By Anastasia Lloyd-Wallis
COO & Head of Insights, Retail Doctor Group
2022 has been a rollercoaster for retail, with changes across all areas but none have been more significant than the changing consumer. Covid has led consumers to have higher expectations from retailers and brands, the rise of digital platforms has made it easier than ever to purchase products but also to make their voices heard all cumulating in a very different consumer than we saw 12 months ago.
Our predictions so far
In part 1 of this blog we delved into the first 4 trend predictions and, more importantly, what retailers can do about them…
- The Price Sensitive consumer
- Catch me in seconds – The impatient consumer
- Experiential Retail
- Customer Loyalty Loop
We learnt that consumers are more unsure about their financial position, they value their time in a different way – and because of this are more demanding of reailers and their experience with a retailer is no longer a linear journey, we are now looking at a loyalty loop.
So without further ado we will now look to uncover the remaining 4 consumer trends for 2023.
- Social Commerce
- Brand Humanisaton
- Privacy First
- Get Circular
Lets have a look at the first next trends to understand what retailers can do to deliver to customer expectations in 2023.
TREND 5: Social Commerce
The widespread use of social media across the globe has turbo-charged social commerce, especially amongst the younger demographics. This rise caused a resultant splash in retail, with the percentage of consumers using social media to interact with retailers doubling across categories.
Our recent research indicates that:
- 47% of respondents use social media channels for shopping.
- More consumers are using Facebook, Instagram, Google Shopping, and TikTok to interact with brands since last year.
As social commerce seamlessly blends social experiences and e-commerce transactions through a single path to purchase, we expect social commerce to take a significant share of existing e-commerce markets by 2027. Furthermore, our research shows that social media usage varies significantly for different personalities, not just age groups.
Different consumers have different expectations from what they want to see on social media. Thus, it is vital to understand your customers’ emotional needs and invest in the appropriate channels, rather than waste valuable time and marketing spend on social media channels just because they are on-trend.
Social Media Shopping Trends
47% of participants state they shop on social media, higher amongst women (69%). Facebook shop/Marketplace is the dominant social commerce concept, followed by Google Shopping.
Other statistics include:
- 1 in 5 women state they shop on Instagram.
- 3 in 4 Millennials state they shop on social media channels.
- Instagram and Tiktok are the significantly popular social e-commerce concepts amongst Millennials.
- 69% of men don’t shop on social media, significantly higher than the amount of women (36%) who don’t either.
- Facebook Marketplace is used by 39% of women to shop, more than double their male (18%) counterparts
- Google Shopping is another go-to e-commerce destination for women (31%), while only 16% of men use it to shop.
- Only 4% of men use Instagram or Livestream to shop, while five times that many women (21%) shop here.
- TikTok Shop/Livestream sees only 3% of men shopping here, with a higher amount of women (13%) using the platform to shop.
- Men (1%) are 11 times less likely to use Pinterest shopping for their needs, while more than 1 in 10 women (11%) do.
So how are retailers using these social platforms to make sales?
1. Instagram – In-Chat Payment Feature
Instagram estimates that one billion people message a business across their apps every week. This includes chatting with brands, browsing products, asking for support or interacting with Reels.
To delivery an easy, and frictionless experience to customers, Instagram has introduced a new way to make a purchase on their platform, right where customers chat with your brand. The in-chat payment feature allows users to purchase products from small businesses and track orders via direct messages on Instagram in the United States.
2. Snapchat AR Lens
Snapchat users engage with its augmented reality lenses more than 6 billion times per day. In addition to this, 93% of those users want to use those AR lenses for shopping.
To further reduce the friction and provide customers with a seamless experience, Snapchat launched a new shopping lens feature, allowing users to browse multiple products in one place. Using the lenses, users can review product information such as colours, sizing and pricing, as well as look at similar products from retailers.
3. TikTok Product Fulfilment Centre in the U.S.
TikTok is planning to build its own product fulfilment centres in the U.S., creating an e-commerce supply chain system that could directly challenge Amazon. The move accelerates TikTok’s commitment to e-commerce and to generate extra revenue streams as the company maintains its projections as the world’s most popular social media platform.
This bold move would be huge, not only for TikTok, but for the entire retail industry, and would change the way consumers shop online.
TREND 6: Brand Humanisation
Consumers buy with their hearts, not their heads, and are driven by emotions to make purchase decisions. According to Harvard Business School, 95% of purchase decisions are made by emotions. Thus, to broaden the connection with the customers and resonate emotionally, brands must know who their customers are and what type of journey they are on.
When there is a fine line separating one brand from another, the one that’s formed the emotional bond almost always closes the sale. The journey of personalisation and humanisation allows brands to build trust and inspires loyalty.
Thus, it’s essential for brands to start their journey of humanisation to deepen and enrich customer relationships.
Humanisation of brand requires brands to connect with consumer on subconscious level, create shared values, emotions, and principles, then craft the offer and message that resonates with the customers’ identity and emotions.
In 2023, we will see more retailers strategically building an emotional connection with their customers and making sure customers connect with their brand attributes and cues, so that the brand is not vulnerable to offers and solicitations from competitors.
TREND 7: Privacy First
Numerous data branches – including the recent Optus and Medibank data breaches have prompted consumers to raise their awareness of and to be more concerned about their privacy. More and more consumers are now striving for privacy and invisibility in an age of omnipresent surveillance. Retailers will need to safeguard consumer and business data and build trust amongst their customers.
As the digital environment and data practises keep evolving, our research indicates that almost 8 out of 10 respondents want brands to do more to protect their customer data and named privacy. This is a top concern for consumers.
Moving into 2023, we will see customers demanding more control and choice over how their personal information is collected and used. To provide customers with an exceptional online shopping experience while also giving them confidence to shop, retailers must comprehend how customers feel about the security of their personal information.
Consumers are more concerned about privacy issues than ever:
- 78% of consumers agree that “brands must do more to protect customer data”. This sentiment is higher amongst men (85%).
- 64% of consumers agree that “I worry about how companies use my personal data online”. Here, Gen X consumers top the charts at 66%.
- 62% of consumers agree that “I’m concerned about my privacy when using the internet”. Our research indicates that this is especially of concern to Baby Boomers and Seniors (73%).
Factors Influencing Privacy/ Data Concerns in Online Shopping Environments
As consumers are clearly (and with good reason) worried about their privacy, over half of them (53%) wish not to share too much of their personal information when shopping online. 38% of consumers want to see more additional security steps promoted to further ensure the safety of their privacy.
Online retailers not collecting passive data and not using tracking cookies are preferred by 37% of consumers, while 3 out of 10 consumers simply won’t do business with you if you’ve previously had a data breach. More than one quarter of respondents stated they would feel better doing business with brands that are also considered trustworthy by friends and family. 24% felt that better ratings and reviews could also be considered trustworthy.
Expectations on how to deal with data breaches require that brands:
- Be proactive in their reporting of a data breach or hack (30%),
- Share their approach to protect the data and how the data will be used (24%),
- And publicise their consumer-privacy interest (18%)
These factors are expected to be more significant in the future with increasing consumer privacy/data concerns. Alarmingly, more than one in seven people said that none of the above measures could allay their fears about a data breach or privacy issues.
TREND 8: Get Circular – Reuse and Recycle
Sustainability – and sustainable practices – have long been on people’s minds, so this trend is really no surprise. The emergence of this trend came about as a by-product of the pandemic and continues to gain pace with shoppers. Increasingly concerned about the amount of packaging used, its impact on the environment, and how we can reuse or recycle products, shoppers are looking to change their planet-saving behaviours, patterns, and habits.
46% of Australians say their values and the way they look at life has changed since the pandemic. They are now focused on their impact on the planet. A product’s social and environmental impact is more important than ever, and brands will need to explore ways to connect sustainably – be it using local province, customising products to save the planet, or engaging in locally relevant ways.
Getting circular is now about more than just donating to the sustainable cause. Consumers want to see how brands are stepping up to re-engage local and Australian businesses in sustainable ways. They are non-negotiable in their ethical beliefs, with almost 4 in 5 saying that the treatment of staff is of quite high importance to them. Consumers see this as a hygiene factor for doing business with a retailer and are not willing to pay more for common, human decency.
How Consumers’ Personalities React to Sustainability
- Olivia, the Open-Minded consumer, is interested in a company’s community work and plant-based products.
- Hanna, the Hedonistic consumer, wants to know how she is contributing. It’s about how being ethical makes her feel.
- Andrew, the Adventuristic consumer, is interested in brands that are activists and are leading the change.
More consumers than ever before are speaking out on behalf of the planet — not just with their voices and votes, but with their wallets as well. 35% of respondents are willing to pay a premium for local products. Additionally, more than 1 in 4 customers are willing to pay for sustainable products. Lastly, 2 in 5 consumers prefer brands that are transparent about where their products are made.
Millennials and Zoomers expect brands to be on the forefront when it comes to sustainability and ethics. However, they are not willing to pay a premium for this, it is now a hygiene factor for engagement with them.
Is your customer-driven by social cause, sustainability or circularity?
Contact the RDG Consumer Insights division today, and learn how to drive increased loyalty to your brand, while also tailoring your customer experience to enhance loyalty.
Where to Next?
Whilst consumer behaviour is rapidly changing due to many factors – which can be outside of our control – the one thing that remains constant is that consumers are emotional human beings.
Their emotions drive 95% of their decision-making, and their personalities remain stable whether they are 14 or 86! Thus, you first need to understand who your customers are and what their emotional drivers are. It could be status, security, care, action, fun, safety, reliability, or enjoyment. From this, you can then predict their future behaviours and how each trend may apply to them.
In this everchanging retail world, our future predictions go beyond the trends.
Be the best retailer you can be.
Do you want to understand your customers on a deeper level, go beyond their demographics and talk to them on an emotional level? Contact RDG Insights Division for a better understanding of your customers’ minds and more importantly HOW to action this is your retail, instore, brand and marketing strategy at businessfitness@retaildoctor.com.au or call +61 2 9460 2882.
To read more about our 2023 consumer trend predictions download the whitepaper here