7 Retail Shopping Predictions for Peak 2023
As Peak 2023 begins with July Back to School shopping, Amazon Prime Day, and Walmart+ Week, retailers are gearing up for another year of success. But as they do, they’re facing a changing market. Inflation remains high, talk of an impending recession continues, and 71% of retailers expect that the season may experience less sales volume overall. Retailers are ordering less peak inventory while they grapple with continued uncertainty in the post-pandemic holiday season.
In Radial’s discussions with eCommerce retailers, we hear what’s top of mind and see multiple factors set to influence Peak 2023 consumer trends. Here’s a rundown of the top 7 holiday shopping trends we’re keeping our eye on as this season unfolds and on into the new year:
- Consumer spending will be more discerning. Inflation remains a key concern, and many customers have made significant home improvement, home goods, furniture, and appliance purchases in the last couple of years; shoppers are dialing down spending to be more discerning. The rush to return to instore shopping has passed, and consumers are now focused on finding the best eCommerce and instore deals for mid-price point items. Retailers can promote mid-price point items to align marketing strategies with customer desires. Creative digital marketing and social media ads will also inspire holiday shoppers to purchase items they may not have considered for the holiday season.
- Discounts and promotions will drive peak. In a recent survey, 67% of retail executives forecasted that the holiday shopping season will be driven by a hunt for discounts. Shoppers will go beyond Black Friday and Cyber Monday to seek the best retail sales and discounts across the entire season. This could coincide well with retailers that need to offload excess inventory — giving them the opportunity to heavily discount overstock and (finally?) clear out backrooms. However, consumers may also be less loyal when driven by discounts; and competition could be stiffer among brands battling over the same product categories.
- BOPIS and store fulfillment will extend peak flexibility. Buy online, pickup in store (BOPIS) saved the day for late season shoppers last year: when they missed shipping cutoffs, the opportunity to choose store fulfillment let them still order and meet their holiday gift giving goals. BOPIS and store fulfillment not only boosted late season sales, but it also helped cut down on transportation expenses and eased the burden on carriers during the last days of peak. Retailers that offer store fulfillment options will have the advantage over those that don’t, as this flexibility extends holiday sales and fulfillment. It also tends to increase basket size, as shoppers that come into physical stores to pick up orders usually make additional purchases.
- Return policies will be reshaped. The pandemic required retailers to make shopping as convenient, easy, and possible for shoppers caught in lockdowns. Many retailers instituted policies that offered maximum ease and flexibility for consumers, but were not sustainable to revenue long term. We’re seeing a reckoning or rebalancing of this trend now. Free returns with no parameters are likely to become a thing of the past. Brands are considering how to shape return policies so that customers still feel confident in their purchases, but are dissuaded from making returns. Retailers that want cost containment on their reverse logistics operations are evaluating charging for return shipping, implementing restocking fees, and shortening timeframes on returns. The key is to pay attention to how reshaping policies impacts the customer experience and to communicate with customers about the “why” behind the decisioning. Brands that keep a “human” face with their customers are less likely to experience churn over more restricted policies.
- Loyalty programs will be refined. Many retailers will repackage loyalty programs to increase membership by grouping currently free perks, such as free shipping and returns, into loyalty incentives. Amazon Prime’s original sales pitch was free two-day shipping on Prime items, which inspired people to sign up for the annual membership. Many retailers have had to mimic the benefits of Prime without containing them in membership programs. This will likely change as brands become more discerning about where they offer maximum flexibility in the customer experience while balancing it with cutting costs and safeguarding revenue.
- Buy now, pay later (BNPL) usage will increase. BNPL offerings have become a mainstay since the pandemic, allowing many people to stretch their dollars across a comfortable timeframe while getting their order immediately. If economic pressures continue, we see BNPL growing in popularity. It is particularly popular among Millennials and Gen Z, who tend to be wary of traditional credit cards. Brands that integrate BNPL into their eCommerce payment solutions will likely be rewarded; brands that are able to finance their own BNPL solution will see even bigger gains. Offering BNPL solutions helps retailers meet customers where they are, encourages sales that otherwise may not happen, and provides flexibility that creates a positive customer experience.
- Outsourcing fulfillment will help reduce costs. Fulfillment and transportation comprise significant chunks of retail operational costs. Retailers that want to contain these costs often find it advantageous to partner with a third-party logistics company that specializes in order fulfillment. This is especially true during times of economic uncertainty, supply chain challenges, or major shifts in a business strategy. The unpredictable nature of peak season demands that brands have the agility, resources, and flexibility to scale staffing and operations to meet surges. Many retailers are stretched too thin to fund and staff additional capacity for peak. Offloading this burden to a fulfillment partner like Radial can mitigate financial risk and assure the brand that their customer needs will be met no matter what the peak entails.
Key takeaways: As we look ahead at holiday retail, we can be confident that consumer behavior to buy for the holiday season will remain, while being cognizant of the circumstantial trends impacting their decisions this year. Retailers need to prepare for a potential decrease in holiday spending while being ready for the unexpected. Holidays shoppers may surprise us, and retailers need to be able to meet their expectations no matter what happens.
Partnering with an eCommerce fulfillment provider like Radial can help mitigate risk, ensure online orders are processed and delivered on time, and provide more predictable costs for reserve logistics.
Learn how Radial can help you during peak.
