Retail is going through a period of change and the road ahead is unknown. 2023 is going to be a tough year with many challenges to overcome - ongoing supply chain issues, rising inflation and more.
It’s not all bad though! Artificial Intelligence and data-driven retailing are just two of the trends that will keep the industry alive.
Here are our retail predictions for the year ahead:
1) Customer Lifetime Value
Customer Lifetime Value will continue to surpass Conversion Rate and Average Order Value as the key metric for retailers as they start to realize the potential of their own websites over Google shopping.
We should expect to see smarter and more relevant retention strategies and this will link back to personalization. The more you make a customer feel like you know them, the more loyal they will be to your brand.
2) 1-2-1 Personalization
1-2-1 personalization will accelerate with brands launching entirely unique experiences to each customer. It won’t be enough to just keep playing at the edges anymore.
Customers will be better guided and educated while they shop as retailers move to richer experiences. No more rows and rows of the same garment category, outfits will start to play a key part of the shopping journey and customers will be able to shop in the context of their wardrobe.
3) Artificial Intelligence (AI)
AI is the underlying infrastructure for retailers to make data-driven decisions and give customers highly personalized experiences. It’s an invaluable part of how customers shop.
With AI comes the rise of avatars, the metaverse and voice search - to name just a few! We are not saying that by next year every brand will be able to give customers a 3D avatar of themselves but we will start to see more brands putting the building blocks in place so they can hit the ground running when the time comes.
This increase in AI and personalization will however see customers becoming more confident to make bigger online purchases and we’ll definitely be seeing the influence of fashion trends from the metaverse in how people dress in real life.
Sustainability agendas are forcing brands to look more seriously at their impact and build genuine initiatives. There will be a continued rise in the rental revolution and fresh approaches including testing out products in the metaverse.
A huge win for sustainability will be getting retailers to understand the link between supply and demand and stop a lot of the over-consumption at the source. There is so much wastage in the fashion industry that can be eliminated through better predictive retailing models within each retailer. We can expect to see more of this over the next 12 months from the forward-thinking retailers.
This use of data-driven retailing will become the divide for the winners and the losers.
5) Data Privacy Regulations
Data privacy is an increasing concern among consumers and regulations are being put in place with strong penalties for violating them. Google Chrome will be among other search engines to phase out third-party cookies in 2023.
Considering this, the ability to work with first-party data will become ever more important if brands are to continue a personalized experience for their customers - especially as 70% of consumers expect personalized recommendations (Dressipi Consumer Report).
This will not be a problem for Dressipi’s recommendations as we exclusively work with first-party data such as tracking information from partners and feedback from the style quiz
6) Reduced Returns
Reduced returns will be a positive to come out of inflation and the cost of living crisis. Cheaper items typically have lower return rates so with more consumers opting for the lower value items to reduce their spending, we will see a dip in returns.
Although we are predicting a dip, 2023 will also see more retailers announcing they will be charging for online returns. This will be beneficial for retailers in a time when they really need to protect their profits and with the cost of returns going up due to increased delivery costs.
7) Physical Stores
Physical stores will be transformed into experiential spaces to have a sense of community or a space that is a neighborhood hub and not just a place to shop. The spaces will merge the physical and virtual.
Gymshark’s recently launched first physical store in London is billed as a ‘retail space, gym and community hub’; H&M’s new ‘revolving store’ in Williamsburg New York will have new store experiences, fashion and events throughout the year that draw on local businesses and neighborhood partners. Adidas’s London store hosts events showcasing immersive art and artists as well as spaces where the Adidas community customize their trainers.
There are many possibilities for 2023 but the retailers who look to the future will be the ones that strive ahead. The best place to start is by looking at the data you hold.
As always, Dressipi is here to help.
Sign up to our newsletter for more insights.