2023 promises to be a year of worries. This may bring chances for brands and retailers, as they may take on a caring role. In fact, their duty of care is being pushed harder than ever.
Trend 1: Re-wire
ChatGPT, MidJourney and Epic Diffusion. Need we say more? 2023 will be the year of artificial intelligence. In barely three decades, we have gone from ‘digital first’ over ‘mobile first’ to ‘AI first’.
In recent years, we have seen shortages of just about everything businesses need, from raw materials over containers to human resources. While the most acute pressures have since eased somewhat, costs remain high – much higher, in fact. Moreover, as we discussed last week, scarcity is becoming a structural problem: ageing populations inevitably lead to labour shortages, while resource shortages are an inseparable consequence of the increasing pressure we put on the planet.
So, with fears that consumers will further reduce their spending by 2023, retailers and manufacturers alike are focusing on ways to automate their processes, from production to customer service. Chatbots and simple AI tools can help with frequently asked questions, giving employees more time to build deeper interactions and relationships with customers. Thanks to AI, retailers can also provide their employees with the necessary information (from purchase history and preferences to product information) and tools to provide such a personalised experience.
Trend 2: Re-sell
Second-hand will grow another 127 % by 2026, GlobalData predicts. This year, the market will be worth 141 billion dollars, up from 119 billion last year. North America remains the largest market, with Europe and Asia developing almost equally. Within the European Union, second-hand already accounts for 10 % of the total e-commerce market, by 2025 this could rise to 14 %.
Inflation and price increases are key drivers of the trend: as many as 93 % of European consumers cite this as the reason for buying or selling second-hand. So count on 2023 being a genuine breakthrough year for second-hand, especially as the green image plays another reinforcing role. Loaded with ecological guilt, young consumers in particular feel they are shopping ‘guilt-free’, so to speak.
For retailers, however, it means regaining terrain they lost to consumers: marketplaces where consumers sell to consumers (C2C), such as Vinted and eBay, dominate the playing field. Consequently, a wide variety of retailers and brands are trying to claim their piece of the pie by offering second-hand items themselves.
Trend 3: Re-locate
Anyone who thinks that location has become less important because of the corona pandemic, could not be more wrong. Location is actually becoming even more central: we may work from home and order online more often, but as a result we shop more locally.
At the same time, big cities are bouncing back at lightning speed as tourists return. From home, too: for a day out, with a bite to eat and strolling through the shopping streets. Each type of location has its own function, and the importance of distinctive locations for different functions is only increasing.
The decision where people want to live, work and shop is becoming even more conscious. Although the pandemic briefly fuelled the demand for rural living, global urbanisation continues unabated. Today, more than half of the world’s population lives in cities and this is even evolving towards 80 %.
Trend 4: Re-generate
Car manufacturers are betting on electric, driven to do so by increasingly stringent regulations and environmental standards. It is not only the car industry that has to compulsorily go green; in retail and FMCG, too, sustainability will not escape this year.
The duty of care is giving big companies headaches: Danone has a lawsuit on its hands for not saying explicitly enough how it intends to reduce plastic consumption, Carrefour and Auchan, among others, are facing the same thing.
These are the kind of problems that companies and their investors can do without. Those seeking financing will therefore be increasingly unable to do so without ESG promises and conditions. Not only will banks and investors demand it, it also makes investing more interesting. Green bonds are in high demand, while financial markets slow down in other areas.
Consequently, we will see even more green promise and sustainability in 2023 than we have seen so far. Besides, due to the structural challenges our world is facing, companies are realising that it is no longer just an optional extra.
Trend 5: Re-concile
Welcome to year three of the ‘transition twenties’: the new decade of uncertainty hass well and truly started. Hold on tight, it is going to be another wild ride. But how can retailers and brands make that ride more enjoyable for consumers? How can they be there for people? By offering them moments of comfort and relief.
As people try to limit their spending and keep their purses closed, businesses aim to improve and deepen the relationship with their customers. The whole mission of retail – and the role of the shop – should broaden. Totally in keeping with the ‘servitisation’ of retail, services and solutions come in handy once more in times of economic downturn. From welfare services to handy do-it-yourself tips, brands have the opportunity to establish themselves as partners in consumers’ lives.
The relationship between consumer and brand is changing, with a sense of community and connectedness taking centre stage. Shops are becoming like a church for the brand, a place where like-minded people meet, experience and share experiences together.
You can read about all these trends and more in The Future of Shopping: Re-set Re-made Re-tail, which recently has been nominated by BAM as Marketing Book of 2022.