Opinions expressed by businesskinda.com contributors are their own.
With 2023 just around the corner, retailers are gearing up to make the most of the holiday season with discount deals, reduced prices, free deliveries, bonus packs and more. That said, there’s an elephant in the room this season – and that’s consumer market uncertainty. Recent headlines about inflation have changed the buying behavior of most customers this year. Compared to 2021, one in four Americans (22%) spend less on gifts this year. Having conversations on social media about inflation related to Christmas shopping increased by 35%.
The issue was further complicated by the disruption to global supply chains caused by the pandemic. The increased demand for items led to sky-high prices. With customers less willing to pay higher prices for goods, retailers face a potential drop in revenue, sales and profit margins. Retailers seeking to minimize the impact of inflation, changing customer behavior and an unstable market on their business must adopt strategies to create an engaging and immersive shopping experience.
Here are five predictions to help you meet your customers’ needs and keep your business competitive.
Related: How Compliance Exposes Global Supply Chain Vulnerability
Contents
1. More acceptance of an omnichannel approach
A seamless shopping experience is quickly becoming the order of the day as customers want the flexibility to combine shopping on their phone with shopping in physical locations. The recent Shopify report proves this, with 54% of consumers say they are likely to view a product online and buy it in store – and vice versa.
Sephora is an excellent example of a company already taking this approach. Customers can visit the brand’s website to add products to their shopping cart and visit the store to try on their items before purchasing.
To take advantage of the omnichannel experience, retailers need to create a social presence that maintains brand identity across multiple channels. This includes messaging, services, pricing, and overall customer service.
Getting this right can make it easier to understand and predict customer behavior. You can tailor your customers’ experiences to your marketing and sales needs.
Related: The future of retail is omnichannel
2. Hyper-personalization will skyrocket
With shoppers spending cautiously, typical personalization tactics become ineffective in driving sales. Gone are the days of generic marketing emails with automated first name snippets.
Now customers want purchases to match their needs, which requires brands to make customers feel more connected to the brand – which can increase loyalty and retention. According to a McKinsey survey, 71% of customers expect companies to personalize their experience 76% are frustrated if they don’t find it. Creating hyper-specific recommendations based on customers’ browsing history, previous purchases, location, gender, and age — increases the likelihood of more sales and Generate 40% more sales.
3. AI is redefining the shopping experience
The introduction of DALLE-2, LensAI and most recently — ChatGPT — has sparked discussions about their use in retail. ChatGPT is an AI with near-accurate answers to user questions, which can be used for conversation trading. For example, in terms of personalized recommendations, AI can accurately recommend products using customer data. This helps the customer make an informed decision, driving sales.
In terms of cross-channel customer service, AI can easily give users the same experience by providing support and assistance on a much larger scale. While artificial intelligence already plays a role in most parts of retail, its adoption in 2023 will redefine the entire shopping experience.
Related: Princeton Student builds ChatGPT detection app to fight AI plagiarism
4. Data privacy laws are getting stricter
The data privacy debate is likely to intensify in the coming year as the European Union proposes stricter regulation through the GDPR. Under the GDPR, user consent plays a major role collecting sensitive and non-sensitive data. This means that retailers and advertisers must be transparent in their use of users’ personal data and provide consumers with the option to remove or erase their data.
The problem with the GDPR: Advertisers need user data to serve targeted ads. Retailers need advertisers to market their goods. With legislation tightening on the collection of this data, advertising prices are expected to rise.
5. A switch to organic marketing
The recent increase in advertising costs has convinced most retailers. Why? The current price for ad space is double (sometimes even triple) what it used to be. This means retailers pay more to reach the same audience, with no estimated profitability, sales, or even revenue guarantee.
As a result, many brands are now turning to organic marketing and reaping its benefits. SEO, social media, content marketing, and influencer partnerships are all tactics to ramp up in 2023. Using organic marketing in retail is a strategic approach that can help you build trust and maintain long-lasting customer relationships.
Looking ahead, retailers face ups and downs in the market. Finding ways to meet customer needs is essential to staying afloat – and profitable. The strategies we’ve highlighted here will get you started and prepare you for what’s to come.
Janice has been with businesskinda for 5 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider businesskinda team, Janice seeks to understand an audience before creating memorable, persuasive copy.