The retail industry is evolving post-pandemic, and inflation is amplifying the changes by forcing a shift in consumer shopping habits.
It’s crucial for retailers to understand the five biggest consumer shopping trends of 2023 so they can adapt accordingly and drive engagement, loyalty, and sales.
Top Consumer Shopping Trends in 2023
- Consumers are Spending Less on Retail & E-commerce
- Consumers Value Omnichannel Shopping & Communication
- Consumers Prioritize a Seamless, Customized Experience
- Customers Want Loyalty Programs & Gamification
- Customers Want Retailers to Share Their Values
Trend #1: Consumers are Spending Less on Retail & E-commerce
The inflationary environment has lowered consumers’ purchasing power, causing them to be more financially cautious. Although nominal average weekly earnings have increased by 8.3% since December 2020, real earnings have fallen by 5%.
The whopping increase in prices across the board has had a profound impact on consumers:
- In 2022, consumers saw a year-over-year increase in food prices of 11%, the largest annual increase since the 1980s and a stark contrast from the average increase of 2% in prior years.
- A notable 20%-25% of consumers also spent less in shops and online because they had to pay higher bills at home thanks to a steep increase in energy prices.
Inflation in other areas is forcing consumers to tighten their shopping budgets. Year-over-year credit card spending growth continues to decline; in April 2023, consumer spending declined by more than 3% versus a year ago. This decline in spending is reflected in every demographic of shopper, regardless of income level or age.
Furthermore, in a trend we have seen since the pandemic, customers are prioritizing spending on services over goods. The fitness, travel, and out-of-home entertainment segments remain resilient, displaying year-over-year growth.
The reduction of consumer purchasing power, combined with their desire to spend more on services and less on goods, forces retailers to be competitive and deliver exceptional experiences in order to still attract and retain customers and excel in the market.
Trend #2: Consumers Value Omnichannel Shopping & Communication
Consumers post-pandemic are leveraging e-commerce and shopping on their mobile devices more than ever:
- Roughly three-quarters of U.S. adults are shopping for items on the web
- Nearly 80% of consumers are making purchases directly from their mobile devices (on online shopping sites, mobile apps, and social media)
Retailers cannot treat e-commerce as its own entity separate from retail – e-commerce is the lifeblood for driving traffic to your brand and your stores.
The most successful retailers are leaning into omnichannel experiences. This means giving your customers opportunities to engage with your brand across multiple platforms in a variety of ways, such as:
- Using mobile apps to research products
- Buying products online and picking them up in-store
- Completing an online order in-store to ship a product that is out of stock at that location
- Receiving personalized promotional emails
- Engaging with the brand’s accounts on social media
Meeting customers where they are – whether it’s an online marketplace, their email inbox, a social media platform, their mobile device, or in person – and delivering a consistently delightful experience drives customer satisfaction, loyalty, and sales.
Trend #3: Consumers Prioritize a Seamless, Customized Experience
It’s no secret that customers today desire a level of customization when they interact with brands: 71% of customers want businesses to provide personalized experiences.
However, it goes much further than this. More than three-quarters of customers are frustrated when a business does not deliver personalized experiences, and 45% of customers say this would drive them to take their business elsewhere.
Customization is no longer a nice-to-have; it’s imperative to survive in today’s retail environment.
Examples of personalization that appeals to customers include:
- Relevant product/service recommendations
- Messaging tailored to their needs and behaviors
- Targeted promotions
- Checking in post-purchase
- Sending timely communication tied to key moments
These small touches go a long way, and customers reward the retailers that get it right. More than three-quarters of consumers said they would be more likely to purchase from, repurchase from, and recommend companies that personalize.
In order to win customers’ business over and over, brands need to understand their consumers – who they are, the behaviors and preferences they exhibit, their wants and needs – and use that data to craft intentional, strategic, impactful, personalized experiences.
Trend #4: Customers Want Loyalty Programs & Gamification
Loyalty programs foster a feeling of community and a deeper relationship between your brand and its customers. Successful loyalty programs differentiate themselves with transactional benefits – like free shipping, free returns, and discounts – as well as experiential benefits.
Loyalty programs also frequently incorporate aspects of gamification. Eighty percent of millennials and Gen Z consumers play video games on a weekly basis, indicating a strong interest in and enjoyment of gamified experiences.
Some examples of successful loyalty programs are:
- Starbucks: The Starbucks app uses a points system where customers earn “stars” for each purchase, which can be tracked through a visual representation in the app. As customers earn more stars, they “level up” to access more significant rewards, such as free drinks and food items. This gamified rewards program not only encourages repeat purchases but also enhances customer engagement with the Starbucks brand.
- lululemon: lululemon offers two tiers of their membership. lululemon Essential is a free program that offers member benefits including virtual community events, early access to product drops, and other perks. lululemon Studio, which requires purchase of a lululemon Studio Mirror and subscription, gives members access to Experiential Store Classes, discounts on gear, and discounts at lululemon partner studios. Both membership programs promote stronger engagement with the brand, as well as fitness-related benefits that match the brand’s and the consumers’ values.
- Nike: The Nike Run Club app is yet another innovative example of gamification. Users are encouraged to run more by tracking their runs, offering personalized coaching plans, challenging friends, and earning achievements. This gamification strategy not only promotes the use of Nike’s app but also aligns with its brand image of inspiring athletic achievement.
Trend #5: Customers Want Retailers to Share Their Values
Customers today care about environmental and social justice (ESJ) issues and want the brands they buy from to care about those issues, too. More than 80% of customers say they want the brands they do business with to have values that align with their own.
This is far from an empty sentiment, as three in four shoppers have parted ways with a brand over a conflict in values.
Brands can increase customer loyalty by demonstrating their commitment to addressing social inequities in their actions. When your e-commerce brand is committed to taking care of the environment, supporting social justice causes, and shining a light on inequality, customers take notice.
Your customer base wants to feel seen, heard, respected, and valued, whether it’s by:
- Donating a percentage of profits to an LGBTQ+ nonprofit organization during Pride Month
- Packaging and shipping your products in a more sustainable fashion
- Including gender-neutral clothing in your product line
- Ensuring minorities are represented across your marketing materials
Customers today are more empowered and socially active than ever before, and 72% of them believe they can vote with their dollars. They want to support brands that are good citizens.
REI, Patagonia, and lululemon are a few brands that are walking the walk with their clothing trade-in and recycling programs. These programs keep the brands’ clothing out of landfills and in action, benefitting the consumers and the environment alike while serving as a positive reflection of the brands’ values.
Diversity, equity, and inclusion (DEI) initiatives and other ESJ efforts should come from a place of authenticity. But if your retail brand truly cares about and prioritizes the same causes that your customers do, they’ll notice, and it will pay off in dividends.
How To Create a Retail Brand Consumers Love and Are Loyal To
Due to inflation and reduced spending power, the retail market is a more competitive space than ever before. Brands need to go above and beyond to attract, retain, and build relationships with customers.
Our experts at AIM Consulting are deeply familiar with the retail and e-commerce space and have helped clients deliver exceptional products and experiences that delight consumers.
Whether you need help developing an engaging loyalty program or mobile app, optimizing your omnichannel experience, or just conducting user research to hone in on exactly who your customers are and what they want, we are ready with the strategy, industry knowledge, and technical skills to bolster your success.
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