The changing face of retail: What’s next for 2023?
As we say goodbye to what was a tumultuous 2022, trying to predict what 2023 may have in store is something of a challenge. The last year has been a rollercoaster ride for retailers. We’ve seen the end of a pandemic, and cautious optimism as consumers returned to the high street. There’s been a steadying of supply chain stability, only to be tempered by rising inflation, unpredictable weather, utility price hikes, rail strikes and staff shortages.
So, what might the year ahead look like for retailers? We’ve analysed the opinions of industry leaders to bring you our predictions for the year ahead.
Inflation will begin to steadily decline
According to analysts, after a small decrease in UK inflation, from 11.1% in October 2022, to 10.7% in November, this slow downward decline is set to continue into Q1 2023(1), which is good news for retailers and consumers alike. Countries such as the USA will be seeing their own inflation increases, which will help the pound to steady itself in the world market. While the experts agree that inflation won’t be back to ‘normal’ any time soon, it appears we are past the worst and that things will slowly settle down. Recent figures also show a small increase in consumer confidence, helping to bolster retailers for the start of 2023.(2)
AI will become part of everyday life
Forbes is predicting that AI will become widely adopted in businesses in 2023.(3) Everything from online retailer recommendations to supply chains will begin to be powered by artificial intelligence that actively learns what is asked of it and delivers against it. It’s time to embrace the future with chatbots, robots and predictive learning, to offer seamless shopping to customers.
Convenience is in
For food retailers, the move to smaller stores in convenient locations continues to grow, with Asda announcing a plan for more than 300 of their ‘Asda Express’ stores by 2026.(4) This follows market predictions for convenience store sales to grow by 13% by 2027.
You may also have seen the rollout of cute little food delivery robots that are currently taking over Cambridge in a trial with the Co-Op. Their supplier, Starship Technologies, expects these to be offered more widely in 2023, with other areas in the UK seemingly keen to follow suit.(5)
Consumers will be searching for bargains
Research suggests that in 2023, 78% of consumers will be looking to cheaper brands, making value a priority.(6) Offering a range of lines to suit all budgets will become important in ensuring customer loyalty and the ‘middle ground’ is likely to take a hit, as customers diverge into those affected by the economic challenges, and those whose disposable income leaves them free to spend.
Cash is no longer king
Cash sales fell in 2022 to just half of their 2020 rates, making up just 15% of all transactions.(7) Card and contactless payments continue to dominate, making it essential for retailers to offer a range of digital payment methods and frictionless checkout experiences. Contactless shopping and delivery will also become mainstream in 2023.
Retail media is on the rise
2022 saw many high street names, such as Asda, Boots and Ocado launch their own media offerings for brands to promote their products.(8) The UK has the highest share of e-commerce sales in the world and will be further bolstered by the increasing availability of 5G technology networks throughout most of the UK, making everything faster, slicker and seamless for one-stop shoppers.
Consumers’ caring isn’t going to change
From ethical products to green packaging and delivery, the trend for consumers caring about the providence of what they buy, and who they buy it from is only going to continue. In fact, a net -23.5% of consumers say that they are going to spend less on fast fashion in 2023.(9)
What this means for small businesses
If you’re a small business, you’re likely worried (and exhausted!) by everything that 2022 has thrown at you. From the cautious hopefulness at the start of 2022, to a tumultuous end to the year, it’s been a roller-coaster ride, but if you’ve made it this far, there is a note of optimism to Spring 2023 onwards. Continuing to embrace new ways of retailing, such as e-commerce, using social media to sell; seamless delivery and logistics and payments will all ensure your business remains at the forefront of what it takes to make it in retail in 2023.
References:
1.Pound to Dollar Week Ahead Forecast: Finding a Footing as Sterling Steadies
2.UK consumer confidence inches up despite warning of ‘tough road ahead’ | News | Retail Week
3.The Top 10 Tech Trends In 2023 Everyone Must Be Ready For
4.Asda to create 10,000 new jobs in convenience store rollout
5.Co-op and Starship roll out robot deliveries in Cambridge | News | The Grocer
6.Research: Tesco, Amazon and Aldi leaders reveal 2023 customer strategies | Analysis | Retail Week
7.Cash retail payments halved last year as ecommerce sales soared | News
8.UK Trends to Watch for 2023 - Insider Intelligence Trends, Forecasts & Statistics
9.Retail Trends 2023: Frugality is in; rampant consumerism is out - Loyalty Magazine