Earlier this year, we talked about our retail industry predictions for the year. In it, we posited that online shopping would ramp up while physical stores would need to provide unique experiences. We also talked about the importance of personalization and why an omnichannel presence is vital. Overall, the trends we saw showed an optimistic industry that continued to embrace and adapt to new technologies.
With 2023 nearly halfway done, we thought it would be a good time to check up on some of our predictions. We wanted to see where our predictions stood, and also include some additional insight into what factors contributed to their continued use and success.
The Enduring Growth of the Retail Industry
Despite a major slowdown in 2020, the retail industry continues to be an economic powerhouse. For instance, in our original predictions, we stated that the global ecommerce industry would be worth around $ 8.1 trillion by 2026. Latest analysis shows that estimate has not changed. According to the same report, the industry will be worth $ 6.9 trillion by the end of this year alone.
The Need for Customer Retention
Among our predictions, the rise of online shopping still remains the biggest driving factor. Because of this, the retail industry will be worth over $29 billion by 2025. However, this also opened up a new challenge when it came to customer retention. Retail companies need to look for ways to make one-time purchasers become returning customers. According to the APAC Retail Trends Consumer Report, convenience alone cannot drive retail purchases and customer retention.
This ties into our other prediction that retailers should consider an omnichannel presence “essential.” Particularly, their leverage of social media. According to the same APAC report, 60% of retailers had higher purchasing intent from consumers thanks to their strong presence on Instagram and TikTok. However, an omnichannel presence does not just mean having a strong foundation online. Retailers should also provide customers with unique in-store options and experiences that help turn them into return purchasers.
Personalization Remains A Major Factor
Owing to Gen Z’s said relationship with technology, personalization still remains a big factor to a retailer’s success in 2023. That is, consumers will continue to want experiences tailored to their interests when they purchase products. Whether that’s the aforementioned unique in-store experience or receiving personalized messages, retailers should continue to look into ways this can be presented. As we pointed out, engaging on an emotional level can help drive brand loyalty.
One approach retailers can do this is through their customer experience. By creating something that is uniquely “them” coupled with ease of access, retailers can engage with their customers on a deeper level that speaks directly to them.
Continued Focus on Transparency and Sustainability
As people become more socially conscious, so will their purchasing choices. They are more likely to purchase from companies that make positive, environmentally sound decisions. This even goes right down to the sustainable packaging of products. According to a report from McKinsey, higher-income shoppers are willing to pay more for a product, provided they are sustainable. Consumers want to continue supporting brands that align with their values and continue to make a positive impact.
Of course, this should not just be all lip service. There needs to also be transparency in their promise to be more sustainable. The need for retailers to be transparent is key for some customers. Remember that consumers are able to share their feedback in real time not just with the company, but with other shoppers as well. This includes negative experiences or “calling out” if a brand misrepresents itself as having sustainable options. Additionally, consumers want more shipping transparency as well. In 2022, FedEx released a report that stated 70% of consumers would do less business with retailers that do not inform them of shipping delays.
The Gen Z Influence
In the revisit of our predictions, we saw a common factor found in each of them. Much of the positive outlooks in retail revolved around Gen Z’s interests, intertwined with their relationship with technology. As the first generation to have constant online access and social media, Gen Z is no doubt shaping the trends of what’s in. Reports say that 98% of Gen Z’ers own a smartphone, giving them immediate access to any online space they want to visit.
When looking back at our retail industry predictions, the imprint of Gen Z shoppers showed retailers where the industry is heading. Particularly with the role of technology. The rise of influencers helps drive engagement to businesses or products that feel like they are being directly advertised to. In 2023, it is estimated that TikTok alone will generate up to 10 million social buyers. This level of personalization drums up more sales and potential buyers in retail. They are also allowed a new level of access to brands not seen before. This opens up new avenues of scrutiny and feedback for retailers. If they want to advocate for transparency and sustainability in their business, this is something they need to be aware of.
Beyond Our Retail Industry Predictions
Earlier we cited the APAC report that stated providing convenience alone cannot help drive more consumers. Indeed, when it comes to today’s shopping experience, people want something more nuanced that directly speaks to them. As these predictions have shown, it also boils down to omnichannel offerings, a strong social media presence, and sustainability.
Technology and people’s relationship with it will continue to drive the retail industry for years to come. We’ve certainly seen shifts in what consumers want in their shopping experience, whether in-person or online. In order to remain competitive and ahead of the curve, companies need to look at where the industry is heading towards. They should also adapt to consumer interests and not be afraid to take risks with emerging technologies.