Opinions expressed by Entrepreneur contributors are their own.
With 2023 here, retailers geared up to make the most of the festive season with discount deals, slashed prices, free deliveries, bonus packages and more. That said, there’s an elephant in the room this season — and that’s the uncertainty about the consumer market. Recent headlines about inflation have changed most shoppers’ buying habits this year. Compared to 2021, one in four Americans (22%) is spending less on gifts this year. Conversations on social media around inflation relating to holiday shopping have increased by 35%.
Further complicating the issue was the disruption of global supply chains caused by the pandemic. Increased demand for items led to skyrocketing prices. With customers now less willing to pay higher prices for goods, retailers face a potential decline in revenue, sales and profit margins. Retailers looking to minimize the impact of inflation, changing customer behaviors and an unstable market on their business must employ strategies to create an engaging and immersive shopping experience.
Here are five predictions to help you meet your customers’ needs — and keep your business competitive.
Related: How Compliance is Exposing the Fragility of the Global Supply Chain
1. Increased adoption of an omnichannel approach
A seamless shopping experience is quickly becoming the order of the day as customers want the flexibility of combining shopping on their phones with shopping at brick-and-mortar locations. The recent Shopify report proves this, with 54% of consumers saying they’re likely to look at a product online and buy it in-store — and vice-versa.
Sephora is an excellent example of a company already adopting this approach. Customers can visit the brand’s website to add products to their carts and visit the store to try on their items before buying.
To take advantage of the omnichannel experience, retailers should create a social presence that retains the brand identity across multiple channels. This includes messaging, services, pricing and overall customer service.
Doing this well can make it easier to understand and predict customer behavior. You can tailor your consumers’ experiences to match your marketing and sales needs.
Related: Future Of Retail Is Omnichannel
2. Hyperpersonalization will skyrocket
With shoppers now spending cautiously, typical personalization tactics are becoming ineffective in driving sales. Gone are the days of generic marketing emails with automated first-name snippets.
Now, customers want purchases to fit their needs which requires brands to make customers feel more connected to the brand — which can increase loyalty and retention. According to a McKinsey survey, 71% of customers expect companies to personalize their experience, and 76% are frustrated when they don’t find it. Creating hyper-specific recommendations based on customers’ browsing history, past purchases, location, gender and age — increases the likelihood of making more sales and generating 40% more revenue.
3. AI redefines the shopping experience
The introduction of DALLE-2, LensAI and, most recently — ChatGPT — has sparked discussions around their use in retail. ChatGPT is an AI with nearly accurate responses to user queries—which can be used for conversational commerce. For example, in terms of personalized recommendations, AI can accurately recommend products using customer data. This helps the customer make an informed decision, driving sales.
Regarding customer service across different channels, AI can easily give users the same experience by providing support and assistance at a far larger scale. While artificial intelligence is already in play in most parts of the retail industry, its adoption in 2023 will redefine the entire shopping experience.
Related: Princeton Student Builds ChatGPT Detection App to Fight AI Plagiarism
4. Data privacy laws will become stricter
The debate on data privacy will likely become more heated in the next year, with the European Union proposing stricter regulations via GDPR. Under GDPR, user consent plays a big role in collecting sensitive and non-sensitive data. This means retailers and advertisers need to be transparent in using user’s personal data and offer consumers the option to delete or erase their data.
The problem with the GDPR: Advertisers need user data to serve targeted ads. Retailers need advertisers to market their goods. Now, with laws becoming stricter in collecting this data, advertising prices are expected to increase.
5. A switch to organic marketing
The recent rise in advertising costs has pushed most retailers over the edge. Why? The current ad space price is double (with some triple) what it used to be. This means retailers are paying more to reach the same audience—with no estimated profitability, sales or even revenue guarantee.
As a result, many brands are now moving toward organic marketing and capitalizing on its benefits. SEO, social media, content marketing and influencer partnerships are all tactics to ramp up in 2023. Using organic marketing in retail is a strategic approach that can help you build trust and maintain long-term customer relationships.
Looking ahead, retailers are facing ups and downs in the market. Finding ways to appeal to customers’ needs is vital to staying afloat — and profitable. The strategies we’ve highlighted here will help you along the way while preparing you for what’s to come.
Jacob Loveless
Source link
