce. 

The Retail Trends that Will Define 2023

Changing consumer behavior, inflation, and geopolitical challenges will undoubtedly continue to challenge the retail industry this year. However, positive trends, such as preparedness, inclusivity, and improving customer experience in physical and online stores, can limit their effects and help retailers boost sales. Moreover, retailers can also profit from using new strategies, such as authentic automation and expanding to new sales channels. By adopting these new trends, businesses can improve retail growth and even drive economic expansion.