5 Trends to Watch: 2023 Retail
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- Continued Popularity of Private-Label Brands - The growth in private-label brands is expected to continue in 2023 and the coming years. In the early days of the COVID-19 pandemic, many consumers turned to private-label goods when they were unable to find their usual name brands due to panic buying and stockpiling. While lower price points have contributed to the growth of private-label brands, quality, taste, and availability have also contributed to consumers ditching household name brands in favor of private-label brands. The trend towards private-label brands has continued since 2020 and is expected to continue into 2023 and beyond as record-high inflation and fears about the economy push consumers to rethink their devotion to branded products and turn to private-label brands to save money.
- Increased Investments in the Metaverse - While there is no consensus on what exactly the metaverse is, that has not stopped retail brands from investing and experimenting in the virtual reality space. From gaming platforms like Roblox and Fortnite to augmented reality (AR) and non-fungible tokens (NFTs), retail brands have been leading the way, selling digital versions of their products and creating real-world revenue. The world's first Metaverse Fashion Week debuted in 2022 and featured more than 60 luxury and digital brands. With the development and expansion of the metaverse comes the potential to improve consumers' shopping experiences, making the process more engaging and accessible. In the metaverse, consumers can virtually try clothing, accessories, and cosmetics, customize products and purchase physical items, all without ever leaving home. In addition to making shopping easier and more convenient, the metaverse may prove to be a valuable tool allowing brands and businesses to create long-term loyalty with their consumers, particularly Gen Z consumers, who are the first generation whose entire lives have been completely shaped by technology. While the full potential of the metaverse remains unknown, one thing seems all but certain - the metaverse will be a valuable tool for retailers to connect with consumers wherever they happen to be.
- Retailers Focused on Omnichannel Commerce - One of the many things the COVID-19 pandemic has altered is the way consumers shop, with more and more shopping taking place online and a premium placed on convenience, efficiency, and personalization. Omnichannel commerce gives brands more flexibility on how they connect with consumers and provides multiple ways for consumers to make purchases. Omnichannel commerce provides more avenues for consumers to make a purchase, including through their desktop, mobile phone, apps, brick-and-mortar stores, as well as smart devices. An omnichannel strategy also extends to the ways consumers choose to receive their purchases, with options ranging from same-day delivery, in-store and curbside pickup to touchless checkout. A well-implemented omnichannel commerce strategy has the power to improve the consumer experience while increasing sales and consumer engagement.
On a related note, supply chain and labor and employment will remain highly-watched issues in the Retail industry. On the supply chain front, while the worst of the COVID-19-induced retail supply chain chaos appears to be behind us, supply chain disruptions are expected to continue in 2023. In an effort to reduce the number and severity of supply chain disruptions, many retailers plan to invest in efforts to modernize their supply chain in the coming year, with last-mile fulfillment likely becoming a crucial part of the omnichannel retail experience. When it comes to labor and employment, retailers can expect to contend with fierce competition for hourly workers and challenges hiring and retaining workers as workers seek jobs with higher wages, better benefits, more flexibility. As retailers struggle to adequately staff their stores, understaffed stores risk driving consumers further away from brick-and-mortar locations and towards online as consumers seek out more pleasant shopping experiences.
- Rise in ESG-Conscious Consumers - Consumers are becoming increasingly conscious about the businesses they frequent and the products they purchase, with more and more consumers preferring to spend their dollars with brands and businesses that positively impact the planet, the communities they operate within, and their workforce. Millennials and Gen Z continue to be responsible consumers, placing a premium on sustainability and valuing brands that walk the walk when it comes to their ESG initiatives. Consumers are also willing to pay more and accept longer delivery times for sustainable products and brands that align with their values. It is important to note, however, that greenwashing claims will continue to pose risks for retailers and may erode their goodwill and alienate consumers who may not be willing to give the retailer a second chance, but may choose to shop elsewhere.
- Emphasis on Experiential Retail - With the prevalence of online shopping, brick-and-mortar stores will continue to reposition themselves by offering consumers unique experiences that cannot be replicated online. With experiential retail, consumer engagement takes priority over sales, with things like Instagram-worthy elements driving consumer-created content, which further expands the retailer's reach on social media. Experiential retail allows brands to engage a consumer's five senses through enhanced shopping experiences, leading to stronger emotional connections to a brand and its products, resulting in increased brand loyalty and buying potential. Experiential retail can also help a retailer build community by offering in-store classes and events.
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