As in the past few years, the retail sector in 2023 will be heavily impacted by macroeconomic trends such as supply chain constraints and inflation. We remain in a challenging environment characterized by uncertainty. Consumer spending continues to increase, but will it plateau? Inflation appears to be slowing, but will this relief continue? And will experts’ forecast of a mild recession in 2023 force shoppers to close their wallets? Retailers need to be prepared for a potentially volatile year ahead that could result in very different shopping patterns.
For the upcoming holiday season and beyond, retailers need to start getting creative in order to prepare for any eventuality. One of the most notable shifts will be consumers keeping a closer eye on deals in order to confront their own economic uncertainty. In fact, a recent survey by small business accounting software platform Xero about consumer trends shows a significant sense of economic anxiety:
- 76 percent are extremely/very concerned about inflation;
- 68 percent are extremely/very worried about a recession;
- 58 percent are watching more often for sales and discounts;
- 47 percent are spending more time looking for the best prices; and
- 39 percent will prioritize price above all else.
This leaves retailers in a tricky spot, as they’re being squeezed by rising wholesale prices and increased shipping costs. Amidst all of these challenges and external factors, there are a few ways retailers can ensure they’re continuing to attract more customers.
One strategy is focusing on improving consumer shopping experiences and finding ways to incentivize consumers to shop in-store via their e-commerce platform. Options such as buy online, pick up in-store (BOPIS) as well as fast/free delivery directly to the store are great ways to do this. When the consumer is in-store, even to simply pick up an online order, retailers can offer coupons to entice them to shop more. For example, $25 off a minimum total purchase or “buy 2 get 1 free” are better types of incentives than a blanket 10 percent off. If you offer a straight markdown, it may adversely impact the bottom line if individual consumers purchase in very large quantities. Therefore, offering coupons that require buying a specific amount of product might be the best bet.
Another way to utilize technology is to review email marketing lists to offer exclusive coupons to existing customers. Even if someone hasn’t shopped with you in over a year-and-a-half doesn’t mean they wouldn’t be interested in browsing the inventory again (with a discount)!
Thinking outside of the box by getting creative to entice customers will be essential for retail success in 2023. Overall costs have ballooned for consumers — and this can get even worse in the winter as utilities such as heating increase in use and cost. Consumers are preparing to pay more across the board. As a result, retailers must ensure they’re imaginative enough to make them want to retain their loyalty and keep shopping with them.
Raphy Soussan is a partner at Mazars, an international audit, tax and advisory firm.
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