Today’s consumers have shifting shopping behaviors and expectations. Social and technological changes impact the way people browse, buy, and stick to a brand. And that poses a problem for businesses planning to explore changing trends in the retail industry.
With custom eCommerce development, you can have a unique online store, switch on social channels, and eventually be on the same page with the rest of the industry. Consumers expect that as they prefer to shop online more and more.
The times when retail purchases went through physical stores have gone forever. The same applies to the way customers order products through online stores. Back then, they would expect their purchases to arrive in a couple of days and be satisfied.
Retail consumers make purchases in different channels and order same-day delivery with a button click. This has become an established part of practically any eCommerce business.
Digital technology enables rapid innovations and welcomes new concepts amidst shifting consumer demands. As a result, retailers need some strategic decisions about what to focus on shortly not to lose ground. So let’s look at the most critical trends in the retail industry in 2023. But first, let’s start with revealing insights about the current state of the retail market.
Total retail sales have generated $27 trillion of revenue so far, as reported by Statista. Physical retail stores remain the primary spending channel, exceeding $19 trillion in 2022. Retail eCommerce sales, in return, are expected to cross the $5 trillion mark, according to the data provided by eMarketer.
Statista and eMarketer experts predict total retail sales to hit $25 to $30 trillion by 2024. Despite slowing growth rate projections, online retail purchases are forecast to surpass $7 trillion by 2025.
Online sales continue to accelerate, and the gap between brick-and-mortar and eCommerce retail stores is set to decrease in the coming years. Growing digitalization, the advent of 5G, and surging mobile usage contribute to the steady growth of eCommerce stores.
Regional insights reveal that digital spending remains disproportionate. For example, China is home to half of all eCommerce sales, while the US market generates only 19% of total eCommerce revenue. Still, US eCommerce customers have spent $5.300 on average on goods and services online, as stated by another eMarketer report.
A takeaway from this data is that the retail sector will likely remain a territory with a favorable growth scenario. As a result, both online and offline retailers can be ready to open new avenues for business growth in the coming years.
In the age of GDPR and CCPA, inconsistent data protection policies, improper distribution of duties, and careless attitudes to received information can become roadblocks to any business. Therefore, like all other companies, retail and eCommerce companies must pay special attention to data protection and regulation policies and procedures.
Online and brick-and-mortar retailers deal with tons of sensitive information about their customers every day and can’t afford to put it at risk of exposure. However, missteps and flaws can lead to fines, a damaged reputation, and other consequences.
Data collection and processing are complicated for retailers as they must deal with different aspects of subject data rights. In addition, they need to maintain sales and marketing systems at scale, respond to data breaches, record consent, manage data retention and many other data-related activities.
Many countries have already provided responses to address the concerns related to data protection and maintenance. For example, China, Brazil, and Canada have introduced laws similar to GDPR governing personal information collection and handling.
Therefore, in 2023 retailers will have to deal with stricter data protection mechanisms in most countries worldwide. In addition, they must be on the lookout for new countries planning to introduce local data protection acts.
One of the key consumer trends in retail is the growing focus on the questions of sustainability, morals, and ethics. As a result, more and more people have become concerned with how a retailer handles environmental issues and what it does to reduce the carbon footprint on the planet.
For example, a Wunderman Thompson Future Shopper report has found evidence that consumer demands have shifted towards environmentally-friendly commercial practices. More than half of consumers say they would buy from a brand that goes beyond just promoting and selling products. Another 60% of respondents would stick to a retailer that strives to reduce waste and energy consumption.
Rather than seeing it as an obstacle, retailers can embrace the potential that lies in sustainability and turn it into their competitive advantage. Companies that adapt to sustainability trends in retail can increase trust and loyalty with their clients while often also reconsidering their operations and processes.
Any online retailer has to go through specific actions before delivering a physical product to a consumer’s door. It has to manage the supply chain, consider logistical issues, and return certain items without disruptions.
This traditional order fulfillment flow has been there for a while. Yet, modern technology has reinvented the way we browse and acquire things.
One of the newest trends in retail in this regard is a novice concept of the Direct-to-Avatar business model brought by the proliferation of Web 3.0 technologies like blockchain, metaverse, and extended reality. However, in the most common sense, DTA is about selling virtualized products to avatar owners without dealing with supply and logistical chains.
Digital wardrobes, fashion collections, and virtual physical products like Gucci’s sneakers are gradually entering consumers’ screens. People are starting to see the value in digital items with the rise of NFTs, in-game avatars, and clothes. Retail brands must be in tune with consumer expectations to take advantage of opportunities there.
Suppose you drop by a nearby retail counter, and nobody greets you or suggests the right product fits your demands. When there is no assistant to help shoppers with arising questions, the chances of getting paying customers can significantly reduce.
The same applies to online consumers visiting your retail store. As users have gotten used to omnichannel shopping experiences, providing excellent customer service with conversational commerce and chat commerce is necessary.
One of the most prominent technology trends in retail in 2023 is a tight intersection between chat and shopping. That is a continued dialogue between a retailer and a potential customer via live chat, chatbots, messaging apps, or voice assistants.
WeChat, Tencent’s messaging platform, will have a pool of 1.31 billion monthly active users in 2022, according to Statista. Brands have already recognized the potential for their growth by interacting with WeChat users and building meaningful connections there. So far, $26,550 in annual consumer spending indicates that these efforts have been quite successful.
Retailers are expected to use private messaging platforms to reach their business goals. Some of them include the following:
Gen Alpha refers to the generation of people born between 2010 and 2025. According to recent estimates, this consumer group will likely comprise approximately 2.5 billion members on the entire planet. For retail, this can become one of the most significant shares of future customers.
Generation Alpha is the first generation of digital-native, self-educated, and aware shoppers who consider retail and technology tightly knit. Even though most of this group's shoppers still need to be eligible to make their purchases, they can already shape the following big things in Retail.
One of the new trends in retail is the focus on rethinking how brands and marketers reach and engage a new wave of consumers. Insights from industry-leading researchers have revealed Generation Alpha's influence in retail, particularly in driving new ethics and practices.
For example, another Wunderman Thompson report mentions how Gen Alpha can shape the future of retail. One of the top retail trends in the US and Western Europe is genderless shopping, which encourages brands to develop and include gender-neutral product categories. Inclusive aisles and sustainable play are also on the retail trending list.
The above trends point to the change of mindset of the new generation of consumers. They are raised on screens and grow up in an environment where they can perceive and act upon real-world concerns. And it is up to retailers not to miss opportunities to connect and engage a new wave of future consumers.
One of the newest trends in eСommerce in retail is the rollout of interactive digital twins of physical stores. Big names like Lowe’s, Kroger, and Burberry are currently exploring the concept of digital twinning to promote their products and collections and test new use cases.
For example, instead of setting up showrooms in remote locations, brands can create digital twins and invite customers to interact with them. Another use case is the creation of a realistic 3D avatar of an actual product under development.
A digital twin is a highly detailed virtual duplicate of a physical asset. It also serves as a repository that collects all sorts of data generated throughout its lifecycle. For example, companies can track, modify, and update a digital replica of a product just as they would with an actual product in a store.
When companies clone their products in a virtual environment, they can mimic traditional shopping experiences and solve logistical challenges for their customers and associates. As a result, the retail sector can also create better products, reduce its carbon footprint, and optimize day-to-day operations.
As noted by the previously mentioned Future Shopper report, 64% of consumers would be glad to purchase everything through one retail brand. And marketplaces can do an excellent job for the retail sector to realize that intent.
Retailer and brand marketplaces can become one of the global trends in retail in the coming years. The marketplace model offers excellent opportunities for retailers to unify all customer touchpoints on one platform. It also helps to increase loyalty, build trust, and outperform competitors.
On the flip side, retail marketplaces need to be ready to address the concerns and worries rising in the minds of global consumers. Here’s a glance at the most pressing ones mentioned in the Future Shopper report:
There is no doubt that marketplaces offer ease and convenience for consumers allowing them to buy different products in one place. For retailers, having their own branded marketplace can solve multiple business goals. For example, they can engage more customers, increase their retention, and beat competitors. However, retailers planning to join a marketplace or build their own need to consider consumers' expectations.
Social commerce has been among the hot trends in retail for a while. Many brands use social media platforms to sell and market their products. Social commerce sales in the US reached $51.8 billion in 2022. The market is set to generate $145.2 billion by 2028.
As people continue spending more time on social media, retailers and brands must look at how they can convert them into paying customers in this channel. But appetites are changing, and retailers must navigate what can encourage shoppers to buy through social platforms.
The Future Shopper report revealed some interesting findings in this regard. First, respondents named getting deals and discounts as the top reason to buy through social media platforms like Facebook or Instagram in the future. Ease of purchase and exclusive sales are the major factors that encourage consumers to turn to their preferred social media apps or sites for shopping.
Retailers need to embrace the transformation of the customer journey and consider their changing preferences. Competitors could beat those who fail to go from traditional web-based channels to social-first content and smaller brands gradually taking a share of the eCommerce pie.
One of the top future trends in retail is the adoption of emerging technologies that help to beat closest rivals and meet customer expectations.
Voice ordering and intelligent assistants have been penetrating the homes of ordinary consumers at a fast rate in recent years. As shoppers continue interacting with AI technologies, the retail sector can tap into the opportunities awaiting.
Consumers can purchase online, re-order products and services, and use AI to receive product recommendations. For example, the Future Shopper report found that 35% of shoppers used AI for assisted shopping. This means that many customers rely on immersive technologies to help them make their next purchase.
As innovations continue to become a new normal for customers and retailers, failure to adapt to change can slow down business growth and development. For retailers, introducing innovative features like voice-enabled shopping should become a priority rather than just a nice-to-have feature.
In this article, we identified the key IT trends in retail industry and mentioned the forces that are likely to shape the future of shopping.
Retail innovations, including chat commerce, direct-to-avatar business models, social commerce, and digital twinning, can provide retailers with new lanes for business growth, customer loyalty, and profitability.
Other concepts like focus on data protection, sustainability practices, and conscious customers can significantly influence how retailers operate shortly.
As retailers aim at unlocking these new avenues, they will need a development partner that may provide expertise to design a tailored experience for global consumers.
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