December 21, 2022
Expert Retail Industry Trends and Predictions for 2023
The retail apocalypse may not be over just yet.
Retailers have survived several years of shifting demand, excess inventory, inflationary pressures and supply chain disruptions. After beginning to rebound in 2022, the retail industry is heading into 2023 with slowing momentum and disappointing holiday sales.
The new year will bring new challenges that will test the industry’s resilience. For retail and wholesale companies, careful preparation and strategic planning will be critical to expanding while others contract.
Here are five retail industry trends and predictions for 2023.
1. Driven by social media shopping, e-commerce will reign supreme.
E-commerce has quickly grown, becoming the preferred shopping experience for the younger generations. E-commerce will continue to grow in 2023 as more consumers trade in-person shopping for online stores.
According to a recent Hootsuite report, 58.4% of global internet users make an online purchase every week, and 30.6% of people make that purchase on their mobile devices. Insider Intelligence projects worldwide retail e-commerce sales will make up 22.3% of total retail sales by 2023, totaling over $6 trillion.
Experts predict that social commerce will fuel an e-commerce boom in 2023, with platforms like TikTok increasing their influence. The #TikTokMadeMeBuyIt trend, which has 8.1 billion views and counting, features young shoppers explaining how their favorite influencers and videos influenced their purchases. The e-commerce sector will get a boost when the platform launches its own commerce platform, “TikTok Shop,” to more U.S. business owners.
2. Hybrid shopping will become the default customer journey.
Online and offline shopping experiences are merging, creating a new customer journey that involves interactions with both brick-and-mortar and e-commerce stores. In 2023, experts predict this type of “hybrid” shopping that mixes physical and digital channels will become an industry staple.
According to IBM, hybrid shopping is already the primary buying method for 27% of consumers and 36% of Generation Z shoppers. For example, people may buy an out-of-stock item in-store but request home delivery, or others may make a purchase online and pick it up curbside.
These multi-channel shopping experiences require retailers to have plenty of warehousing space and an accurate inventory management system. As a result, many retailers are turning to third-party logistics (3PL) companies to handle the heavy lifting — a decision that will become more popular in 2023.
3. Ongoing labor shortages will prove challenging for retailers.
Though the Great Resignation has hit companies across sectors, it has disproportionately impacted the retail industry, where 70% of job openings remain unfilled, according to the U.S. Chamber of Commerce. Labor will likely become an ongoing challenge for retailers in 2023, particularly in the e-commerce sector.
FedEx found that 65% of e-tailers struggled to handle the number of orders they were receiving in 2022, and 62% believed there were too few people in the labor pool for too many open jobs in the retail industry.
Some retailers are counting on 3PLs to fill the gap in this tight labor market. Instead of hiring their own in-house team or temporary staff, outsourcing some or all deliveries and warehousing to a 3PL will shift part of this burden off retailers to the awaiting logistics industry.
4. Customers will continue to expect fast, free shipping.
During the pandemic’s e-commerce explosion, consumers began expecting faster deliveries — and they expected them to be free. To compete with e-commerce giants like Amazon, small- and medium-sized retailers will continue experimenting with free two-day shipping in 2023.
A BigCommerce survey found that half of the respondents will avoid shopping with a retailer that does not offer free shipping, and another 24% will only buy from that retailer if they have no other option.
As a result of the growing demand for fast, free shipping, 58% of retail executives are focused on building agility to adapt, according to IBM. To stay competitive, retailers must either ramp up their delivery services or partner with 3PL providers that already have the capabilities and assets to deliver items quickly.
5. Customers will seek out products with sustainable packaging.
According to Shorr, 57% of surveyed consumers are more likely to purchase a product from a retailer if the packaging is sustainable. Experts predict this growing consumer demand for sustainability will force the issue into the limelight in 2023.
Consumers are aligning themselves with brands that have similar values. The retail industry will have to keep up by reducing its own carbon footprint and choosing vendors and partners with similar commitments to sustainability.
Though more challenges are ahead for the retail industry in 2023, there will also be new opportunities to capitalize on shifting consumer priorities and demands. With the right partners, retailers can make the most of the new year.
Armstrong Supply Chain Solutions provides distribution, transportation, first mile, final mile and asset management services to companies across the country. We would love to have a conversation with you and your team about your needs, goals, and how Armstrong can provide solutions that work for you. Call 800.288.7396 or request a free quote online.Return to Blog Homepage >