Comprehending consumer demand and retail trends for 2023

– By Samir Kumaar Modi

With 2023 just around the corner, most brands are hopeful that consumer demand in India will remain resilient despite headwinds across the globe. At this juncture, one of the first things organisations wish to know is how consumer demand will shape up and what will be the overall trends that brands must heed. 

In the post-pandemic ecosystem, 2022 has been one of the most transformative years in the retail sector. Initially, companies received a massive blow with the closing down of brick-and-mortar stores all over the world, which consequentially strengthened the belief that e-commerce and omnichannel are the future. Simultaneously, brands also had to step up their digital strategies to maintain their consumer connect and drive sales given the ongoing pandemic. As consumers adapt to these technological interventions, 2023 remains an important year for brands to fortify their consumer-centric retail practices to thrive in the digital-driven retail economy. 

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Key Insights for 2023

Keeping the importance of insights and forecasts of retail and customer demand in mind, here are some expected trends to help brands in improving consumer experiences while better navigating 2023. 

E-commerce is here for keeps: Though e-commerce had already gained considerable traction before 2020, the pandemic accelerated its sales volumes and acceptance. Although the growth momentum slowed after lockdown restrictions were completely lifted, online shopping has crystallised into an indivisible part of most consumers’ habits. The emergence of social commerce is giving a fillip to e-commerce due to its convenience and non-invasive advertising. Furthermore, influencer marketing is also one of the most popular marketing strategies for retailers due to the strategic targeting of consumers and swift return on investments.  As per estimates, there may be up to 24 million online stores worldwide. Consequently, market analysts anticipate the global e-commerce segment will reach $8.1 trillion by 2026, rising from $5.7 trillion in 2022. Over the years, expect the scale, complexity and popularity of e-commerce to keep growing. 

24×7 customer support is crucial: To paraphrase an imperialist era maxim, ‘The e-commerce empire never sleeps’. Since online orders can be placed/executed at any time of the day or night, customers expect 24×7 services. Simply offering excellent service isn’t good enough – it must also be always available. The provision of 24×7 customer support ascertains that problems and issues are managed or resolved at the outset, rather than allowing matters to escalate. Yet, it’s challenging to have human resources on call at all times. This brings up the next essential element – chatbots. 

Virtual assistants can bolster consumer support: Chatbots have established their foothold as the online equivalent of a human representative and have been making their presence felt during the past few years. By 2027, Gartner predicts 25 per cent of companies will deploy chatbots as their main customer service mechanism. Chatbots help brands save money, offer better customer support, engage with consumers via multiple channels, deliver always-available customer service and expand across geographies without accumulating overheads or other baggage. Chatbots are also adept at answering FAQs, obtaining feedback and providing multilingual support. 

Seamless omnichannel experience: To retain competitiveness, brands need to integrate offline and online shopping experiences. Customers are accustomed to researching products online and then buying in-store or vice versa. As a result, the fine line between buying online and offline has blurred in recent times. Not surprisingly, legacy retailers are opening online outlets while virtual entities have been building brick-and-mortar stores. Today, retailers migrating online are investing heavily in tech AI, AR and VR to facilitate more immersive online experiences akin to in-store shopping. 

Transparency regarding delivery: Apart from free and fast deliveries, customers these days demand real-time visibility and flexibility. Additionally, fulfilling all delivery promises is equally critical to attracting and retaining consumers. To achieve this goal, retailers must be transparent about delivery timelines and delays, if any. If deliveries are delayed without customers being informed in time, a significant percentage may no longer be keen to buy from the portal again. Therefore, it’s vital to set clear and realistic delivery timelines while allowing consumers on-demand delivery status checks. 

Sustainable packaging and products preferred: Consumers prefer packaging that is sustainable and can be recycled. However, e-commerce packaging remains one of the industry’s largest emission sources – six times higher for online orders compared to in-store purchases. Retailers should use recycled materials and also pay attention to both outer and inner packaging to promote sustainability. Harvard Business Review reveals that products marketed as sustainable have higher average sales growth of 5.6 times vis-à-vis the non-sustainable versions. As buyers turn more conscientious, sustainability is one of the core concerns driving purchase decisions. 

The rise of D2C brands: Another trend that requires distinct elaboration is the emergence of the D2C category. Thanks to its greater accessibility, lower prices, convenience, seamless online payments, inexpensive internet access and the surge in social media usage, direct-to-consumer is gaining prominence among both buyers and brands. As swiping on apps becomes popular, brands are transforming their marketing and social media strategies. YouTube, Instagram reels, influencer marketing and regional marketing are all going mainstream, bypassing traditional marketing. 

After a pandemic-riddled era, it is evident that change and constant innovation propelled by evolving consumer habits and expectations will be key driving forces in 2023. It is imperative for organisations and retailers to switch to smart AI and retail-tech solutions that are in alignment with their business goals. Brands that remain agile, adaptive and affordable while meeting shifting consumer demands through tech tools and innovation will continue to rule the markets. 

(Samir Kumaar Modi is the Managing Director of Modi Enterprises)