The goal of any great business strategy team is to help brands more deeply understand the desires and needs of their target audience. While the above sentence seems simple, the complexity of analyzing buying decisions and positioning your brand to be in the right place at the right time can be overwhelming.
Adding to the whirlwind of data points is the fact that consumer behavior is heavily influenced by global events and demographics. And, the views of certain groups may shift over time. An entire generation’s buying behavior may evolve over a few years, leaving companies scrambling to reach customers in new ways.
If a company’s marketing, strategy, research, and revenue teams are functioning properly, there should be a constant influx (and curiosity for) new information. What’s happening in the world? For brands, this means taking these findings and adapting to consumer pain points to share how your brand is the missing puzzle piece.
While we can’t predict the future, we can provide an in-depth overview of social and economic trends important to your brand positioning in 2023. We recommend using this as a guide as you inspire internal teams to build an ongoing, flexible brand strategy based on continuous market analysis.
COVID’s impact on buying behavior is long-lasting
While COVID seems to have loosened its hold on our everyday lives, it has certainly left some areas of consumer behavior nearly permanently altered. Shoppers are thinking differently about illness and safety in general.
Anyone who feels slightly sick stays home from work, holidays, or in-store shopping experiences, compared to pre-COVID times. Shoppers in grocery stores and malls are still seen wearing masks as an added layer of protection in crowded stores. However, after a few years of isolation, they’re equally excited by fresh and interactive in-person shopping experiences.
Ecommerce is the future, but in-store shopping isn’t dead
Though the popularity of ecommerce has grown dramatically in the past few years, consumers aren’t ignoring in-person shopping experiences.
Raydiant’s State of Consumer Behavior Report 2022 found that over 44% of consumers prefer shopping in-store. Another 27.6% reported that the allure of in-store experiences is the primary driver of this preference. Additionally, the report found that nearly 55% of respondents have abandoned a brand because of a single bad in-store experience. (We’ll talk more about customer loyalty later).
Ecommerce’s popularity is here to stay—even with in-store shopping making a comeback. Statista predicts that the retail ecommerce market will grow by nearly 3 trillion dollars. Globally, estimates predict sales will increase from 5.2 to 8.1 trillion dollars by 2026.
As a result of these trends, brands are walking the line between creating a memorable online and in-person shopping experience. They’re connecting the experience by:
- Providing in-store deals that match online sales
- Offering top-notch customer service
- Creating one-of-a-kind experiences to improve the customer journey
- Offering blended shopping experiences like virtual try-ons to engage younger audiences and tech-savvy adults
Subscription models are driving customer loyalty
Since COVID, brands have been innovating to make purchasing easier, faster, and safer. Offering a subscription-based model is one way that brands have been driving customer loyalty and revenue.
This is especially true for beauty, food/beverage, and personal care brands. By offering subscriptions, they’re personalizing the customer experience, driving more predictable sales volume, and increasing their gross merchandise value.
For example, one study found that merchandisers with a subscription model grew their customer base by an average of 31%. The study included fashion, health and wellness, home goods, beauty, and pet care industries.
CPG companies are moving toward DTC models
The popularity of subscription sales also pushes CPG brands toward the direct-to-consumer (DTC) business model. CPG companies are bypassing third-party wholesalers and retailers altogether due to more efficient fulfillment, higher customer lifetime value, and easier market entry compared to traditional retail.
However, this also means that older retailers are rethinking their branding, value proposition, and marketing strategy to compete with longer-standing DTC brands, like Nike.
Consumers want flexible payment options
Buy now, pay later (BNPL) is becoming a popular payment method. Nearly 50% of Americans in a recent survey reported that they’ve used BNPL in the past year. BNPL is used by over 360 million people worldwide, and that number is estimated to grow 157% to nearly 900 million users by 2027. This payment method is most popular with people ages 18-44 who live in the U.S. and Europe. By 2025, eMarketer estimates that almost half of Gen Z consumers will have used BNPL.
According to one payment-industry analyst, merchants who offer BNPL are seeing consumers spend more. Those consumers tend to be male, with 62.8% of men surveyed having used BNPL at least once, versus 51.4% of women. Clothing was found to be the most popular BNPL purchase category, with nearly two-thirds of respondents purchasing clothing, followed by entertainment, reading material, and household furnishings.
Top BNPL companies include Klarna, Affirm, and PayPal Credit. In the U.S., PayPal Credit is the BNPL market leader, with 34.6 million active users.
Another trend is the buy-online-pickup-in-store (BOPIS) option that provides shoppers flexibility on the go. The convenience of BOPIS has boosted brand sales and customer loyalty. In fact, 75% of shoppers who use BOPIS say they are likely to make additional purchases online, while 49% have made additional purchases while picking up in-store. And the trend is only growing: nearly 67% of shoppers in the U.S. have used BOPIS in the past six months. It’s estimated that by 2025, 10% of all sales will be fulfilled by Click and Collect.
These shifts show that consumers want the purchasing experience to be quick and easy. Retailers who offer digital and mobile wallet payment options (as well as BNPL and BOPIS) have a better chance of customers following through with payments and not abandoning their shopping carts.
Data privacy—a concern for consumers, an opportunity for brands
It’s hard to provide personalized buying experiences without customer data.
After seeing companies suffer cyberattacks and data leaks, consumers are more educated on their privacy rights. Data privacy concerns are one of the biggest factors impacting consumer behavior in 2023.
In a Pew Research Center study, 81% of Americans said the potential risks they face from companies collecting their data outweigh the benefits. Cisco’s 2022 Consumer Privacy Survey had similar findings. Even with privacy laws in over 130 countries, consumers lack confidence that their data is safe.
Personalization is still important, but consumers want control
The good news is that organizations have an opportunity to use customer data appropriately to establish trust and build long-term relationships with their audience.
Consumers want transparency on how companies use their data, but they want personalization, too. Since before the pandemic, organizations like Salesforce have been focusing on privacy-first personalization. The goal is to establish trust through transparency and consent.
According to iapp, a leading resource for data privacy training, data privacy and loyalty programs are more popular with consumers than remarketing or location-based ads. The main reason is that consumers want a more personal relationship with a brand. In a recent study, 71% of surveyed customers said they would share their personal information if it gave them personalized product recommendations.
Businesses that successfully transition to privacy-first personalization will redefine how they think about marketing. They’ll focus their time on creating meaningful connections and hyper-personalized experiences that drive loyalty.
Inflation pushes consumers to seek quality over quantity
Consumers are expected to spend less over the next four to six months, but they’re still buying. However, the products or services they purchase must be well worth the investment. In the face of economic slowdown and high inflation, brands need to provide more value over cost.
To build relationships with customers during times of uncertainty, brands need:
- A resilient marketing strategy
- Transparent communication
- An empathetic approach
Forecasts predict an increase in consumer spending, regardless of economic factors
Consumers padded their savings accounts during the pandemic. In the face of economic uncertainty in 2023, many households have built a safety net.
Forrester’s recent Consumer Energy Index and Retail Pulse Survey found that over 60% of U.S. adults are nervous about a potential recession. It also predicted that consumers will spend their savings this year, but on big-ticket items—motor vehicles and appliances.
Different age groups and incomes have different inflation concerns
In Q4 2022, the Conference Board’s consumer confidence index fell to its lowest reading in months. Still, the index remains above its COVID-19 lows.
This decline in consumer confidence was mainly in the 55-and-over age bracket and households with annual incomes below $55,000. Lower-income households have dealt with the brunt of inflation.
Unknown brands that fit consumer values will win over established brands that don’t
Consumers purchasing more often online means they’re introduced to new brands. This creates further competition, especially for traditional brands that haven’t aligned their product or service with audience values.
According to Gartner’s 2023 CMO Leadership Vision survey, 53% of adults said it’s less important to choose from a well-known brand today than it was three years ago. Another 55% agreed that large corporations are responsible for many of society’s problems.
The good news is that brands can take action toward combating potentially negative consumer attitudes. CMOs can maximize their brand-building budget by sharing messaging focused on their company’s mission and values. Additionally, leaders can prioritize advertising through channels that create meaningful brand interaction, including customer journey-specific experiences.
Gen Z is pushing for sustainable products
Gen Z is further contributing to the conversation around sustainability and the impact businesses have on the environment. IBM research states that 77% of consumers regardless of generation consider sustainability and environmental responsibility to be “moderately important”. Harvard Business Review found that sustainable products have a 5.6 times higher average sales growth rate than non-sustainable ones.
By 2030, Gen Z will earn 27% of the world’s income, surpassing millennials by 2031. Gen Z’s influence will continue to strengthen. Brands will continue to join the conversation on how they bring sustainability and make a positive impact. Consumer insights are only helpful when brands act on them. When it comes to your brand’s media strategy, Goodway Group is a leading partner. We’ll help your brand stand out from the competition, gain market share, and build customer loyalty through immersive experiences. Learn more about our commerce media solutions here.