The retail industry has faced numerous challenges over the last year including recovering from the COVID-19 pandemic, responding and adapting to inflation as well as supply and distribution issues as a result of the war in Ukraine. Throughout these disruptions, the retail industry has also benefited from the growth of digitalisation and technology, and we explore the opportunities, threats and trends that will continue to emerge in 2023.
In addition, Consumer protection law is being prioritised. With the government accelerating the implementation of the Digital Markets, Competition and Consumer Bill, traders will need to familiarise themselves with the key consumer reforms (and take note of the GPDR style fines). The Bill could be published early this year, enacted by May 2023, and come into force as early as this October 2023.
Impact of the Cost-of-Living Crisis on Prices
Given 2023 will be the year of the cost-of-living crisis, pricing will be crucial for retailers. Consumers will be searching for the best price on almost every product to make ends meet. Retailers need to consider their profit margin against making goods affordable to decide on whether to focus on becoming a luxury or a commodity.
While consumers have been concerned about the environment, they have been reluctant to pay more for sustainable goods. Watch out in 2023 for the growth in second hand sales as consumers view this as an alternative way to be sustainable whilst saving money given the economic uncertainty.
Technology & access to data
Consumers will grow and maintain their loyalty with retailers who they feel are accessible and have an attractive user interface. There are further opportunities this year for retailers to leverage data on consumer preferences, attributes, interests and their purchase history, to create customised product recommendations and advertisements directed at the specific customer/user. These features are also useful to adapt manufacturing, control inventory and reduce waste.
Maintaining customer loyalty
With most retailers supercharging their digital platforms during the pandemic, there was a big focus on making as many sales as possible, with customer acquisition at the top of the agenda. In 2023, retailers will be looking at how to keep and maintain customers once they have been acquired, as it is more cost efficient to market to an existing customer base than to try and acquire new customers.
Logistics & political instability
With the pandemic, US sanctions, the Ukrainian war, and Brexit all having an effect on logistics, retailers will be accelerating the move closer to home for manufacturing and supply of raw materials. Retailers are looking to remove the complexities of cross-border trading and benefit from a more cost-effective storage solution for goods to be located closer to consumers and quicker delivery times.
Strengthening consumer law enforcement
By the end of this year the Competition and Markets Authority will gain significant new powers to determine (without court involvement) if consumer protection law has been breached and directly enforce consumer law. Their new powers include the ability to fine traders up to 10% of their global annual turnover for breaches of consumer law.
Cancel my subscription!
From online streaming services to fitness applications, many of us have spent our hard-earned cash on subscriptions which we see as a waste of money and can’t work out how to cancel. This year will see new law which is expected to target contracts that have the potential to lock-in consumers indefinitely, and those where unclear information is buried in lengthy terms and conditions.
Genuine help to tackle fake reviews
Amendments to current law are being made this year to protect consumers from fake reviews. There is concern that too many of us are being misled into buying the latest gimmicky gadget or signing-up to the latest online fad on the back of dodgy reviews that don’t reflect an actual consumer's genuine experience of a good or service.