With cost of living increases and economic uncertainty around the world there are a lot of questions about how consumers will behave in 2023.
We decided to explore where people might spend more or less next year and how brands can respond to new challenges.
While more than half of consumers aged over 55 said they felt financially secure, younger generations are less confident.
Many of us are much more aware of the price of food or fuel but predictions suggest that financial optimism will increase in 2023 and that people will have a little more disposable income during the year.
Online vs in-store shopping
It’s not surprising that people say they are likely to continue shopping online. Well over half of internet users are already buying online every week.
However, brick and mortar stores will still have an important role to play. In fact, almost half of Gen Z customers say they prefer to shop in-store rather than online. From groceries to clothing there are plenty of brands with store expansion plans in 2023.
Some businesses aim to combine the best aspects of in-store experiences and online shopping to attract customers who like to do both. Most importantly, a transition to physical and digital or ‘phy-gital’ shopping will require a new approach to cross-channel measurement and performance indicators.
Hybrid shopping experiences using app-based augmented reality (AR) tools are also likely to increase to enhance the experiences of both online and in-store shoppers.
Winners and losers
Spending on travel and entertainment is likely to increase next year after the pandemic restrictions. With money still in short supply, however, we will probably continue to make less expensive ‘treat purchases’, including clothes and accessories, personal care products and technology.
Larger and more expensive purchases including home appliances and furniture could be under pressure as people return to the workplace and become less focused on their home surroundings. Supply chain issues and materials shortages are likely to increase costs and add to the pressure in these sectors.
One person’s luxury might be someone else’s necessity but price-conscious consumers are likely to cut back on luxury goods.
There are still plenty of people willing to spend on high-end brands including supercars and timepieces. Even here, however, customers are looking for quality and value and want to buy from brands that are relevant to them.
Everyone likes to feel they have found a bargain, but more consumers are now taking time to search for offers and special deals. Value for money will continue to be a priority, so improving the perceived value of your offer will help to increase sales without the need to reduce your prices.
Customers across all age groups are still willing to pay more for sustainable products. As Gen Z consumers play an increasingly important part in the world economy it will be important to recognize what motivates and interests a group that will represent over a quarter of world spending by 2030.
Recyclable and sustainable packaging are becoming requirements for both online and in-store purchases. Ecommerce packaging is currently the largest source of emissions in the sector and is six times higher than for in-store purchases. Consumers say they are making a conscious effort to buy more sustainable products and that they are more likely to buy from retailers if their packaging is sustainable.
Younger shoppers in particular are using social media for product research, so making sure product details are clear and compelling will be a requirement for 2023.
Social media shopping is also becoming more influential and 20% of impulse buyers say they use social media ‘buy’ buttons to make unplanned purchases. Enabling your customers to discover and buy without leaving their favorite platform is becoming an expectation, so the experience must be as easy as possible.
While there has been a long-standing expectation that online purchases can be returned for free, this could change in 2023. Free returns add to retailers’ costs and encourage the likelihood of over-ordering. Some brands have already introduced charges for returns and this trend is likely to continue.
A recent survey of 3,000 consumers found that a quarter would give up coffee for a year in exchange for free shipping on their online orders. In addition to fast and free deliveries, meeting promised delivery dates is also important.
Transparent shipping timelines and updates about delays are becoming essential. Poor experiences can damage reputations and make it less likely that customers will return.
Be prepared for consumer expectations in 2023
At Williams Commerce our experienced team and partnerships with leading commerce platforms mean we can digitally transform your business. Whether you are planning to build new online and in-store experiences in 2023, want to improve your revenue growth, or integrate your systems for improved efficiency and transparency, we can help.