At NRF’s Big Show 2023 we got the first look at the top consumer trends with the biggest implications for retailers and brands for 2023.
In this session, Michelle Evans – Global Lead of Retail and Digital Consumer Insights for Euromonitor International revealed the latest insights from Euromonitor’s annual ‘Global Consumer Trends Report’. She explained the behaviours and motivations that will drive shopping habits next year so retailers can meet new demands.
Euromonitor International is the world’s leading provider of global business intelligence, market analysis and consumer insights. They partner with retailers to provide the custom solutions to support decisions and grow your business.
Globally, we reached 8 billion consumers in 2022. Gen Z is now 25% of all consumers and becoming an important segment. Globally today, 62% of consumers use the internet, that is double what it was a decade ago.
Euromonitor International estimate shoppers spent US$10.2 trillion online in 2022, and around US$64 trillion in total retail spend. However, the rate of growth has been the slowest since the pandemic eased.
It is predicted global economic challenges will soften spending, leading to around +2.6% GDP growth, constrained by geo-political tensions and inflation.
Trend 1 – Authentic Automation
‘High tech, high touch’ – consumers in 2023 are demanding technology with a human touch. They want speed but also want an emotional connection, which enables consumers feel connected and appreciated. Something they have lacked over the past 3 years of the pandemic.
The level of ‘intrusiveness’ associated with technology will become a barrier to adopt and use, and will distract from the store experience. Consumers are happy to purchase online with technology and use it to expedite their transaction, but they get ‘less comfortable’ when technology ‘intrudes’ into services. Robo-manicures or robot-baristas were examples of where consumers still want a human touch.
Euromonitor’s research found 55% of retail executives plan to invest in AI over then next five years, 42% in AR/VR and 38% in robotics and automation. However, before investing retail leaders must assess touch points – where could you implement, versus when should you implement, are two very different and important questions. Don’t implement technology, just because you can. Humanise technology as much as possible.
Trend 2 – Budgeteers
Euromonitor’s research identified an emerging consumer, labelled the ‘budgeteer’. As higher inflation kicks, leading to higher prices and costs of living, consumers are making beginning to make different decisions.
Research found 28% plan to decrease in spending, while 21% will shift to private label or affordable brand options. A further 28% will shift to discounters, like ALDI to save, and 46% plan to save this year.
Retailers are responding by increasing ‘subscription’ models, which will enable consumers to ‘spread’ repayments across longer periods of time. Adding perks and discounts to their loyalty programs, which creates a higher value proposition.
Euromonitor’s research found 55% retail executives expected their business would be forced to increase prices on products and services due to inflationary pressures. This may lead to SKU rationalisation to pull down in costs.
Expect to see the growth of BNPL products continue to grow in the market, as credit becomes more difficult to attain.
Retailers will look for partnerships to grow value and reduce or at least share costs of doing business
Trend 3 – Eco-Economic Consumer
Reduced spending and consumption behaviours are having a positive impact on the environment and sustainability. For example, for three years, we travelled less, drove less and many of us are still working from home. Fewer emissions.
As consumers ‘dial back’ on consumption, these behaviours will positively impact the environment.
As costs of living increase, consumers will be reducing food waste – choosing to eat ‘left-overs’ rather than throw out good food. Consumers will reduce energy consumption. Turning off lights and air conditioning to avoid increasing electricity bills. The same will hold for gas and water.
They will seek to repair, to extend the life of products, to avoid having to buy replacements.
Retailers can gain from this shift. Already Nike is providing a shoe cleaning facility in some of their stores. UK supermarket, Sainsbury, launched a pop-up, ‘Sains-freeze’, to educate consumers how to safety freeze and re-heat left-overs to reduce waste and household costs.
Retailers will capitalise on this trend by investing in business models that help consumers save, while doing good things for the environment.
Euromonitor’s research found 45% retail executive plan to invest in sustainability initiatives over the next 5 years.
Trend 4 – Revived Routines
After 3 years, consumers want to get out and live their lives once again. They plan to increase social activities, which will lead to positive outcomes for the beauty sector, cosmetics, hospitality and entertainment sectors.
Mango, one of Europe’s leading fashion brands, capitalised on people returning to the office. They started offering live steam shopping and advice on business wear and getting ready for ‘back to the office’.
Euromonitor’s research found 39% of ‘digital consumers’ expect to get back into daily everyday activities, like exercise, getting back into the office, travel, and socialising in 2023.
Retailers can capitalise on this trend by considering how they can ‘fit into people lives’, as normality returns. Sporting goods and activewear retailers are expected to gain from this trend.
Trend 5 – Young and Disruptive
Generation Z are increasingly becoming the decisions makers and a very important segment. Euromonitor’s research found 25% of consumers today fit the Gen Z descriptor.
Gen Z, born from 1995 to 2010—are true digital natives. They have been exposed to the internet, to social networks, and to mobile systems. Today, aged between 13 to 28, they are becoming an important segment.
Euromonitor’s research found 48% of Gen Z’s want to buy products considered ‘innovative’. A further 30% will buy brands with strong social and political beliefs, and they will boycott brands that aren’t transparent or don’t align to modern social norms.
Approximately, 65% trust ‘independent’ product reviews more, than corporate marketing massages.
To respond, retailers should use transparent product endorsements and authentic brand ambassadors, to connect more with Gen Z.
To conclude, Evans singled out some important points for retailers.
Firstly, we are now moving into a period of cautious and conscious consumers.
Secondly, the experimental mindset is rebounding – consumers are wanting the get out and about once again. Expect an increasing YOLO mindset to drive consumption. Despite inflation, there will be consumers who say, ‘you only live once, so spend, travel and experience life to the fullest’.
Finally, consumers will seek authentic interactions. It will be important for retailers to blend ‘high tech, with high touch’, using technology to deliver genuine connections.