Hey there are RETHINK Retail listeners. We’ve made it through another year of exciting retail transformation and you’ve made it to our final episode of 202., and as we move into the new year, everyone is of course asking, “What lies ahead? What will the retail industry look like in 2023?” We also share that same question with you, dear listener, and although we might not have a crystal ball, we foresee a continuation of many of the current retail trends of 2022. We think retailers will continue to focus on creating unique shopping experiences, both online and in-store, and leveraging technology to do it while also offering more personalized services. Now of course, those are just some of the trends that we think will dominate the new year and some of the trends that we’ll cover in this final episode of 2022, where we’ll hear from many leading retail experts as they weigh in on their predictions for the new year.
Some of those predictions include the continued rise of data-driven retail, the impact of a fickle labor market and the continued popularity of experiential shopping. Here to dive in with their predictions and more are an impressive roster of retail industry leaders who are armed with the experience and foresight fit to forecast the trends that will define 2023. As always, we thank you for listening and we thank you for your continued support of the RETHINK Retail podcast. Please enjoy this final episode of 2022. It is packed to the brim with fresh retail insights from many of our friends across the retail industry. Until next year, have a very happy holiday season, a happy new year, and we will see you back in January.
Hi, this is Ron Thurston, the host of the Retail in America Tour, and I’m here with my 2023 retail industry predictions. We have spent a lot of time thinking about the frontline store teams over the last several years. What do they mean? The challenges that comes with hiring, but the prediction on my end is that this is a critical turning point in the future of our industry and we have to continue to invest in those store teams and leadership of those store teams if we’re going to continue our success.
So some things that I believe will continue to be important as leadership development; be that person that brings someone else forward in our industry and we have the ability to create careers that are unparalleled in their access and their ability to grow and their commitment to brands, but it requires great leadership at the store level. And as I’ve interviewed people all across the country on the tour, there’s a very common thread that says there’s always been someone else in a retail leader’s life who has brought them forward, who has invested in them, who has stretched them in new ways, who’s given them more responsibility and has seen that special light that shines from retail store employees. And all the things that have been the challenge of the last several years, I predict this investment in frontline teams is what’s going to unlock the future success of our business.
Hello everyone. Michael LeBlanc from Toronto, Canada. Consumer growth consultant and media empire in the making with several retail industry podcasts and do a lot consulting, keynote speaking as well. So hello, great to be here once again for the 2023 predictions. Or should I say once again for predictions, this time for 2023. This is going to be the year 2023, the year of the retail worker. So if we were having this discussion last year, it was all about supply chain past couple of years. Thanks to the covid era was all about retail supply chain. Those never simple. Retail supply chain is never simple. There’s always a truck falling off a road somewhere or a train getting blocked by snow somewhere or a boat at the bottom of the ocean somewhere, but it’s calmed down. It’s simmered down, both the prices and the complexity have simmered down.
It is interesting, it will leave a lasting mark. We’ll be dealing with that over the course of the next number of years. Just in time goes to just in case supply chain. That’s a very different philosophy, so we’ll keep a close eye on that, but really it’s going to be about the retail worker; finding them and keeping them. This is not a short-term issue. Of course, it was never always easy to find retail workers pre-pandemic. It is now at 10-year cycle of trying to find people. “Where did everybody go?” I get asked all the time. Well, there’s a whole litany of issues. I’ll tell you the one place they haven’t gone is that’s sitting at home waiting to work.
There is full employment across North America and this will persist, this will continue. This is a demographic influx and this is a tectonic change coming out of the covid year for a variety of reasons. But finding people, keeping people, now on the positive side, if you can call it that, some of the VC funded tech firms are shedding tech employees. We see that in the news. That’s good news for retail because retail has tens of thousands of fantastic tech jobs ready and waiting. So it will be, when I talk to retailers, it will be a real focus on people, talent, acquisition, retention, being the employer of choice.
Hi, my name is Ryan Taylor, head of retail product marketing for T-Mobile for business. And my 2023 predictions are retail triggers are driving huge technology adoption. The challenges of changing retail environment and accelerating the need for new technology solutions, and they include a couple different areas I’d say are pain points within the industry today. Lack of skilled workers still going to be opportunity in 2023. Retailers are going to be facing tighter margins, inventory and price transparency in 2023. They’re going to still be facing huge upside on supply chain and inventory optimization. And guess what? The consumers are going to continue to change their expectations through time. As retailers start to deal with these challenges, they’ll really start to adapt smart retail technology in the market and it’s expected to grow anywhere from $9.4 billion in 2021 to $28.6 billion in 2026. That’s a 25% CAGR.
Believe our retail IT departments to really wrangle the building, the managing, maintaining connected devices from multi vendors. This can really lead to missteps and wasted resources. So my predictions for 2023 are going to fall in two specific areas; lack of skill workers is going to continue to be a significant problem and opportunity and supply chain and inventory optimization, it’s going to be [inaudible 00:07:36] opportunity too. So things that retailers can do to address that or solutions they can adopt to address that is going to be how do they leverage data-driven analytics? [inaudible 00:07:45] business intelligence through realtime data collection and analysis that helps retail provide exceptional end-to-end customer service.
So occupancy monitoring, queue detection, heat mapping activities and tracking. The second’s going to be under asset and inventory tracking solutions. So how can they efficiently and actively asset track inventory solutions to help stem track the $6.6 trillion in the industry that’s delivering of goods today? So things like trailer monitoring, powered asset tracking, inventory asset tracking and so forth is really going to help retailers if they’re invested in any solutions to adopt to the pain points of 2023. We also have fleet management solutions that really provide a centralized vital function across retail supply chain, which is saving time, reducing area, and lowering costs. And last but not least, to enable all the adoption of these solutions, retailers are going to continue to need to invest in a reliable connectivity and a reliable network.
Hi, I’m Dan Goldman. I have 20 years of retail industry experience leading strategy across enterprises like Gap Inc and The North Face as well as consulting for a wide array of consumer [inaudible 00:09:01] and PE investors at McKinsey and Kurt Salmon. From my personal point of view, and speaking about the overall retail industry and not about Gap specific businesses, I’d say that for all those waiting for the industry to return to a pre-pandemic normalcy in 2023, unfortunately I personally believe we’re going to have to wait at least another year as we [inaudible 00:09:19] see the disruption driven by the macroeconomic uncertainty, consumer behavior changes in emerging innovators.
On the consumer side, I believe the bifurcation of real disposable income growth will continue to drive an increased divergence between luxury and value. Consumer preferences and needs will also continue to evolve as we move forward in the hybrid world with two dualities. One where we’re spending more time back in offices and gyms and quenching our thirst for social engagements, experiences and travel and the other where we’re still seeking refuge, safety and comfort at our own homes. Together these consumer trends will raise the importance of brands, strengthening their emotional connections and sharpening their value propositions.
On the market side, I personally believe emerging innovators will continue to challenge the status quo. Take SHEIN for example. They built a compelling consumer app-based ecosystem that encompasses many of the latest industry trends including real-time newness, personalization, user generated content, live streaming and gamification. All while building a highly agile data driven supply chain that enables them to drop over a thousand new styles a day with limited inventory liability by adjusting production with direct data feeds to their factories based on consumer demand. What’s interesting about this model is it’s winning with Gen Z despite the lack of transparency of sustainability that that generation claims to value the most. To keep pace with that type of change and that type of innovation, traditional brands and retailers really need to think about operational agility with a focus on consumer-centric insights in using predictive data in diversification.
Hi, I’m Tim Dardis and I am the vice president of business development and strategy at Alviere. And when I think about 2023 and the predictions of retail in 2023, I think I really take a step back and look at the broader environment. Obviously rising costs, inflation and what the impact of that is on a grander scale. Consumer costs are going to go up, which ultimately means margins are going to go down, and supply chain strains are continuing. And so retailers have to think a little bit differently. We’re starting to find more and more brands are hiring more different titles. Titles that, from my experience in a FinTech space for almost 20 years, but much newer, different titles like payments innovation, loyalty innovation, strategy and innovation. So we’re finding out that retailers are really thinking of ways to innovate because at the end of the day you have rising costs and a lower demand, but that means you have figure out ways to extract more revenue, extract more value from your existing customer base.
Summon up to two predictions; payments innovation, which really means retailers thinking about how do they embrace payments in a different way. Obviously they offer things like PayPal, and Apple Pay, and Google Pay, and credit cards and of course buy now pay later surge over the last couple years, which I think is likely going to go down or change quite a bit in terms of that landscape. I think retailers are looking to innovate in that space quite a bit. We are certainly hearing that from the brands that we’re talking to and really trying to bring a lot of that in-house or try to offer more white label solutions, which enables them to offer customized programs to their clients that they can brand for themselves, creating more value for their clients and customers and ultimately more value for themselves by [inaudible 00:12:48] or minimizing the costs or the expense tied to accepting payments.
There’s going to be a lot of innovation around loyalty in 2023 as well. I mean, loyalty programs I think most brands would say that their programs are relatively stale and so they really need to revamp those programs and sometimes just throw out existing programs, just start from scratch with a whiteboard. And so we’re going to start seeing, I think, brands start figuring out ways to incorporate financial services and maybe that’s rewards. Crypto as rewards, “So the more you shop with us, we’ll give you some crypto back into your account that you can use to purchase goods from us.” Different ways to really bring financial services into it, bring more eyes into their brand, give their customers a little reason to come see them and talk to them and ultimately of course buy from them when financial services does that.
And so I think with the way [inaudible 00:13:41] platform and other solutions out there really empower brands to do this in a pretty easy way while they can still focus on their core business, I definitely think we’re going to start seeing more and more of that happening in 2023 and beyond.
David J. Katz:
Hi everyone, I’m David J. Katz and I am executive vice president and chief marketing officer for Randa Apparel & Accessories. Consumers pivot from casual when they were at home all the time to dressier when they were going back to work and there’s going to be a regression to the mean that you’re going to see a standard. It’ll be a new normal, but it’s going to standardize somewhere in the middle. You saw a pivot from people doing almost entirely e-commerce shopping because the retailers they went to were closed, where they could only buy essential items there, to pivoting back to mortar and brick because they’re suddenly available. And the social experience, and touching, and feeling product and trying it on was important. And again, there’ll be a bit of a regression that’s going to happen.
There have been brands and retailers who have used one of the critical tools of heavy promotions to drive AURs down and to get that old inventory through, but there is a dopamine kind of effect to the customer on that you acclimate them to that type of a discount and that’s not the best tool for long-term brand value for a retailer or a brand. So the brands and retailers that have maintained higher AURs will have a better balance sheet and going into ’23. That said, they needed to move obsolete inventory so that they could free up cash as well. So the balance of that without heavily discounting your product, which may over time diminish the value of your brand or retailer, those that have had the balance sheet going into this and can maintain those AURs and maintain the customer experience at a higher level, will do better as they go through ’23.
Hi, I’m Michael Zakkour. I’m the founder of Five New Digital, a retail and digital commerce research and consulting firm. I’m really excited to be here alongside RETHINK Retail to talk about what I think some of the big stories for 2023 are going to be. The addition of things like augmented reality, virtual reality, extended reality, metaverse technologies, we put all of this on the umbrella of immersive commerce. How do we evolve from a 2D, flat, click-and-buy experience to something that resembles online what we all feel in this store? The ability to feel, touch, experience the products. Online for too long has essentially been walking into a store where there’s only a cashier working and that cashier doesn’t know anything about the products. So this is the year immersive commerce is really going to take off, and we’re already seeing it here towards the end of 2022 is Walmart and Target and Amazon have all made efforts to include immersive commerce experiences.
We’re seeing things like company out there called Sizer who can do online sizing through your phone and it works in the store, it works online, it works offline. So to me, immersive commerce, this is the year where it really becomes big in the West. The other big story I see for 2023 is going to be the emergence and growth of live streaming commerce. A lot of people would be surprised to know it’s already a $5 billion industry in the U.S., which obviously pales in comparison to the $400 billion industry that it is in Asia already. But live streaming has so many advantages, and certainly falls under that immersive commerce umbrella, to be able to talk to the host and buy with one click and no friction and all the advantages. And really this is a physical store and online play.
When you do a live stream from a store, not are you selling products to the people who are there on the live stream, but over and over again, our live streams that we’ve done for our clients proves over and over again that store traffic following the live stream goes up, basket size increases, conversion increases, so this is the year that live streaming is really going to come to the fore in the West. If smaller brands, and D2C brands in particular, don’t continue to invest in technology, innovation and supply chain, the gap between the biggest retailers and everybody else is only going to grow.
My name’s Phillip Raub and I’m the CEO of Model No. Previously founded a company called b8ta and I’m really excited to talk to RETHINK about what I see are big trends and what I think is going to be happening in 2023. You’re really going to see a lot of retailers start to continue opening up physical stores, but I think it’s going to be in a way that they’re going back to the flagship model where you’ve got in large cities, both in the U.S. and international, opening flagship locations, and then having smaller satellite stores within markets that can support their e-commerce business and to continue to build awareness and I think brands bringing in other designers, maybe creating pop-up shops to do that.
Again, going on the road and doing road shows, I think it’s going to where the customers are at as people maybe aren’t always enthralled with going to a mall. And as lifestyle centers, malls and things here know really the landscape shifts, you’re going to start to see, I think, brands realizing the power of being where people are at. That’s large concert venues, festivals, things of that nature because you also have a highly engaged audience at times. Especially there’s also a lot of downtime as well.
My name is Rick Costello and I am the head of digital commerce here at Trustly. It’s great to be part of this session. I think reducing fraud and cutting costs is top of mind, and again, as we enter this new year, I think it’s still going to be a very high priority for online retailers is going to be the customers. So getting to know your customer, focusing more heavily on the shopping experience I think is going to be essential as well. Card not present transactions, so online commerce. Fraud is not only on the rise, but it’s also costing retailers collectively billions of dollars in losses. Implementing more secure ways to pay outside of just credit and debit cards is going to be essential. And looking at payments from a security standpoint, but also adopting methods and working with companies that might absorb that fraud and chargeback risk is going to be essential.
The second piece is the processing costs. So when you look at Visa and MasterCard, obviously particularly around the interchange fees that merchants are paying, they’re not only very high, but they’re also rising. And merchants, retailers are at the mercy of the card schemes; so Visa and MasterCard. So again, looking at more low-cost payment methods that have a little bit more security behind them are going to be ways to combat those high fees and the fraud. What Trustly does is we provide a guaranteed payment method that is well below the cost of credit and debit. So essentially we are facilitating payments from a customer’s bank account directly to the merchant through a very, very secure, oftentimes two factor authenticated payment flow. So again, alleviates a lot of that fraud, a lot of the chargebacks, Trustly absorb that, and then the processing fees again are much, much lower.
So merchants are looking at a solution like Trustly as a complete win-win in terms of how do we reduce fees, and how do we combat and mitigate fraud? The second piece I think is going to be very essential as well is focusing on your customer. Customers, again, with the economy where it is today, are a little bit more tighter budgets these days. So personalizing that shopping experience, implementing rewards programs, incentivizing customers to shop with you, looking at return policies. An article that I recently read, 70% of customers look at a return policy before they even make a purchase. So adopting that flexibility and catering to your customer, getting to know them, personalizing messaging to them, incentivizing them to shop with you is not only going to drive new customers to your business, but it’s also going to help you retain those customers as well.
Hi, I’m Christine Russo. I’m host of podcast What Just Happened, and I spent this entire year speaking to CEOs, founders and leaders of companies in retail and in brands. And I can tell you confidently, we are in a really complicated time in the retail industry. It’s hard to make predictions. The one thing that we can rely on is that it’s going to remain choppy. So if it remains choppy, it’s hard to say this is the exact things that will happen. So if you can’t actually know what will happen, I suggest that you focus more on what you should be doing for the second half of 2023 rather than trying to anticipate what might be happening in the market.
So with all of the challenges that are happening in the industry right now, the most important thing is to focus on the customer. And that may seem very rudimentary, but it seems like it can fall off if you are not properly set up with all of your MarTech and strategy. So one way to deal with all of these problems is to really focus on loyalty. That will reduce your customer acquisition and it will build your sales. So if you predict that things are going to remain economically unstable, build your loyalty. So focus on actions rather than predictions of where [inaudible 00:24:14] think things might be going and that will get you through a very choppy period of the first half of 2023.