To say the state of the world’s economy is troublesome to consumers would be an understatement. Inflation is affecting the US economy as fears of a recession persist. Credit card rates are being pushed higher due to increased interest rates.
A looming winter energy crisis is threatening the European economy. In the meantime, the US dollar is not going as far as it used to, and consumers are feeling the pinch of rising prices of just about everything. The Federal Reserve is however keen to keep a tight lid on inflation, as it impinges of the world economy in more ways than just oil, than ever before.
In response to increased pressure on household budgets, many consumers are tightening their belts in ways similar to the first months of the pandemic. In this case, a shift toward financial security is resulting in more restricted spending. Consumers are splurging less and spending more on basic essentials and necessities like utilities and groceries.
Economic uncertainty and shifting consumer behaviour will undoubtedly shape retail and ecommerce trends for 2023 and beyond. These trends include consumer desire for convenience, saving money and the flexibility to buy when, where and how they want. If some of these trends seem familiar, it is because many of them originated in the pandemic-driven rise of ecommerce in 2020.
Here are a few trends consumers and retailers can expect to see in the coming year.
Consumers will be more selective
Not surprisingly, selective shopping will be popular with consumers impacted by economic downturns. Customers will combat inflation by being more choosy in their shopping and buying habits.
Shoppers across all economic sectors are already seeking out discounts and promotions, buying lower-quality items and shopping at discount or outlet stores. In November, Walmart reported sales growth due in part, the company said, to wealthier customers switching to the discount retailer for grocery shopping. There again Walmart are not exactly high-end to start with. Consumers are also relying on deeper research to make more informed purchases.
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While consumers may try to maintain a certain level of purchasing and ride out any potential recession by using any savings they have as well as consumer lines of credit, European and U.K. shoppers may have no choice but to cut back more severely. A looming energy crisis that threatens to send heating prices sky high may force households to trim discretionary spending, if not cut it out altogether.
These trends will most likely affect consumer shopping behaviour throughout 2023.
Focus on personalisation delineates success
Finally appreciation of the effect personalisation has on the consumer has got traction, as the rank and file of ecommerce retailers take it to heart. Once the exclusive privilege of enterprise retailers, their standing start into meteoric heights has awoken an appreciation among the SMEs as profits arrive.
When research houses Forrester, Bain, McKinsey and Statista all agree that personalisation delivers 20x the return of all other types of marketing combines, it’s time to take notice, and do something about it. Predictive personalisation software (PPS) being the greatest case in point.
This autonomous software watches buying history, impressions and navigation, employing predictive analytics to identify what products are most likely to be bought next, for each individual consumer. Marketers still segmenting take note, while your doing that someone else is treating your customers to what they want.
PPS wraps unique personal product selections up in a unique email for each consumer, which lands unopposed in the respective email inbox. Timing is perfectly calculated to when it will achieve the greatest effect.
To those not using PPS, this is exactly when when it will achieve the most damage to you. It grabs meteoric increases in AOV and naturally CLV, smashing holes in RoR and to those using it – loyalty, to those without – churn.
Personalisation is not segmentation, neither is it using customers name when appropriate. PPS is learning to appreciate each individual customer’s desires, wants and needs, and when they want it. It is delivering on that expectation.
Increased unified and omnichannel experiences
Ecommerce experts predict omnichannel marketing and unified shopping experiences will be one of 2023’s hottest consumer trends. That’s no surprise, given the steady growth of omnichannel strategies in the past few years. Nearly 90% of consumers now expect brands to offer omnichannel experiences across their preferred online and in-store channels and touchpoints.
Catering to consumer demands can pay off for brands in 2023 and the future. Companies that offer robust omnichannel experiences can see a 20% boost in total revenue. Brands using at least three channels in their retail strategies see a 287% higher purchase ratethan single-channel brands.
Not only does unified commerce improve the customer experience by offering seamless interaction with brands, but by having a single source of truth by way of a centralised CMS, brands can collect and own valuable data that enables further personalisation that drives loyalty and average customer LTV.
BNPL: Buy now pay later will continue to grow
As money gets tighter, cash-strapped consumers are looking for flexible payment options. The popular “buy now, pay later” (BNPL) payment option fits that bill nicely. BNPL lets customers pay for purchases in instalments, with no additional charges and no interest fee.
Today, BNPL is one of the top online payment methods worldwide. In fact, consumers are increasingly choosing BNPL over credit cards to avoid steep interest rates. As financial uncertainty grows, so does the number of BNPL users. Approximately 59.3 million shoppers used BNPL in 2022; a figure projected to climb to 88.2 million in 2023. Consumers made USD$179 billion in BNPL purchases in 2022.
AI-empowered voice shopping
Voice search has become one of the most popular ways to shop online. According to a recent survey, 57% of consumers use personal voice assistants like Apple’s Siri and Amazon’s Alexa daily. Smart speakers are also becoming more popular, with 35% of the U.S. population owning one in 2022.
Ecommerce will continue to leverage this trend by creating intuitive and hands-free voice-enabled shopping experiences. With voice assistance, shoppers can easily find and buy what they want without combing through multiple web sites. Ease of use and convenience make voice-enabled shopping one of 2023’s most reliable retail trends.
Social commerce will gain bigger following
Social commerce is an increasingly popular retail trend where customers can search for products and purchase directly from social media platforms. This retail strategy continues to grow enormously, and there’s little wonder why. A staggering 4.59 billion people currently use social media, a figure that will grow to 4.89 billion in 2023.
With numbers like these, it makes sense that ecommerce brands would seek to capitalise on the enormous potential of social commerce. According to market predictions, social commerce revenue will hit USD$50 billion in 2023 and reach nearly USD$80 billion by 2025. More than 80 million shoppers used social commerce in 2022; by 2023, that figure will grow to 100 million.
Even the best financial analysts cannot predict how long economic uncertainties will last. Unfortunately, things could get worse before they get better, however with the right tools ecommerce should be relatively unbreakable. Projections indicate inflation will ease in 2023, even as the threat of recession grows.
As a result, consumers will continue to spend in conservative and budget-conscious ways. To counter consumers’ hesitation to spend, ecommerce brands and retailers will likely offer attractive bargains and promotions. Luring shoppers into spending on products, personal selected them, might just become one of 2023’s biggest retail trends.