Over the past year, the retail sector has faced a number of difficulties, including overcoming the COVID-19 pandemic’s long-lasting effects (including the recent reopening of China’s borders), adjusting to inflation, and coping with supply and distribution problems brought on by the conflict in Ukraine. Retail players, including well-known names in luxury, have nevertheless benefited from the development of digitalization and technology as a result of these disruptions (and others) at play. This has helped to highlight a variety of opportunities, threats, and trends that will continue to emerge in 2023 and that deserve attention.
Pricing will be essential for retailers since 2023 will be a year where the cost-of-living problem will be felt most acutely. To make ends meet, there won’t be a shortage of shoppers looking for the greatest deal on practically every good. Retailers must determine whether to prioritise being a luxury or a commodity by balancing their profit margin versus keeping products inexpensive.
The majority of consumers have remained generally hesitant to pay more for sustainable items, despite growing consumer concern for the environment and calls for corporations to prioritise sustainability and environmental, social, and governance issues in their operations. Watch out for the growth in secondhand sales in 2023 as customers see the expanding resale market as an alternative method to be sustainable (especially in connection with the purchase of luxury products) while saving money given the economic unpredictability.
Customers will continue to be loyal to retailers they perceive as being approachable and having a pleasing user interface. Retailers have more chances this year to use data on consumer preferences, traits, interests, and purchase history to make product recommendations and marketing that are tailored to the individual user or customer. Additionally helpful for adjusting manufacturing, managing inventories, and cutting waste are these features.
Legislators and regulators are concurrently placing a high priority on consumer protection laws. For instance, the government of the United Kingdom is speeding up the implementation of the Digital Markets, Competition and Consumer Bill, which establishes new competition rules for online markets and the biggest online businesses. This bill is regarded as the most significant revision to UK competition and consumer protection laws in recent memory. Companies will therefore need to become conversant with the most important consumer reforms (and take note of the GPDR style fines). The Bill may be released in the first quarter of this year, passed by May 2023, and go into effect as early as this October 2023.
There was a huge emphasis on making as many purchases as possible during the epidemic, with customer acquisition at the top of the agenda, as the majority of shops accelerated their digital platforms. Since it is more cost-effective to promote to an existing client base than to try and recruit new consumers, merchants will focus on customer retention strategies in 2023.
Retailers will also speed up the move closer to home for manufacture and supply of raw materials in order to exercise greater control over their distribution as a result of the pandemic, U.S. sanctions, the Ukrainian crisis, and Brexit. Retailers want to simplify international trade so that they can benefit from more affordable storage options, quicker shipping times, and closer locations for their products.
Many of us have been spending money on subscriptions, from online streaming services to fitness apps, and in support of a greater trend of cutting back, are trying to cancel at least some of these services, frequently with difficulty. New legislation are anticipated to target contracts that could lock customers in for an extended period of time and those where information is buried in long terms and conditions.
Finally, changes to the legislation are being enacted this year to safeguard customers against phoney reviews. It is feared that too many of us are being duped into purchasing the newest novelty device or enrolling in the newest online craze based on phoney reviews that don’t accurately represent real customer experiences with a good or service.
