What you need to know about retail trends in 2023

The conscious consumer: affordability, health, and sustainability

One of the most intriguing trends in retail is conscious consumerism. This phenomenon refers to the rise of a sizeable group of consumers who are making conscious choices about what, why and how to buy (food & retail) products. When the trend emerged, more and more consumers were choosing health and sustainability over affordability – and health over sustainability. However, the economic climate has changed dramatically in the course of a year. So when we conducted a second survey, at the end of 2022, consumer priorities had altered accordingly. 

For instance, in the current economic climate, 7 out of 10 Dutch consumers will buy the cheapest product, even if it’s not sustainably produced or sourced. Contrary to the popular opinion that younger generations are more concerned about climate change, this number is even higher for Millennials and Gen Z (almost 8 out of 10). Of course, younger generations are usually less affluent than older ones, so maybe financial constraints are holding them back from more eco-friendly decisions. When it comes to health, things are different. When respondents were asked to choose between health and affordability, their key priority turned out to be health. Apparently, the purchasing decisions of Dutch consumers are driven mostly by individual interests (affordability, health) rather than by common interests (sustainability).

What do these results mean for retailers? Consumers do care about sustainability, but even more about affordability and health. It might be wise to balance and temper retail messaging around sustainability, and focus more on value and health. On another note: what the survey also revealed was that overall, for more than half of the respondents the convenience of online retail is hard to resist. Especially younger generations are quick to recognise the advantages of online purchasing and are willing to pay more for products online. They are also more open to ultra-fast delivery (10 to 15 minutes) and additional costs. 

More Retail Trends

Next to conscious consumerism, Deloitte has identified five other key retail trends for 2023 that could help retailers grow their business in the year ahead.

1. Unlocking value.
   Ongoing cost pressures will lead to difficult decisions about prioritising capital allocation. That is why there will most likely be a renewed focus on performance improvement in 2023. More than ever, retailers will be interested in identifying, improving, and creating efficiencies across all areas of the business, and focused on maximising the value of available assets. 
2. Experience innovation 
   The importance of innovative technology and business models will increase further in order to respond to changing consumer behaviour across the entire customer journey. Retailers will be able to differentiate themselves if they engage directly with consumers, support the growth of communities, and actively encourage interaction with their brands. Social commerce and gaming will offer extra growth opportunities, as will immersive, technology filled physical stores. 
3. Planet & Society
   Retailers do not only have to live up to rules and regulations regarding planet & society, but they can also benefit from major growth opportunities connected to their net zero commitments. In fact, 2023 could be the year when they can make their targets – which might have seemed too ambitious before - seem achievable.
4. People & Leadership
   Retail is a people business. If employees don’t feel fulfilled or looked after, customer service will suffer. It’s essential for retailers to consider what really matters to a new generation of retail employees, while navigating new ways of working, challenging decisions on cost, and delivering on net zero ambitions. This requires strong, empathetic and purposeful leadership.
5. The impact of AI on the retail industry in 2023
   And then there’s AI, with its potential to cause major disruption in the industry this year. There are a number of ways in which AI will have a severe impact, from Personalisation and Predictive Analytics to Inventory Management, Automation of repetitive tasks, Chatbots, and Image recognition. For instance, looking at Predictive Analytics, AI could be used to analyse data from various sources (including customer data, sales data, and social media data) to predict customer behaviour and trends. This can help retailers to make more informed decisions about storage, pricing, and marketing.