2023 retail predictions for the UK
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TCS Retail Survey: Top Takeaways for the UK
With evolving consumer expectations and preferences in how they shop and buy, anticipating what lies ahead in 2023 can be a bit tricky for retailers.
Other factors—such as inflation, lingering supply chain challenges, and geo-political events—can further complicate any kind of industry forecast. The TCS Retail Consumer Survey offers some data-derived insights to help retailers in the United Kingdom (UK) to successfully compete in 2023.
The UK is set to enter recession this year, but it will be shorter and less severe than previously thought, according to the Bank of England. The forecast comes as interest rates were raised to 4% from 3.5%, their highest level in over 14 years. Inflation remains close to its highest level for 40 years—more than five times what it should be—according to this report.
The question then becomes: With escalating cost of living and lower growth margins, how can retailers create a growth strategy that positions their business to thrive and gain a competitive advantage?
Consumers want technology-enhanced experiences.
The research shows an emerging generational divide—and similarities—on digital shopping experiences, sustainable product choices, payment options, and data privacy as retail businesses look to uncover new opportunities and increase revenue while navigating an increasingly complex economic environment.
Some of the findings around technology-enabled shopping experiences were surprising. Across all genders and five generations—from Gen Z, Millennials, Gen X, Baby Boomers and the Silent Generation or “Seniors”—on average, at least half of the respondents in all groups (with less interest from Seniors) said they were more likely to shop with retailers who offered their preferred technology.
Across the board, compared to the other age groups, Millennials showed the most interest and were more likely to shop with retailers offering technology-enabled customer experiences, like livestreaming, contactless checkouts, virtualization (shopping in the metaverse, for example), cryptocurrency payment options, the ability to buy on a brand-owned mobile app and online marketplaces. The findings, however, also remind us not to neglect Senior shoppers who are increasingly comfortable with technology.
Privacy vs perks
Millennials are more open to sharing personal data
Among the key findings is that amid the worsening economy, Millennials, the largest consumer group with the most buying power, are also the most willing (at 76%) to share personal data in exchange for discounts, perks, and other shopping benefits compared to other generations.
By contrast, Gen Z (aged 18-25 years and the youngest generation surveyed) is more privacy-conscious, with about 60% willing to trade their personal information for benefits. This number continues to decline across all age groups all the way to the Silent Generation, who at 25% are the most reluctant to share their personal information.
These results highlight an opportunity for retailers to capitalize on Millennials’ willingness to share data by providing personalized shopping options that reward those customers for doing so. The insights from the survey also suggest this is an opportunity to build greater trust with the other age groups, who are more protective of their personal data. Retailers can do this by giving them greater confidence that their data is safe and secure, and by collecting only the personal data needed to make shopping easy and friction-free.
Consumers are increasingly becoming sustainability-conscious.
The survey findings reflect this, with an average of 88% of all respondents saying whether a product is made sustainably or sourced responsibly is important when considering a purchase.
Conversely, only an average of 62% of consumers surveyed are putting their money where their mouth is—so to speak—and have recently spent more on responsibly-sourced and environmentally-friendly products.
At 71%, Gen Z has been most willing to pay more for sustainably-produced and ethically-sourced items in the past six months.
However, an average of 68% of all consumers surveyed—and (as shown below) a striking 79% of Millennials—are more likely to consider shopping and spending more with a particular retailer offering rewards for making sustainable choices.
Cutting down on discretionary items
Not surprisingly, all generations are planning to spend less on discretionary items (from beauty and hygiene products to entertainment to home décor). But the survey findings show that Gen X, that group of people dealing with both children and aging parents, plan on spending less on these items in 2023 compared to all other ages.
Retailers with expertise in analytics who can utilize personal and behavioral data will be better positioned to effectively target different age groups and best navigate the complex segmentation and marketing required for a diverse customer base going forward.
By focusing on Millennial buying power with tailored products, messaging and offers in the short and medium-term, retailers can earn added loyalty and maximize a critical customer segment for years to come. But they must also rethink their larger marketing strategies, especially online and on social media, to build trust with Gen Z, whose buying power is rapidly rising, and with Gen X, who prefers to find products in-store, online and via TV advertising.
This way, businesses can increase revenue while helping to lead the future of intelligent, sustainable, omnichannel retail and deliver the memorable customer experiences shoppers want today and tomorrow.
Surprising opportunities await retailers in 2023 despite forecasts of a challenging economic cycle and decreased consumer discretionary spending.