As 2023 draws to a close, Retail Insight Network examines this year’s top trends and the data underpinning them.
2023 has been an important year in the retail sector. Technological advancements, like the continued advancement of omnichannel sales, have changed how consumers interact with sellers, while global inflation and increased environmental consciousness have changed purchasing habits.
As the end of the year approaches, Retail Insight Network looks back at the top trends of 2023 and the data underpinning them.
The rapid inflation in Western economies this year is a trend that has shaped all sectors but retail more than most. The Russian invasion of Ukraine in 2022 sparked a chain reaction of supply issues and energy price hikes that cumulatively increased production costs, particularly in the food sector. This has continued to be passed on to consumers in 2023, leading to changes in spending habits.
A survey published earlier this year by AlixPartners suggests that 74% of respondents intended to dine out less often this year in response to rising costs. However, only 39% said that they intended to frequent less expensive restaurants, a marked change from the 2008 recession in which consumers tended to move to cheaper establishments rather than reducing the amount they went to restaurants.
Consumers have also chosen to reduce non-essential spend on other areas of retail. UK consumer spending in the sector only rose 2.6% year on year in October compared to the CPIH (an inflation index made up of a basket of goods including housing costs) inflation rate of 6.3%.
Notably, however, the growth in ‘specialist’ food and drink brands was higher than that of regular groceries, suggesting that there has been a similar trend seen in restaurants. People are trying to reduce costs by buying fewer nice things rather than the same amount of cheaper goods.
This may in part be due to the second major theme of this year, sustainability. Consumers and companies alike are increasingly conscious of the environmental impact of consumption, leading to the growth of the second-hand retail market. The ‘recommerce’ sector grew the UK economy by £7bn ($8.9bn) from October 2022 to October 2023, driven in particular by the Gen-Z demographic, which is reshaping the business world with its increased focus on social justice and sustainability.
Companies are reflecting this attitude internally, too. GlobalData analytics suggest that the most mentioned theme in retail corporate filings this year is environment followed closely by governance. Both were mentioned more than 40,000 times. Governance, while not directly related to sustainability, is important in ensuring both that companies are pursuing a robust decarbonisation strategy and are communicating that clearly to consumers.
GlobalData analysts expect ESG to remain a key theme for 2024, noting that, while pressures in 2023 have largely come from customers and employees, “other larger jurisdictions such as the EU are likely to adopt similar frameworks” to the German government’s Supply Chain Due Diligence Act. This requires large companies there to “find and eliminate environmental and human rights abuses at every stage of their supply chains”.
A third major theme for the sector this year has been the further development of omnichannel sales. Omnichannel refers to a marketing strategy that provides customers with a seamless transition between all sales channels, particularly emphasising the integration of online and in-store elements.
For some businesses, this means augmenting the in-person shopping experience with digital tools. UK footwear retailer Footasylum partnered with omnichannel specialist NewStore in August to bring its platform to Footasylum stores. This software is part focused on the sales team, allowing them to track inventory across all sites, send items between sites and maintain personal user profiles on a smartphone app.
For others, particularly Chinese retailers like fast fashion giant Shein, it means integrating sales opportunities within social media apps and other virtual experiences. China is the world’s largest e-commerce market, in part because of the prevalence of livestream shopping, which operates like a real-time interactive version of the shopping channels of old.
While this trend has grown rapidly since the start of the Covid-19 pandemic in 2020, it has continued to mature in 2023. GlobalData analysis shows that hirings for posts focused on contactless retail, future of work and ecommerce are up 26%, 15% and 13% year on year, respectively.
Source from Retail Insight Network
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