4 MINUTE READ | December 22, 2022
Trendspotter: 2023 Retail & Consumer Trends
While 2021 was characterized by product shortages and supply chain snarls, the retail environment in 2022 saw excess inventory and consumer demand for steep discounts to help with rising prices, resulting in retailers significantly discounting merchandise to help clear warehouse shelves and close out the year. Retail sales growth in 2023 is expected to remain relatively flat as the economic uncertainty that characterized much of 2022 continues into 2023. While ongoing inflationary pressures and geopolitical tensions continue to impact supply chains and spending patterns worldwide, the discounting that drove record-breaking holiday sales growth is also likely to inform consumer expectations in the months ahead.
From a resurgence of in-store shopping, to more customers opting for the convenience of buy-now-pay-later (BNPL), the final weeks of the 2022 holiday season delivered fresh insight into the trends shaping shopping behaviors and what retailers can expect heading into 2023.
With price-conscious consumers at the helm of purchasing decisions heading into the new year, brands that leverage insight, integrated ways of working and agile activation will be best positioned to capture consumer demand and market share during what is expected to be another year marked by uncertainty.
The Retail & Consumer Trends We’re Watching
The role social media plays in purchase decisions is evolving, with leading platforms continuously launching native storefronts and refining commerce capabilities to be more engaging and immersive. This is helping users discover new brands, browse inventory, and shop for products easier than ever. The adoption of social commerce will only accelerate in 2023, with TikTok and Snapchat slated to expand their current native checkout offerings to more brands next year.
By the numbers: According to eMarketer, TikTok alone will add nearly ten million social buyers to the mix in 2023, thanks to the launch of TikTok Shop and other shopping features, bringing in more than double the combined increase predicted from Facebook, Instagram, and Pinterest.
Analysts note that U.S. retail social commerce sales will see double-digit growth next year, and to match this increased demand, social platforms will continue to refine the in-app checkout process to reduce friction in the shopping experience.
Retailers across verticals are eagerly embracing the resale concept by bringing resale programs in-house, as consumers seek sustainable alternatives to fast fashion and pay greater attention to reducing their own carbon footprint. The growth and popularity of resale programs skyrocketed in 2022, with brands like Athleta, Burberry, Lululemon, and Michael Kors now offering convenient resale programs both in-store and online as an additional service and value-add to customers, with more retailers expected to launch programs of their own in the coming months.
By the numbers: Global Web Index recently reported that more than three out of five internet users either “donated, bought, or sold a pre-owned item” in the last six months.
According to eMarketer, U.S. digital resale sales are projected to grow by nearly 30 percent and reach close to $20 billion in 2023, and will account for ten percent of all U.S. retail ecommerce apparel and accessories sales by 2025.
As inflation remains a primary concern for millions of shoppers, alternative payment methods via buy-now-pay-later (BNPL) partners are becoming more popular. Consumer research shows that many Gen Z consumers now consider BNPL a standard method of payment, much like a credit card, with adoption expected to increase in 2023.
By the numbers: Nearly 30 percent of Americans have used a form of alternative financing like BNPL services in 2022, up from just 18 percent this time last year, according to Consumer Reports.
While the APAC market maintains a dominant position in livestream shopping globally, U.S. consumers are growing more familiar with the experience, and brands like Ralph Lauren, Gap, and Old Navy have become early movers with their own livestream shopping programs, as they look to replicate APAC’s success in the U.S. market.
By the numbers: 2022 livestream ecommerce sales will top $17 billion, according to Statista, with livestream shopping revenues expected to triple by 2026 to nearly $55 billion.
As adoption grows in the months to come, we expect more U.S. brands to fill the 2023 calendar with livestream shopping events and experiences of their own.
Brick-and-mortar stores are making a comeback after foot traffic declined throughout the pandemic. During the 2022 holiday season, brands with store footprints leveraged omnichannel offerings through buy-online-pickup-in-store (BOPIS) and curbside pickup to gain a competitive edge over DTC and ecommerce-only retailers.
By the numbers: Adobe reports in-store retail sales are 14 percent higher in 2022 than pre-pandemic trends.
Brands with physical locations will need to enter 2023 with a renewed focus on delivering a premium in-store experience for customers, crafting omnichannel offerings that uplevel the in-store experience to attract foot traffic and retain loyal customers. While physical retail isn’t a new trend, the traditional storefront is anything but traditional, with brands like Nike and Louis Vuitton experimenting with concept stores, app integration and limited product drops at physical locations to create demand and engage shoppers in new and exciting ways.
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The broader retail industry has proven itself quite adaptable in recent years as shopping behaviors ebbed and flowed against unpredictable macroeconomic changes, geopolitical tensions, and global supply chain challenges. In the months to come, retailers that continue to operate with unbridled agility will be best positioned to deliver value for their customers while capturing market share gains as pockets of opportunities appear across the ever-evolving retail landscape.
Posted by: PMG Insights