Best Retail Trends will be discussed in this article. This is a list of the most important retail trends in 2023. In this guide, we’ll outline how consumer behavior, technology and supply chains are impacting retail. So whether you’re a mom-and-pop shop or a big box retailer, these are the top retail trends to know.
Top 11 Best Retail Trends In 2023
In this article, you can know about Retail Trends here are the details below;
1. Expanding Options For Friction-Free Retail
In today’s marketplace, any type of friction in the customer experience can lead to a lost sale. In fact, according to a PwC report, more than 40% of consumers say they’ll pay more for a product if they can get it quickly and conveniently.
That’s why more and more retailers are focused on providing friction-free retail experiences for their customers. Self-checkout, autonomous checkout, expanded payment options, and real-time inventory updates are just a few solutions that are trending now. Nearly 50% of American consumers say they use self-checkout nearly all the time when shopping. Another 30% say they use self-checkout about half the time. Self-Service-Checkouts-min.webpNearly 80% of Americans use self-checkout at least half the time. The market for self-checkout systems was worth $3.44 billion in 2021 and is predicted to increase at a CAGR of 13.3% between 2022 & 2030.
Autonomous checkout, also called checkout-less, is another way retailers are attempting to provide a smooth experience for customers. PwC’s report shows the number of checkout-less retail stores around the world will rise to more than 12,000 by 2027. That’s a 91% increase over 2021. Amazon’s Just Walk Out technology debuted in 2016 and the company is finally expanding its reach. For example, the technology was installed in a Hudson Nonstop store at Dallas Love Field Airport in 2021, and it was installed in the first non-Amazon grocery store in late 2022. Also check Digital Payments
Standard AI offers another autonomous retail platform. Unlike Amazon, their platform doesn’t rely on shelf sensors but exclusively uses cameras. This means it can easily be installed in existing stores within a few weeks. According to Raison Asset Management, Standard AI’s estimated annual revenue currently sits at $17.3 million and the company plans to be operational in 50,000 stores by 2028. In addition, the company took over an Italian checkout technology company in 2020 and recently acquired Skip, a self-checkout services provider.
With nearly 8 in 10 consumers expecting their real income to fall in 2023, retailers are also expanding their payment options across online and in-store channels.Proximity mobile payments have been gaining popularity among consumers in recent years and Business Insider predicts that 50% of U.S. smartphone users will make a purchase using this method by 2025. Adoption of Buy Now, Pay Later (BNPL) continues to grow, as well. According to the a Consumer Financial Protection Bureau survey of five popular providers, the number of BNPL loans grew nearly 1,000% between 2019 and 2021. In addition, the amount of the loans grew by nearly 1,100%. Klarna reported a 71% increase in users in 2021 and, in 2022, increased their number of retail partnerships to 450,000.
2. Social Platforms Drive Billions In Retail Sales
According to a 2022 survey from Square and Wakefield Research, more than 90% of retailers are now selling on social media. Accenture predicts retailers will continue to invest in social commerce opportunities, driving global social commerce sales to $1.2 trillion by 2025, nearly tripling 2021 levels.
Accenture expects to see apparel, electronics, and groceries drive the social commerce trend forward in the coming years. Because of the ability to increase engagement and hyper-target customers, McKinsey says this retail channel has the potential to be the best selling channel for all types of retailers. This trend is especially prevalent in younger generations. Deloitte reported that 60% of Gen Z and 56% of millennials planned to do at least some of their holiday shopping on social media during the 2022 season. Overall, 63% of shoppers say they purchased something through social media in 2022—a 5% increase from 2021. That’s according to a survey from Wunderman Thompson.
The survey also shows that Facebook & Instagram hold the top spots when it comes to social commerce platforms in the United States—33% of consumers are most likely to purchase from Facebook and 24% are most likely to purchase from Instagram. Social-Commerce-Report-min.webpIn the U.S., Facebook and Instagram have a solid hold as the top social media platforms for retail sales. However, recent announcements from Instagram and Facebook show they’re scaling back shopping features and devoting more focus to advertising. This gives other apps a chance to jump into the social commerce scene, and WeChat seems ready to do just that. It’s the largest social media app in China and users spend an average of two hours per day on the platform. The app posted $250 billion in transactions via its mini programs in 2021.
3. Economic Uncertainty Impacts Supply Chains
Although retailers are out of crisis mode when it comes to managing supply chains, there are still significant challenges ahead. The stress on the U.S. supply chain has eased since the pandemic, but logistics experts say 2023 will be a year of rebalancing. One big uncertainty is consumer demand. While inflation blasted consumers throughout 2022, core PCE inflation was down .3% month-over-month in December 2022. That number marked the slowest rate of increase since October 2021.
Still, consumer spending didn’t increase. In fact, it declined .2%. Decreasing consumer demand could result in another surplus of inventory much like the one many retailers faced in 2022.Large retail corporations like Nike reported big increases in inventory. Nike shares fell 10% in September 2022 after the company announced North American inventory was up 65% year-over-year. Company officials blamed the surplus on backorders finally arriving and holiday orders arriving early. Supply chain experts say inventory surpluses and uncertain consumer demand are two of the reasons why retailers are turning away from air freight in droves. During the pandemic, air freight was one way retailers could get around supply chain issues.
But it resulted in huge costs. The Children’s Place reportedly spent $30 million on air freight in the fourth quarter of 2022. The company cited that number as a major reason why their net losses totaled between $52 million to $57 million in the final quarter of the year. The Children’s Place are reporting increased costs related to supply chain issues. In late 2022, retail air freight was down 90% year-over-year. This means retailers are moving back to ocean shipping, which took a huge hit during the pandemic due to reliability concerns, but even demand for that is low right now.
West Coast demand dropped 17%-20% in the last quarter of 2022. The good news is that port congestion has eased. Up to 10% of the global ocean freight carriers were blocked at one point, but nearly all of that has been released. Ocean shipping rates are declining, as well. In January 2023, spot rates were 80% lower than in September 2021. One trend that may be helpful to retailers suffering from supply chain woes is nearshoring.
In late 2022, Deloitte reported that 62% of surveyed manufacturers said they’d started nearshoring production. That equates to a 25% increase over 2021. Mexico is where many of these nearshoring solutions are headed. Labor rates in Mexico are similar to those in China, and goods can easily be transported to the U.S. via rail and road. In the first part of 2022, the Mexican state of Baja California saw investments from 55 companies that totaled $1.22 billion. In late 2022, Mexico’s economy minister said the country has discussed nearshoring interest with more than 400 North American companies.
4. Consumer Demand For Same-Day Delivery Rises
Speedy shipping continues to be a top priority for retail consumers. Same-day delivery is moving from a nice-to-have feature to a must-have feature for online retailers. The 2022 State of Shipping report from X Delivery showed that 56% of all abandoned carts are caused by issues with shipping. One of the shipping issues that bothers consumers most is the speed of delivery. According to survey results from FedEx, nearly 70% of consumers say this factors into their purchase decisions.
X Delivery’s report showed that 90% of consumers want their products to arrive in fewer than five business days. Nearly 40% of consumers want their delivery in less than two days. Amazon and other large retailers are seeing soaring demand for their same-day delivery programs. More than ⅔ of U.S. households subscribe to Prime. That accounts for more than half the population. And, these Prime members spend 4x the amount of non-Prime members. When considering consumers purchasing from web-only retailers, the number of consumers using same-day delivery increased 12% between 2020 and 2021. The percentage of consumers (shopping with web-only retailers) who use same-day delivery has increased to 36%.
The 2022 Bringg Barometer: State of Retail Delivery & Fulfillment surveyed 500 retailers from across the globe and found that nearly 100% of respondents plan to have same-day delivery in place within the next three years. Only 35% of them have this offering now. A survey from the Retail Industry Leaders Association echoes that sentiment. They report that 80% of retailers will increase their spending on e-commerce fulfillment in the coming year. Some retailers are opting to outsource same-day delivery. Roadie, a UPS offshoot, is a crowdsourced delivery service that covers 20,000 zip codes across the United States. The sports merchandise retailer Fanatics launched a partnership with Roadie in late 2022. Same-day delivery of their products is currently available in Atlanta, Boston, Chicago, Dallas, Las Vegas, St. Louis, and Jacksonville, with plans to add more cities in the coming months.
5. Automation Eases The Pain Of Labor Shortages
Estimates show that 85 million jobs may be unfilled in 2030 due to labor shortages. Many of those jobs are in the retail sector. The quit rate in the retail industry sat at 4% in the fall of 2022 according to the U.S. Chamber of Commerce. The national average is just 2.7%. In early 2022, the demand for part-time employees ramped up 13% in just one month. That included a 963% increase in sales associates positions and a 3,168% increase in pickup and delivery driver positions. Leaked internal research from Amazon shows just how fast this trend is progressing. The company report said Amazon could run out of warehouse workers by 2024.
Many retailers are increasing compensation and enhancing benefits in order to attract talent. However, some retailers are taking a tech-oriented approach. As discussed earlier, self-checkout and autonomous checkout are one option. Automation in the warehouse is another solution. Walmart has started using AI-powered software and automated bots in their fulfillment centers. Also check Hacks To Go Viral On TikTok For Businesses
Walgreens is using robots to fill prescriptions in 22 facilities across the country and hopes that these bots will fill half of all the company’s orders by 2025.The robots can fill 300 prescriptions per hour. In a store with human pharmacists, that would take an entire day. Even cleaning the floors of a retail store can be automated.Brain Corp offers robotic floor scrubbers and vacuums for retail, grocery, airports, and more. These robots also scan inventory levels as they traverse the stores. The company has deployed 26,000 robots so far including many in Sam’s Club stores.
6. Brands Launch Fashion Resale Marketplaces
Financial woes and sustainability concerns are leading many retail consumers to shop resale marketplaces more frequently than ever before. The founder of Recurate, a platform that helps brands build their own resale marketplaces, says that the resale market is growing 11x faster than regular retail. Between 2020 and 2021, there was a 275% increase in brands with their own resale shops. Many brands see this as a win-win. They’re still promoting their products, but they’re showing a dedication to sustainability at the same time. In fact, Recurate reports these types of marketplaces can result in a 65% increase in customer engagement and a 50% increase in new customer acquisition without offering any new products. The company is already working with brands like Frye, Michael Kors, and Steve Madden. Lululemon, an athletic apparel company that’s always had an eye on sustainability, recently launched their own resale platform called “Like New.” The concept was first tested in 80 stores in Texas and California in 2021, but is now available across the United States.
7. Pop Up Stores Tap Into A Unique Retail Environment
During the pandemic, nearly all shoppers went online. And brands adjusted accordingly. But now, as retailers adjust to a post-pandemic world, they’re bringing back a different kind of physical shopping experience: pop-up shops. This trend was popular in the years following the Great Recession, and it’s making a comeback now. A Shopify survey recently found that nearly 1/3rd of brands said they’ll be “establishing or expanding their use of pop-up and in-person experiences in the next year”.
One retail expert put it bluntly: “Pop-ups are going to become a marketing necessity in the future”. These pop-up shops give brands a physical presence without a 100% commitment. The spaces are usually temporary and only display a portion of the brand’s product offerings. Retail pop-ups also allow brands to take their products directly to consumers in a way that feels new and exclusive while creating a sense of urgency among consumers. Wilson Sporting Goods is one brand that’s taking advantage of this trend.
The company opened a pop-up store and tennis museum in New York City during the summer of 2021, leading up to the US Open. This pop-up was part of a broad consumer-oriented strategy at Wilson. The brand opened its very first store in Chicago just a month prior to its pop-up in NYC. The brand offered exclusive equipment and apparel at the store, as well as racket customization services. Turning to the retail fashion space, ThredUp is an online-only brand that recently partnered with Madewell to create a physical presence for shoppers. Since ThredUp is an online consignment shop it made perfect sense for the company to partner with Madewell’s concept for recycling their jeans, Madewell Forever.
The ThredUp and Madewell Forever pop-up in Brooklyn is the first to not offer a single piece of new clothing. It’s filled with second-hand Madewell clothing sourced via ThredUp. Keeping in line with the exclusive feeling of this trend, the store was only open for one month. Even luxury fashion brands are hosting pop-ups. In the summer of 2021, Dolce & Gabbana released The Sicilian Cart traveling pop-up shop in the Hamptons.
The shop was an intricately decorated Airstream that was meant to evoke the relaxed, but luxurious, beach vibes of the Mediterranean island. It sold an extremely limited number of summer items and only stuck around for one month. Another clothing brand, Todd Snyder New York, also recently set up pop-ups in the Hamptons and reported that 50% of the customers he saw were first-timers. The pop-ups enabled the brand to engage current customers, draw in new shoppers, and test the retail market all with one marketing strategy.
8. Hyper-Personalized Customer Experiences Become The Norm
A survey from mid-2020 reported that 96% of customers will leave a brand if they receive bad customer service. On the flip side, 62% of people are willing to pay for good customer service. In just the past few years, the bar for “good customer service” has been raised higher and higher. Today, shoppers expect retail brands to give them what they want exactly when they want it. This boils down to understanding and predicting the customers’ wants and needs. In a word, it’s hyper-personalization: using data, AI, and marketing automation to create targeted experiences for customers. Retailers are currently investing only 0.7% of their revenue on personalization, on average. But, the best-in-class retailers are investing more right now, about 0.9%, and expect to increase the amount by 30% in the next three years.
An analysis from Epsilon reported that shoppers reliably respond to hyper-personalization, driving revenue for brands that implement the strategy. The data showed that 80% of retail customers are more likely to make a purchase if the company offers personalized experiences and 90% of people find this personalization appealing. Skimping on personalization may be devastating for brands in the near future. Nearly 40% of customers may walk away from a brand due to poor personalization efforts. What types of personalization grab shoppers’ attention? Product recommendations based on their previous history and on their interests. Sephora, the international beauty-products retailer, is hitting its customers with both types of personalization.
When joining the retailer’s loyalty program, shoppers fill out an online profile. Then, they receive customized recommendations based on their responses. In-store associates can also access shoppers’ profiles and make personalized recommendations. After that, the history and interests of Sephora customers are constantly tracked and hyper-personalization automation takes over. In-store associates record the samples they try. Makeup artists record the products they use on customers. The app records the products the customer tries on digitally. These products are then marketed through a variety of channels. Sephora’s efforts are clearly best-in-class. For the past four years, the company has been one of the highest-rated companies in the Retail Personalization Index released by Sailthru.
9. Consumers Demand Ethical, Sustainable Practices
In 2022 and beyond, we expect customers will be taking more interest in the values and responsibilities of companies. In particular, customers are interested in the environmental impacts and ethical practices of companies. Google searches for “ethical brands” increased 300% between 2019 and 2020. Sustainability, environmental responsibility, and recycling are brand attributes that nearly 50% of consumers say are very important. These consumers are using their wallets to make their voices heard.
Forrester reported that one-third of US consumers say their concerns about climate change impact their purchase decisions. Two out of five say they prefer to buy environmentally sustainable products. In the coming years, experts predict companies are going to be implementing serious measures to lessen their environmental impact. According to one consulting firm, nearly 80% of investors say sustainability is more important than it was just five years ago. For instance, by 2025, IDC anticipates that 75% of traders will make changes in their supply chains to improve carbon emissions & environmental aspects. IDC says this will result in a 45% growth in customer loyalty. Ingka Group, a holding company that controls the majority of IKEA stores, recently made a sizable pledge to sustainable forestry.
The company purchased more than 10,000 acres of forestland in southeast Georgia. They have agreed to legally binding requirements for the management of the land: protecting the land from fragmentation, restoring the longleaf pine, and defending the habitat of the gopher tortoise. Starbucks is another well-known establishment that’s accelerating its pledge to the environment. In 2018, the company started the “Greener Store Framework.” The goal is to reduce carbon emissions, water usage, and waste produced in their stores. There are currently 2,300 Greener Stores in North America and the company plans to create another 10,000 Greener Stores across the globe by 2025. Even the retail giant Amazon has signed on to participate in The Climate Pledge. The company says they’re working toward achieving net-zero annual carbon emissions by 2040.
Still, they have a long way to go, especially when it comes to packaging waste. A report from Oceana estimated that Amazon produces more than 465 million pounds of packaging waste in just one year. Environmentally-oriented companies are coming up with packaging alternatives for Amazon and other e commerce businesses. Lumi, a Los Angeles-based packaging and supply chain company, sells cornstarch foam as an alternative to styrofoam. Mushroom packaging is another renewable material that’s being suggested as an alternative shipping material.
10. Livestream Shopping Goes Mainstream
Livestream shopping is a dynamic retail experience based on engagement and community. Typically, an influencer or celebrity will go live to review and discuss a product while customers ask questions or make comments. The trend has already seen incredible success in China. There, the industry has reached $66 billion and accounts for more than 20% of the country’s total online sales. In 2019, America’s livestream market only accounted for $1 billion in sales. However, the trend is expected to take off in the United States in the coming months, reaching $25 billion market value in the next year and climbing from there. The research firm McKinsey predicts that live-commerce sales could make up 20% of all e-commerce by 2026. With the market surging, livestream shopping platforms are exploding in popularity. One company, NTWRK, offers an app that streams live shopping events with exclusive products backed by celebrities.
The company recently partnered with Snapchat for an exclusive release of a money counter from a celebrity jeweler. The live shopping episode sold $100,000 worth of products and brought in 4,300 subscribers in the first 24 hours. While the fashion and beauty industries are the most popular when it comes to livestream shopping, other retailers are picking up on the trend, too.
Coresight Research conducted a survey that showed more than 40% of potential customers watch livestreams regarding home products and more than 37% watch live shopping events for electronics. The Home Depot is just one example. The home improvement retailer hosted in-person workshops pre-pandemic. In 2020, they turned these experiences digital and launched live streams on their website. Before the pandemic, The Home Depot hosted five in-store events per month. With livestreams, they are engaging with customers over the course of 40 shows per month. Quivr, a specialized coffee and tea retailer, livestreams on the Amazon Live platform. The owner started in 2020 with just 50 viewers on his first live event. Now, he reports that it’s “guaranteed” that his sales increase by 150% in the 24 hours following a live streaming event.
11. Private Labels Drive Record Revenue
Far from the low-quality generics of years past, private labels and store brands are poised to move to the forefront of retail sales in the coming years. In the consumer packaged goods sector, private label products are outpacing the sale of branded alternatives by 3x. One report showed that 25% of products sold carry the retailer’s own brand.
In 2021, sales of private label products were up nearly $2 billion over 2020. Altogether, more than $199 billion in private label goods were sold in 2021— an all-time record. Costco’s private label, Kirkland Signature, is valued at $75 billion. The brand drives $39 billion in profit annually. Private labels at Kroger drove $26.2 billion in sales in 2020. Their brand, Simple Truth, grew 18% during the year and brought in $3 billion — the highest amount ever for the brand. In the grocery sector, the private label products seeing the most sales growth are varied. The top three are frozen baby food, refrigerated ham, and shelf-stable egg substitutes. With 45 private labels, Target is just one example of a retailer that’s continually working to improve their customers’ perception of store-owned brands.
Target has leaned into their cheap-chic perception and developed brands that offer everything from premium luggage to value-priced home organization pieces. In all, Target boasts 10 private labels that surpass $1 billion in revenue. Dick’s Sporting Goods continues to release new private labels in the retail sector, as well. The brand released a men’s apparel line, VRST, in early 2021 and brought NFL wide receiver DeVonta Smith on board to be the face of the brand. Carrie Underwood has been the face of its brand of women’s apparel, CALIA, which now ranks as the second most-popular women’s apparel brand in its stores.
Conclusion
That’s it for this report on the top retail trends of 2023. Retail was impacted by COVID-19 perhaps more than any other space. While retailers took a hit during the pandemic, brick-and-mortar is still far ahead of e-commerce in terms of total sales. This means that we should see more innovations in the retail landscape moving forward.
