By Ellie-Rose Davies, Content Executive at IMRG
We wished you a merry Christmas, and now we are wishing you a happy new year. But, are good tidings in store for 2023? This blog covers IMRG’s predictions for 2023, with invaluable advice from industry experts to help you grow.
Presenting Our 2023 Forecast:
Last week, Matthew Walsh, Data and Retail Director at IMRG, shared all the key factors which could impact online retail growth this year:
Using these considerations, alongside analysing a wealth of data from our Index, we have curated a forecast for 2023.
Unfortunately, we expect the total market for online retail to experience a decline of -3% YoY in 2023. At best, the market could achieve -1% YoY and at worst, the market could undergo a steep decline of -7%.
We predict another year of difficulty for online retail categories. Clothing will likely just keep itself afloat, at 0% YoY, whereas we expect all other major categories to see further declines; home & garden and electricals -5% YoY, health & beauty -4% YoY, and gifts -7% YoY.
Is the future doomed for online retail?
Not according to Salsify’s study of 1,217 consumers (aged 18-60+) in Great Britain, during November 2022. Carla El Gawly, Principal Strategic Retail Account Executive at Salsify, explores how ‘more than half (57%) of UK shoppers changed their shopping habits, with 72% of that group saying they are now buying online more of the time. An additional 19% have shifted to buying online and picking up products in store.’
‘Only 15% say they made a change to shop online less and return to stores. Ecommerce was the winning aisle of retail during the pandemic, and it will still lead in the post-pandemic era. For 64% of UK shoppers, it’s the online shopping experience that keeps them loyal to a brand. Therefore, retailers and brands should collaborate better and make most of the product detail pages to ensure consistent and consumer-relevant experiences.’
Linda Ersbacken, Marketing Manager UK at Voyado, explains that one way to maintain and increase the appetite for online retail is through clienteling; ‘Focus should be on re-creating the intimate, personal in-store experiences for your customers online and you can do this by harnessing data and AI.’
‘Successful clienteling gives valued customers an enhanced experience: online and in-store systems should recommend, upsell and provide empathy to the customer and their needs. So far, this has mainly been the realm of more premium brands, but in 2023, it’s likely to go mainstream.’
With the knowledge that online retail is omnipresent, it is no wonder that Sacha Wilson, Senior Director at Avalara says, ‘2022 saw an increase in retailers either creating or expanding their online presence.’ But Sacha reinforces that ‘scaling in a cost-effective, efficient way is crucial if a newly expanded business doesn’t want to see its increased profits dip back down.’
‘In the current economic climate, we’ve even seen businesses laying off employees in the latter half of 2022 due to unsustainable levels of growth. To avoid this, growth must take second place to efficiency and process improvement to a retailer’s bottom line and customer experience.’
Thus, all is not lost. Gavin Warwick, European Partnership Manager at SmartFreight reveals that ‘Some of the challenges we may see this year will also create opportunities, such in the supply chain, visibility and digitalisation, and sustainability. Pressures that impact businesses can be a driving force for more dynamic businesses and can move companies ahead of their competitors.’
Customer-centric growth strategies to consider in 2023:
As noted, the key to driving high performance is to enhance the customer experience.
Joelle Mullin, Retail and Travel Client Partner at Awin, shares that ‘It’s going to be a tough year for retail overall, and customers will be focused on essential vs non-essential shopping.’
‘In 2022, brands with more publisher diversity benefited from large growth and were able to protect themselves somewhat from the impact of many macro-factors affecting retail. As customers continue to demand honest product insights, retailer comparisons and seek out the best prices, the affiliate channel will continue to buck the trend and stand out comparative to wider retail ecommerce.’
So, ‘while everyone is containing costs, failing to support a brand or respond to customers’ changing needs can jeopardise profit and performance in the long term’, says Chris Gorman, Head of Professional Services at Esendex.
We should also remember that while ‘customers are looking for reassurance that they are obtaining the best value for money, this is not, according to our latest global consumer research, based on product quality alone but on every touchpoint, including customer support and after-sales care.’
Ecommerce Evangelists, Mats Fischerström and Axel Lindgren at nShift suggest that because ‘the customer has less money to spend, to attract the customers you need to be really innovative, offer reasonably priced products and a seamless delivery experience while cutting costs at the same time.’
‘It is like when your fridge is almost empty but you need to cook an innovative three-course meal.’
Get creative with it!
Beyond meeting the customer’s basic needs, retailers can also provide innovative, enhanced experiences to stand out in a large crowd.
Jennifer Griffin Smith, Chief Marketing Officer at Brightcove, says ‘Now more than ever before, businesses must follow the examples set by media companies, who have mastered the secret to retaining audience numbers through the power of content – matching content needs with consumers.’
‘Given that the vast majority of shoppers (70%) now consider video to be essential when shopping online, retailers thinking and acting like media companies will be key to customer retention and maintaining profits throughout 2023.’
Also reflecting on creative ways to attain customers is Nick Jones, GM International at Lucidworks; ‘Commerce continues to move towards more conversational digital experiences. And customers are saying they want to use chatbots and voice to meet their goals as quickly as possible.’
‘However, whether it’s chatbots or search bars, retailers should aim to improve search techniques in this era of anonymity. Without explicit permission from shoppers to track behaviour, retailers have to tailor merchandising based on fewer ‘known’ elements.’
Should we anticipate the rise of retail media and CTV?
One way retailers can enhance customers’ experience of ecommerce is through retail media and CTV (Connected TV).
Sam Benkel, Managing Director, Retail Media Northern Europe at Criteo, reflects on a recent study of over 800 media agencies which ‘gleaned one key recommendation: brands should be diversifying marketing spend across newer channels such as connected TV (CTV), retail media, audio, and the metaverse.’
‘Retail media, for instance, offers brands deeper audience targeting through retailers’ direct relationships with their customers, better user experience, and outcome-based reporting to accurately measure impact. Three-in-five UK media agencies believe it will outperform search and social campaigns this year.’
Similarly, Ben Foulkes, Commercial Director at Epsilon reiterates the value of retail media and CTV. Ben exclaims that ‘The opportunity to unlock the power of retail media first-party data to deliver impactful, personalised, and interactive CTV ads offers a huge opportunity for brands. Even more than a year ago, there was already strong demand for buying CTV advertising on retail media networks.’
‘Though current retail media spend is driven by existing trade deals, the combination of the 2 fastest growing channels will help accelerate the shift from trade marketing budgets to brand budgets, attracting new spend from media agencies and advertisers.’
May your key takeaway of today be that while things are looking gloomy ahead, you can take the steps today to see a happier and brighter tomorrow.
If you’d like to watch the rest of our 2023 predictions webinar, click here.
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