Marketing

Marketing in the new age of retail: What to expect in 2023

Shopping in 2023 requires more intention from brands.

Photo by istock.com

January 24, 2023 by Ron Hay — Associate Director, Retail, Movable Ink

Retail sales had their biggest increase in eight months before experiencing a stark drop at the start of the holiday season in November. Consumer demand followed similar trends due to a quick succession of impactful events — inflation, the global recession and supply chain issues.

Despite these challenges impacting retailers' margins, consumer spending behavior, and U.S. retail growth potentially slowing to 2.9% YoY in 2023, the retail sector has stabilized over the last two years. Still, evolving consumer spending habits and behavior, paired with macroeconomic conditions, will force marketers to innovate as they deal with complexities.

Here's what we can expect to see over the next year:

Shifting Consumer Purchasing Habits
As e-commerce sales steadily increase, shoppers lose the benefits of in-person shopping, like fitting rooms, and resort to "bracketing" or purchasing items in multiple sizes to return those that don't fit. As a result, retailers are grappling with a jump in merchandise returns, and once returned, these products might not return to the shelves, instead ending up in a landfill — damaging retailers' bottom lines and adding to the billions of pounds of returned inventory piled into landfills per year.

Returns are part of the shopper experience, but retailers can circumvent the financial and environmental impact by being in tune with customer expectations and needs. Leveraging ratings, reviews, and user-generated content to educate shoppers on their product selection can help shoppers choose the right product the first time, which can curb the growing trend of returns and increase customer satisfaction.

Increase in Multiple Touchpoints
Not only did the pandemic change where consumers shop, but it impacted how by accelerating online shopping and catapulting consumers into the digital sphere.

As consumers shift between scrolling on apps, and comparing prices and reading reviews on their computers, shopping in 2023 requires more intention from brands. The new consumer purchase journey will involve multiple touchpoints and channels, not just in-store and online shopping but social commerce, owned apps, and online communication, requiring a new approach to marketing. The mobile channel, in particular, accounts for an increasing share of total U.S. online sales, reaching 41.8% of 2022 retail e-commerce sales. As omnichannel commerce grows, marketers and retailers alike should focus on omnichannel marketing to reach their audiences.

Omnichannel marketing aims to tell a cohesive brand story across all customer touch points on every available channel (online and off) to support one another and build loyalty. For example, a customer might view a product through a retailer's app and receive a reminder email highlighting the item, their nearest store, and the option to reserve it. With these details, the customer can receive their product even faster with greater convenience, and personalized communications make the experience frictionless. In the new year, retailers must adopt an omnichannel marketing strategy to accommodate consumers where and how they're shopping to create a seamless experience.

Evolving Loyalty Programs
During the multi-touchpoint purchasing journey, many consumers use their digital devices to compare product prices and read reviews to find the best deal. As shoppers focus on cutting costs without sacrificing quality, it's harder for retailers to retain customer loyalty in a sea of lower prices. Traditional reward programs — purchase equals points — have less value and will no longer cut it for consumers. Loyalty isn't just offers and points; it's about creating unique and positive customer interactions at every point in the customer's experience.

Loyalty programs like those from IKEA and Target let you turn points into dollars to save on your purchases but in 2023, retailers will pivot to programs that offer customers personalized, relevant, and more tangible value, like cashback and discounted member prices. Even Starbucks and Delta Airlines have merged their two loyalty programs, enabling customers to earn one mile for every $1 they spend at Starbucks and earn double miles if they buy Starbucks on a day that they're traveling. Retail competition is stiff, but these loyalty programs can differentiate one retailer from the next, and encourage customers to buy more, engage often, and grow their loyalty.

Personalization with the Help of Customer Data Platforms
As retailers embarked on digital transformations over the last two years, personalization will become even more critical in 2023. Each stage of the customer journey, from awareness to purchasing, requires some level of personalization to engage and capture the attention of the customer. According to McKinsey, 71% of consumers expect companies to deliver personalized interactions and 76% get frustrated when this doesn't happen, driving them toward competitors.

Leveraging customer behavior and zero- and first-party data to create personalized content will play a major role in engaging customers throughout this journey — but it's easier said than done. Customer purchasing behavior is rarely linear. It often involves multiple devices and is constantly changing, but it's an essential part of retail marketing. Customer data platforms (CDPs) can be used to manage data and create a scalable, comprehensive view of customers across channels based on the marketer's needs. Customer data can also open an avenue of profit for retailers through retail media networks (RMNs) — a retail-owned digital platform that gives marketers access to customers' first-party data, like purchases, which they can use to build personalized ads on the retailer's website.

We'll see a jump in retailers using CDPs to create a holistic image of their customers in 2023 and leveraging customer data to create RMNs now that personalization is a requirement for customer engagement.

From pandemic shutdowns to supply chain issues, disruptions in the retail industry called for renewed agility and innovative solutions from brands to attract and retain customers. In 2023, customers will continue to look for personalized, valuable content at every stage of their purchasing journey. Due to rapid digitalization, retailers and marketers will be required to adjust their strategies to be more customer-centric, more digital, and more beneficial in the long term.

About Ron Hay

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Ron has nearly ten years of retail marketing experience across a variety of disciplines. Most recently, he managed marketing strategy for the email, SMS, and mobile channels at DICK’S Sporting Goods. There, Ron oversaw channel optimization, focusing on developing and scaling personalized content, enhancing customer journeys, and rigorous A/B testing. In this role, he also managed relationships across a portfolio of martech partners, including Movable Ink. Ron joined Movable Ink in 2022 as a member of the Strategy Team, supporting Retail clients in North America.