January brings with it thoughts about the coming year and the retail industry is no exception – trying to second guess how the next 12 months will pan out might feel impossible to many small business owners. However there are tried and tested ways to forecast how the year will likely look for the retail community and in turn, using this knowledge to inform plans will enable you to get the best out of 2023.
After the pandemic-led disruption of 2020 and 2021, the retail industry had pinned its hopes on 2022 being a return to something approaching normality – none of the experts had quite predicted how the ‘cost of living crisis’ would unfold and how ongoing turmoil with the UK government would impact the economy as sharply and severely as it did.
“The real difference in 2022 is that the cost of living crisis has impacted on consumer demand, especially in the second half of the year,” suggests Andrew Goodacre, CEO of the British Independent Retailers Association (BIRA).
“At the same time, we have seen the costs of running a business increase very sharply – energy costs are 400% more, wages are 10% more and there is still supply chain inflation.”
2023 requires business owners – us – to pay close attention to key industry trends that are impacting how customers will buy, shop and communicate – finding the balance between selling products that are wanted and needed, while recognising that levels of discretionary spending have been hard-hit by the current economic climate.
For many of us small business owners, finding this balance will rely on a number of different tactics, from better stock and range management to communicating in a more personalised way with our customers.
I’ve focused on four trends for the retail industry in 2023 that I believe if acted on well many small businesses will not only survive but thrive during the next 12 months.
Value for money
There’s no avoiding it, your customers are counting their pennies. Talking to your customers about value for money has got to be the top of every business’ priority list in 2023. Take note – this is not just about the cheapest option. It’s about explaining why spending money with you is an excellent choice, many shoppers will reevaluate their spending at this time of the year and good quality, long lasting products will be on people’s checklist. So make sure you are being very clear with your story – take some time this month to ensure every potential customer understands why your products are value for money. Review your website, remind them in your newsletters, create some targeted social media messaging and, of course, find creative ways to spread the word inside your bricks and mortar stores.
Resale, more than ever, is one of today’s consumer’s top priorities – resale ticks two very important boxes. Second-hand shopping is not only an environmentally-friendly option but it also offers lower prices and value for money. Whether it’s eBay sponsoring Love Island with “pre-loved fashion” or the growing desire to buy second-hand goods, resale is a trend that hits 2 vitally important shoppers needs and desires.
The key is thinking about how circularity, which includes resale but also repair, recycle and reusing could work for your business.
Smart businesses are diversifying. One of the big winners from the pandemic years, e-commerce has seen an 11 month decline in 2022 as a percentage of total retail sales. Coupled with rising costs of acquisition, 2023 is the year to look at all the different places you can sell, and aim to reduce over-reliance on traditional e-commerce. Whilst planning use the knowledge that ‘local shopping’ is still growing – small businesses especially need to engage local shoppers with a range of ‘points of sale’. Offering more ‘points of sale’ opens the door for creative collaborative working with other small, local businesses. Diversifying ‘point of sale’ offerings together – a joint online hub, click and collect services, eco delivery with other local businesses. 2023 is the year to meet your customer where they are and embrace your ‘local’.
Fans not customers
All retailers should be prioritising loyalty this year and taking it to the next level. Focusing on your loyal customers as a way to grow has long been vital, but in 2023 retailers should be focusing on creating fans and communities. For proof of how fandom works with selling products, take a look at the booming creator economy where fans of personalities are buying in to what their favourite creators are selling.
So, despite the challenges 2023 is throwing up – remember that customers are still buying. It is up to you, the small business community, to show shoppers what they want to see, when they want to see it! Good Luck.