2023 Retail Trends: Industry Predictions & Strategies for Success

As the new year begins in earnest, the retail industry finds itself in an interesting position. Globally, talks of a recession are underway. In fact, 71% of retailers are expecting a recession, according to Shopify's Commerce Trends 2023 report.

But despite the economic forecast keeping companies on their toes, it's the changes happening inside the industry that may re-shape retail altogether.

The upcoming recession is only one factor to keep in mind. Between the consumer-led demand for personalization and the updated user privacy policies that are refashioning data management and customer acquisition, retail marketers are shifting focus – and channels.

Overall, we will see brands investing heavily in their customers – and the customer experience – in 2023.

Shopify reports that eCommerce will continue to grow on trend with pre-pandemic predictions, and projected revenue from online shopping is expected to increase by 14% in 2023. While this expected growth isn't surprising, the changes in customer behavior and expectations have been. According to Shopify President Harley Finkelstein, "Before, customers went to brands. Today, brands must go where their customers are."

Finkelstein is referring to the omnichannel experience, where brands deliver the optimal experience as customers bounce between multiple channels. An omnichannel approach isn't novel in 2023, but retailers that emphasize the connection between the online and offline shopping experiences are better positioned for a successful year.

Retailers ahead of the omnichannel curve are embracing the opportunity to invest in customers by encouraging a hybrid shopping experience. The reality is that shoppers interact with brick-and-mortars as well as online storefronts at various stages of the customer journey. Roughly 75% of U.S. shoppers research products before buying them in-store or online, and 24% of shoppers interact with products in-store before purchasing. Even Gen Z – renowned for their preferences for online experiences – prefers shopping in-store over half the time, according to Shopify.

An omnichannel strategy is straightforward – and impactful. Successful examples of this include BOPIS orders (buy online, pickup in store) which was responsible for 1 in every 5 online orders this past 2022 holiday season, and BORIS orders (buy online, return in store), which accounted for 13% of all returns during the 2022 holiday season. In both scenarios, a customer is interacting both online and offline, and at various points of the customer journey. This experience will become the norm in 2023.

How to Prepare: Local Landing Pages + Site Search

Because customers cycle between online and brick-and-mortar shopping experiences at different points of the buyer's journey, retailers can have a difficult time predicting exactly where customers will enter, leave, and then re-enter the purchasing journey when both online and in-store experiences are involved.

Fortunately, retailers can create a better experience with local landing pages. Consider that landing pages can be used in a variety of scenarios – from the new visitor looking for a storefront location nearby, to the devoted online shopper ready to pick up their items, to the loyal customer who simply needs to exchange a product for a different color. Particularly for BOPIS and BORIS customers, local pages are the connective tissue of the online-to-offline customer journey.

Your customers consider your local page an extension of your brick-and-mortar storefront. Visitors rely on them to discover your physical location, store hours, and inventory, encouraging interaction with your store both online and offline. Because local landing pages are geared towards specific moments of intent within the customer journey, they drive conversions throughout the funnel and across channels – even when the journey isn't linear.

Additionally, local landing pages compliment retailers' local SEO strategies for added visibility within the search engine results page (SERP), which is vital when customers turn to search engines like Google over brand-owned channels – like the store website – with their queries. And finally, local landing pages can be strategically deployed to drive visibility for products and services within the nearby community, making for a powerfully effective retail marketing tool to new and existing customers alike.

No matter where customers are in their journey, local landing pages are a low-lift, high-reward strategy to connect your online presence to your storefront.

To then connect your storefront back to your online presence, consider adding site search as a functionality within your general website, and also within your individual landing pages. This will allow in-store and local customers to search for products online, find answers to common questions if an associate isn't available, and provide a seamless offline-to-online customer experience.

Importantly, retailers should note that 43% of their site visitors will navigate directly to a search box, and that those searches are between 2-3x more likely to convert, according to Forrester. Additionally, 68% of shoppers will not return to a site that provides a poor search experience, so it's essential that your landing page solution is equipped with site search.

New user privacy laws, regulations, and policies limiting third-party cookies and tracking have noticeably upended the way retailers and customers connect. With the declining return on ad spend (ROAS) and the decreasing accuracy of targeted ads, first-party data will likely be the driving force behind successful retail marketing in 2023.

Retailers that collect first-party data will discover better insights into their customers, customer journey, and more. These retailers will have access to their customer data in perpetuity. And, most importantly, the information is more relevant to the customer because it's sourced from the customer directly.

First-party data allows retailers to provide a more personalized shopping experience. With the ability to showcase more relevant products and services, share personalized content, and own the channels the customers interact with, retailers armed with first-party data will find themselves with more personalization power in 2023.

Consider these benefits of personalization in eCommerce:

• Improved Lifetime Value (LTV) and Customer Loyalty: Consider that 80% of people would prefer to buy items from an eCommerce store that offers personalized experiences, and 44% of those buyers would come back, becoming repeat shoppers in the process.

• Increased Conversion Rate (CVR) and Sales: Personalization often leads to higher CVR. In fact, eCommerce shops that offered a personalized experience saw higher sales – 20% on average – than those who did not offer this service.

• Boosted Average Order Value (AOV): 77% of all consumers admit that they've paid more for products sold in online stores that offer personalized experiences.

How to Prepare: Site Search + eCommerce Personalization Software

According to Shopify, only 26% of today's retailers are using customer data to segment and target customers. This could be at least partially because the industry-wide transition to retail personalization using first-party data is still underway. Another potential reason for this relatively low adoption rate is that retailers may still be searching for the right tools to collect, store, manage, and interpret the data.

A first-party data strategy can provide insights from even your quietest customers. For instance, not only does site search provide value throughout the funnel, the queries that your customers type into the search bar are the equivalent of a conversation with a customer. Additionally, search term analysis and clustering provides insights on a macro level, and individual users' search data allows for personalization within the individual's buying journey.

First-party data can be collected in-store, too, especially in conjunction with BOPIS and BORIS. Armed with this data, retailers should consider eCommerce personalization platforms and solutions to digitally connect customers with products and services that align to their wants and needs.

Finally, to capitalize on the benefits of personalization, retailers should consider opting for solutions that guide the buyer through their journey. Guided search prompts, dynamic product re-ranking to match user interests, and varying automated workflows triggered by search query intent are a few components to expect from a great retail platform.

For all its glory, first-party data alone can't solve retail's rising customer acquisition costs (CAC). According to Shopify, CAC is affecting retailers industry-wide and to add insult to injury, 70% of consumers bought from a competitor of their go-to brand during the pandemic. Without third-party data, retailers will have to think creatively about how to attract and retain customers in 2023.

Going into 2023, the data indicates that returning customers are the most valuable to retailers, especially during rocky economic times.

Consider this:

• Loyalty increases a customer's worth 22x, according to a 2021 study.

• New customers are 5% to 20% likely to make a purchase, compared to 60% to 70% for a returning customer.

• 40% of loyal customers will buy from their favorite brand over a cheaper option.

• 60% of loyal customers tell others about their brands.

As retailers experiment with new channels in 2023, returning customers – and their impact – will be top of mind. Expect to see retailers increase their focus on retention over acquisition.

How to Prepare: Social Commerce Strategy

According to a global study from Shopify, 28% of brands are relying on social commerce as a customer acquisition and retention strategy.

In 2023 in the U.S. alone, social commerce is on track to double its sales from 2020, with the potential to exceed $56 billion. Globally, social commerce is expected to be responsible for $2 trillion in sales by 2025. That said, social commerce is part of a larger trend that we're already familiar with: omnichannel marketing.

That's why in addition to your local landing pages and your usual roster of listings to manage (like your Google Business Profile and Apple Business Connect), make sure that all of your local listings are updated with publishers like Facebook as well. Referring back to the growing trend of consumers expecting the omnichannel experience, it's important for these details to be up to date.

Other channels that retailers will experiment with this year are Augmented Reality (AR), though these retailers will be well ahead of the curve given that this new channel is still in its infancy; AR is only a $4 million industry today, though it's expected to reach nearly $18 million by 2028. Finally, collaborations with other brands and creators seem to be successful, at least in sharing first-party data.

Despite all of these changes, retailers really only need to focus on one thing: delivering a consistent, delightful commerce experience. Although omnichannel experiences, first-party data, and creative channels are all powerful strategies, the aspiration remains the same: how can we deliver value to our customers today?

Are your stores missing out on revenue? Request a personalized local landing pages assessment today.