2023 is just around the corner and we want to give you a head start. That’s why we’ve talked with top retail influencers about what to expect in 2023 when it comes to retail and shopper marketing. Carol Spieckerman, Jeff Sward, and Mike Anthony share actionable insights that will help you prepare your 2023 strategy.
With Higher Prices, Shopper Behavior is Changing
As prices increase, shoppers tend to focus more on what they “need” instead of what they “want”. Is 2023 going to be the year of “savings”?
“It's tough to be optimistic about short-term consumer discretionary spending. Inflation in general, but especially energy and food, is taking a bigger bite out of monthly budgets. That has to impact discretionary spending on a whole range of products. And it comes at the most difficult time of the year. The luxury level may do just fine, but for most of us, it means pulling back. Higher than ideal inventories mean more promotions and deeper discounts, so customers might be emboldened to wait and buy at the last minute. Starting with the current holiday and continuing into 2023. "Need" will prevail over "want".”
Apart from focusing on saving more money, customers are also more concerned about what to purchase. Customer loyalty is decreasing as shoppers are comparing the best offers, instead of going for the products they know and love.
“The obvious answer is of course that shoppers will trade down – both in terms of considering cheaper brands/private label, but also in terms of retailers: we are already seeing private label share rising and discounter share rising too. But beyond this, there are many nuances that need to be considered. The most important fact is that shoppers are alerted to price changes, so are now actively checking and noticing prices in store. This means that a lot of the ‘automatic’ or subconscious shopping decisions that are typically made are now disrupted to some extent.
"This is really important. Shoppers that used to buy the same brand week in, week out, now pause momentarily and consider. They check the price. They might compare. This is a risk and an opportunity for every brand. That small disruption in automated shopping behavior creates an opportunity to encourage a shopper to consider your brand.
Beyond this, we need to remember that not all shoppers will trade down on everything. Shoppers will choose. Shoppers still need treats. People need to indulge. They still need convenience. It is imperative that brands understand the core benefits they bring to shoppers and make sure that their POS and packaging make this clear.
Lastly, your brand will lose some shoppers, so you need to look at how you gain other new shoppers. If some shoppers are trading out of your brand, what can you do to recruit new shoppers? Losing some shoppers in conditions like this is inevitable. We can minimize it, but we need to recruit too.”
Mike Anthony, Global CEO of Engage Ldt and author of The Shopper Marketing Revolution
While in some countries the inflation is beginning to ease, it seems that customers will still remain cautious in 2023 and pay more attention to discounts and promotions.
“Inflation is beginning to ease, though not on a global level just yet. In the meantime, retailers’ extreme discounting through the end of 2022 conditioned shoppers to expect low prices. It will be difficult for retailers to raise prices across the board yet multi-category retailers will have more room to move. These retailers can shift promotions to price-sensitive categories to drive online and in-store traffic. From there, impulse buys in more profitable categories can take off. Even if inflation diminishes, the memory of it may not fade right away. Consumers have learned to cut corners and budgeting habits will be ingrained for a while.”
In-store vs Online = More of a Blend
For many years this was a classic debate: What do shoppers prefer? Shopping in-store or online? Well, those times are gone because customers expect you to provide as many options as possible.
“Shoppers prefer both. There are very few exclusive online shoppers in any category. Shoppers will continue to blend. But they will search for deals more. Online delivery charges might be a barrier for some that are trying to save.”
Don’t focus all of your efforts on one channel because you will lose the most valuable shoppers. Try to integrate the digital experience with the physical one for a more complex, phygital experience.
“Both! Choice is the name of the game, though the march to digital that began during the pandemic won’t diminish. At this point, many retailers’ online businesses are quite mature so major increases in online spending are less likely. Brand ubiquity will be the standard as brands exercise all the available options including wholesale, owned retail, E-commerce, social commerce, and marketplace participation. Multi-channel shoppers are retailers’ best customers so paying attention to one channel at the expense of another just isn’t an option.”
Showrooming and webrooming are still going strong. Customers tend to make their research online and purchase in-store. However, for a few products that are more expensive, they might want to see the product in-store and purchase online in search of a better deal.
“It's interesting how many retailers are starting to levy some kind of charge for ecomm returns. "Free" returns are probably one of the most expensive aspects of ecomm for the retailer, and retailers are figuring out that free returns are simply not sustainable. I don't think that will give ecomm a big hit, but hopefully, it will make some customers think twice about over-ordering. Beyond that, I think it's about Knowns and Unknowns. Ordering known products from known brands is easy and doesn't risk returns or disappointment. Ordering Unknowns from Unknown brands is high risk on several levels. That makes the internet great for research and homework, but physical stores great for verification that the product really fills the bill.”
Once again, the combination of online and in-store seems to be the winning hand for retailers and consumer brands. Long gone are the days in which being present only in a physical store was enough.
Technologies that will elevate retail in 2023
Efficiency and a seamless end-to-end experience remain the most important factors for shoppers. That’s why brands and retailers are going to focus on acquiring technology that will make the shopper experience convenient.
“Difficult to pick one, but most of what I see is focused on efficiency. Given the pressure on retail margins, investments that drive efficiency will get the most support. Automated stock checking, self-checkout, and Amazon Go-style stores: they all reduce costs. Expect more apps to help shoppers find deals and bargains too.”
Apart from focusing on efficiency, retailers will also acquire technologies that engage shoppers in-store.
“I’m calling 2023 “the year of the store” since so many of the digital capabilities that have defined online shopping experiences will be unleashed in stores. Device launches from major technology platforms will drive a lot of the action. Here again, retailers have so many options that no two will take the same approach. As fun as it is to think about the consumer-facing possibilities, retailers will also increase investments in technologies that optimize store associate productivity and mitigate shrinkage, particularly theft-related losses.”
Offering a Better Customer Experience
Shoppers are becoming more and more demanding. If retailers and brands want to keep their loyal customers and attract new ones, then they should focus on offering a better customer experience.
“It becomes a question of how seamlessly the retailer or brand can make the whole process work between stores and ecomm. Whether it's BOPIS, BORIS, or some stores offering floor plans to navigate to a specific product (Home Depot). Phones are now extensions of the human hand. Retailers have to plan accordingly. My mantra is Explore + Experiment + Execution = Experience³. It's not simple math. It's Exponential. The customer wants to Explore and Experiment, and the retailer has to Execute with that in mind. Just offering stuff on racks and shelves doesn't cut it anymore. Storytelling...and the more interactive the better!
Another part of the experience is clarity of offering. Retailers tend to offer too much breadth in too little space, and a week after a floor set it all begins to break down. Especially when the next delivery comes in. Fewer choices with better presentation and storytelling would be good for customers and retailers alike.”
Offering a lot of options is no longer enough. Retailers need to be prepared to offer both high-touch and high-tech experiences, depending on their customers.
“Optimizing customer experience will become an even more complex proposition as some shoppers openly embrace technology and automation while others prefer interaction and people-powered help. For the near term, retailers will need to provide a full spectrum of experiences from high touch to high tech. In some cases, creating dedicated formats for these experiences will make more sense rather than attempting to cover every possibility within a single environment.”
However, nobody is reinventing the wheel and we shouldn’t forget about the basics.
“I don’t see much change here. Shoppers want a great price, a good range, and convenience. I think we’ll see the current trend for ready-to-eat extend: as restaurant food (from Deliveroo for example) becomes to feel too expensive, shoppers will want more ready-to-eat meals, served hot and ready to go. Delivering the convenience and quality of Deliveroo food at supermarket prices will be a fast-growing trend.”
Retail trends in 2023
What to expect in 2023? What are the trends that retailers and brands should keep an eye on? Let’s get some actionable insights from our experts.
“Priorities versus possibilities. The last few years have had retailers and brands focusing on what is possible. Now, with so many possibilities becoming a reality, defining priorities should be at the forefront. There are no templates to follow, and retailers no longer have to go it alone as a thriving ecosystem of third-party solution providers is connecting retailers to new capabilities. Retailers can carve out new paths but can’t do everything at once.”
Understanding the demand and good inventory forecasting will always be trendy! Shoppers don’t want to buy old inventory and that is also what we saw during the recent Black Friday 2022.
“Doing a better job of marrying demand planning with supply chain execution. Retailers keep erring on the side of overbuying, and the markdowns required to clear end-of-season residual inventory are massive. I always think it’s odd that so many retailers continue to overbuy after so many years of the same end-of-season outcome.”
Also, multichannel and omnichannel approaches are going strong in 2023. Shoppers want to be able to make a purchase on the channel they prefer.
"We will see the continuation of what I call shopper fragmentation: shoppers using more and more channels. This will be driven by bargain hunting predominantly."
How to increase awareness and sales in 2023?
Finally, we’ve asked our retail influencers for some pieces of advice to help brands and retailers increase awareness and sales in the next year.
“Again...clarity of offering. Too many choices confuse people. Brands and retailers tend to think "more" is the answer for growing sales. Sometimes it's less with better storytelling.”
First off, stick to the basics as Jeff Sward suggests. Offering a convenient and easy shopping experience is something that shoppers want.
“Shoppers are considering their decisions at the point of purchase more than ever as price disruption interrupts their shopping processes. Hard hitting simple-to-understand benefits, communicated at the point of sale will be critical.
Brands need to recognize that shoppers are shifting channels, and that means that different shoppers are going to show up in different places. Understanding which shoppers they are targeting, and where they can be influenced now will be critical to making the right strategic investments in shopper marketing.
Retailers need to balance their obsession with price and start delivering a better in-store experience that recognizes what shoppers want is more than just a ‘warehouse’ full of cheap stuff.”
A better in-store experience is extremely important if you want to attract the attention of customers in 2023.
“For both retailers and brands, 2023 will be all about platform partnerships and platform monetization. Brands used to rely heavily on retailers to connect with consumers. Now, brands have an exploding number of options from Ecommerce and social commerce to owned retail, shop-in-shops, marketplace partnerships, and the metaverse.
Brands will have to be realistic about whether platform building or tapping into others’ established physical and digital platforms makes more sense. Here again, brands will have to establish priorities and develop phased plans rather than attempting to be everywhere at once. Many of retailers’ most attractive growth options will fall outside of traditional product sales.
Solutions and services including healthcare, financial services, online marketplace expansion, and retail media/advertising will help mitigate product-based challenges and boost bottom lines.
Retail media networks will continue to expand, and the competition will heat up as retailers battle for ad dollars. It’s the ultimate example of platform monetization – in this case, monetizing retailers’ direct access to consumer data and selling that access to brands (and soon, non-retail entities).”
In 2023, we will see a focus on retail media networks. As these expand, platform partnerships and monetization are going to be something to keep an eye on in the next year.
2023 - A New Year Filled With Opportunities
The last two years have been extremely challenging for most industries, including retail. However, as we are going into the new normal after the pandemic, there are still challenges along the way. 2023 is all about turning these new challenges into opportunities for brands and retailers.
Thank you, Carol, Jeff, and Mike for all of the valuable insights that you’ve shared!