This article is part of a larger series on Retail Management.
While global retail sales were projected to grow 4.7% to over $30 trillion at the start of the year, the economy has continued to change—now researchers believe that global retail sales will experience growth closer to 3.9% and $29.3 trillion in total sales.
Amid the economic changes and persisting retail growth, the retail world is changing in terms of shopping habits, consumer preferences, the place of small businesses, and more. Whether you’re a well-established operation or just starting a business, understanding these changes is vital for your success.
In this article, we will look at some of the biggest retail industry statistics and trends for 2023 to help your business get ahead.
Retail sales have experienced a lot of change over the past few years. In this section, we will look back at 2022 to see what we can learn—and then move forward to uncover new insights and upcoming trends.
In 2022, global retail sales saw a nearly 7% increase over 2021, hitting $28.195 trillion in total sales. For the US alone, 2022 was also incredibly prosperous, with retail sales gaining an 8.1% increase over 2021, amounting to nearly $7.1 trillion dollars in retail sales.
While this growth is still notable, it’s important to understand that the rate of growth between 2021 and 2022 actually represents a slowdown compared to retail’s growth rate in the past. In fact, retail’s growth has been on a downward trajectory since 2021.
Turning to look at ecommerce, there was also growth within the online sector, and ecommerce actually hit a milestone in 2022, with worldwide sales exceeding $5 trillion for the first time ever. While this is a massive number, ecommerce’s popularity was actually slowing down in 2022, with only a 12% increase in revenue share over 2021, as opposed to the 26% increase we saw between 2019 and 2020. This slow began back in 2021 and does not appear to be regaining its momentum.
Despite the economic decline hitting US and global markets alike, global retail sales are still projected to climb in the coming years, growing by nearly $4 trillion between 2022 and 2025 to hit just under $33 trillion. And, as global retail sales continue to grow, so will e-commerce’s share of those sales. In fact, according to research from eMarketer, 2023’s ecommerce revenue will account for just over 21% of total retail sales, and by 2025, ecom’s share will be over 23.6%.
When the world was forced inside during the COVID-19 pandemic, online shopping took off, and its popularity only seemed to grow—even as the pandemic came to a close. Take a look at the stats below to get a bird’s-eye view of the ecommerce landscape.
One of the biggest changes in the retail industry in the past several years has been the uptick in online shopping. Between 2019 and 2023, global ecommerce sales have nearly doubled, growing from $3.35 trillion to over $6 trillion in just four years. While there has been growth across nearly all shopping categories, the products that have seen the greatest shift to online include OTC medicine, groceries, household and personal care items, and alcohol.
Despite these items experiencing rapid growth in their ecommerce sales, they still have not beat out the top ecommerce shopping categories—auto and parts (30.1%), food and beverage (20.7%), and apparel and accessories (15.4%).
New digital buyer growth is slowing down. Some 2.56 billion people worldwide were estimated to buy something online in 2022, growth of only 3.4%—the slowest increase ever. New buyers will mostly come from large emerging markets, including India, Indonesia, and Brazil.
As the world begins to put the COVID-19 pandemic in the past and return to normalcy, so too are consumer behaviors shifting. In fact, the National Retail Federation found that ecommerce growth slowed as life returns to normal. It found that the massive spike in ecom’s market share around COVID is not indicative of a new trajectory for ecommerce’s share of the retail market, and ecom’s growth has returned to its pre-pandemic trajectory.
Ecommerce’s market share grew from 25% in 2019 to 29% in 2020. The growth has since slowed, fluctuating between 28% and 32% throughout 2022 and 2023.
While this finding indicates that brick-and-mortar isn’t going anywhere, consumers do seem to have taken some of their pandemic shopping behaviors with them—75% of US consumers say that they shop both in-store and online for nearly all of their purchases. There is also a continued emphasis on home improvement and maintenance, with spending in these categories 11% higher than pre-COVID-19 projections, even after adjusting for inflation.
For the US in the first quarter of 2023, retail saw nearly $1.8 trillion in sales compared, with ecommerce accounting for $272 billion or 15.1% (adjusted for seasonal variation) of the total retail market.
Today’s modern consumer is changing fast. With a pandemic and current economic downturn, shopper preferences and behaviors are evolving as quickly as the world is. Take a look at what you can expect from retail consumers in 2023 with the stats and figures below.
While the state of the economy has made price a larger force in shaping consumer preferences, there are also other forces at play. More and more, there is an increased preference for brands that prioritize sustainability, products that come recommended by influencers, and stores and ecommerce sites that offer personalized shopping experiences.
With rising inflation and continued economic stress, consumers are becoming more cost-conscious and are finding ways to save. The Capgemini Research Institute found that 73% of consumers are making few impulse purchases, and 69% are cutting back on non-essential spending completely. There has also been a shift to preferring cheaper products over alternative options and an increase in the time people spend seeking out those products.
As the NRF found, consumers are making more trips to discount stores this year as their stimulus savings run out and inflation continues to rise. It also found that women were more likely to take on cost-saving behaviors—buying more generic brand products, shopping for sales, taking fewer shopping trips, shopping closer to home, and doing more comparative shopping online.
Prodege also found that consumers are making efforts to put more money into their savings (26% of respondents) and to stick to a budget (26% of respondents). And, as with Capgemini’s findings, it also found that 36% of shoppers are cutting back on their spending overall.
As with every aspect of our world, retail is adopting more technology. Small and large businesses alike are using new business solutions and tools to make running their brands easier and enhance customer experience. Take a look through the figures below to see what technologies businesses are investing in and how consumers are reacting.
Over the course of the last year, 80% of businesses have optimized their operations, adopting new tools like cashless payment terminals, mobile banking solutions, social media brand building and optimization, digital marketing, and cloud-based software platforms. These tools have subsequently helped these businesses save time, improve their operations, and enhance customer experience and satisfaction.
How much are retailers spending on technology enhancements? In fashion retail, business owners only invested 1.6% to 1.8% of their revenue in retail technology, but by 2030, that investment is expected to double to 3% to 3.5%. And the investments should pay off, with McKinsey predicting that fashion companies that embed artificial intelligence (AI) into their business models now could see a 118% cumulative increase in cash flow by 2030. Conversely, those slower to invest in digital technology will lag behind—and could see a 23% relative decline.
On the consumer side, there are greater technological expectations, including:
- Offering a mobile-compatible shopping experience: Smartphones accounted for 72% of retail traffic worldwide and 61% of shopping orders.
- Fast and free delivery capabilities: 62% of consumers expect their orders to arrive in less than 3 business days.
- Personalized shopping experiences: 71% of shoppers expect personalized interactions from companies; 76% get frustrated otherwise.
- Buy online, pickup in-store (BOPIS) options: 50% of consumers have decided where to shop depending on whether retailers offer click-and-collect options. A key study from Adobe found that consumers are 20% more likely to purchase from retailers that offer BOPIS versus those that don’t.
Consumers are excited about the new tech but apprehensive when it comes to protecting their data. In fact, 69% only want personalization if it’s based on data they’ve consciously shared with businesses directly.
Social commerce is also a growing force, with TikTok making massive headway. This year, TikTok is anticipated to gain more than 9.6 million social buyers, more than Facebook, Instagram, and Facebook combined. And, through 2026, US social commerce is predicted to grow twice as fast as China’s, almost entirely thanks to Gen Z.
As small businesses look forward and try to understand the retail market, they are faced with some big questions. Click through the tabs below to learn more about the concerns small businesses are facing and how they are combatting the ever-changing market.
While business owners are still confident that they will see revenue growth in the face of the current economic downturn, overall confidence in both local and national economies is low and has been declining since 2021. Only 39% of business owners think their local economy will improve over the next 12 months, compared to 56% in 2021.
Top economic concerns for small businesses include inflation, commodity prices, the political climate, and the supply chain. In fact, 88% of businesses already said they were being impacted by inflation in 2022, and 76% were already experiencing the effects of international supply chain delays.
As of June 2023, 25% of business owners are still raising their average selling prices to account for inflation. While this trend is likely to continue, 25% is the lowest reported share of businesses raising prices since March 2021.
A new concern that we are seeing pop up for small businesses this year is their confidence in the US banking system. With the fall of SVB, small business owners are split, with 49% expressing confidence in America’s banking and 50% not confident. Additionally, 71% of businesses said they are not likely to open a new business bank account in the next six months.
More than 40% of business owners say labor shortages have impacted their business, and many have already taken steps to mitigate their lack of workers with things like incentives and increased hiring. In fact, 26% of small businesses plan to hire in the next 12 months, up 5 points compared to 2021 and double the 13% from mid-2020.
While labor is certainly a top issue for retailers, it is important to note that inflation is by far the top concern. Just 17% of SMBs cite labor as their top issue, while nearly triple that—41%—point to inflation.
Labor is not always the full story. Small businesses are increasingly pointing toward issues finding quality labor, with 92% reporting that they are finding few or no qualified applicants when looking to hire this year.
While the supply chain outlook has improved since 2020, the majority of small businesses are working to move their supply chain closer to home to avoid international logistical issues. In fact, 88% of SMBs have plans to switch at least some of their suppliers to those in the US, and 45% plan to switch them all—even more than last year.
In addition to finding suppliers closer to home, businesses are also looking to invest in new technology to improve their inventory and supply chain management. In a survey from PWC, they found that 86% of business leaders agree that their company should invest more in technology to identify, track and measure supply chain risk, with 35% who strongly agree.
Related: Retail industry trends to watch in 2023.
Retail is a fluid and ever-changing industry that evolves with our culture and can change in an instant. Over the past couple of years, especially, retail has seen new trends and shopping behaviors emerge in the wake of the COVID-19 pandemic, the rapid acceleration in retail technologies, and a tumultuous economy. Using the retailer statistics above, you will be more prepared to combat the changing retail market and allow your business to adapt and thrive as the industry evolves.