This article is part of a larger series on Retail Management.
In 2023, global retail sales are projected to grow 4.5%, exceeding $30.3 trillion by the year’s end. Amid this 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 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 while also looking to the future for new insights and upcoming trends you should be aware of.
The year 2022 was forecast to be bright for retail sales in the US, with the National Retail Federation (NRF) estimating revenue growth between 6% to 8% over 2021. Not only that, but shoppers did not seem overly deterred by uncertain economic conditions, continuing to spend as the holiday season commenced.
Ecommerce also 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 did start to slow in 2022, with only a 12% increase in revenue share over 2021, as opposed to the 26% increase we saw between 2019 and 2020.
Despite the economic decline hitting US and global markets alike, retail sales are still projected to climb in the coming years, growing by nearly $5 trillion between 2022 and 2025 to hit about $33 trillion. And, as global retail sales continue to grow, so will ecommerce’s share of those sales. In fact, according to research from eMarketer, 2022’s ecommerce revenue will account for just over 20% 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.
Consumer preferences did change due to COVID-19, and many retail sectors have seen a massive shift online compared to before the pandemic began. The shopping categories that have seen the greatest post-pandemic shift include OTC medicine, groceries, household and personal care items, and alcohol.
Despite these items gaining rapid growth in ecommerce sales, the top ecommerce shopping categories are fashion and toys/hobbies—remaining on top both pre- and post-pandemic.
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.
In May 2021, total retail sales worldwide were projected to grow around 6%. However, growth was observed at 9.7%, bringing global retail spending to $26 trillion. Brick-and-mortar retail sales accounted for $21 trillion in 2021, rebounding by 8.2% and exceeding pre-pandemic levels two years earlier than originally projected.
The world seems to be returning to normal regarding consumer shopping behaviors. In fact, only 5% of global shoppers said they do not feel comfortable returning at all to stores.
As people return to stores, they do seem to have taken some of their new 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.
Brick and mortar saw $702 billion in spending compared to ecommerce’s $603 billion, and its growth is anticipated to continue at a rate of 2.6% to 3.4% through 2025.
Today’s modern consumer is changing fast. With a pandemic and, now, an imminent recession, shopper preferences and behaviors are altering as the world does. Take a look at what you can expect from retail consumers in 2023 with the stats and figures below.
At the end of the pandemic and through 2022, the biggest thing that dictated consumer preferences was convenience. As the economy has taken a turn and the stimulus checks have stopped lining people’s bank accounts, however, shoppers are placing a greater emphasis on value and price once again.
Take shampoo on Amazon as an example. Value and mass products have experienced the greatest increase in share, at 2% and 5% gains, respectively. Premium shampoo products, on the other hand, have seen more than a 5% decrease in purchase volume. The moral of the story: Consumers want value for their money—especially for essential products.
Did you know?
Among consumers who said they’ve switched brands, slightly more than a third said they opted to buy private-label products because they provide better value.
Consumers are switching brands at unprecedented rates. In the face of inflation and changing priorities, 75% of US consumers have tried new shopping behaviors and broken loyalties with brands this year. And, they aren’t planning on going back—73% say that they intend to continue to incorporate the new brands into their routine. The divide also appears to be somewhat generational, with younger populations more prone to switching brands and rarely forming loyalties in the first place.
Environmental, social, and governance (ESG) factors are important to consumers when deciding which brands to support. In general, younger consumers prioritize authenticity and social issues such as diversity, equity, and inclusion, whereas older consumers pay more attention to health and environmental issues.
As with every aspect of our world, retail is adopting more technologies. Some of the technologies are aimed at making running your business easier, while others deliver on new consumer preferences. Take a look through the figures below to see what technologies businesses are investing in and what tech consumers are expecting.
In the last year, 70% of business owners have adopted new digital tools to aid in their business operations. This ranges from tech that enables online or mobile banking (52%) and cashless payments (43%) to setting up (28%) or bolstering (34%) their online presence. With consumers returning to in-store shopping, retailers are investing in tech for smart shopping experiences. Not only that, in the next 12 months, 95% of retailers plan to boost their investment in digital capability. Retailers are using tech to improve digital shopping and the ongoing communication cycle between retailers and customers.
How much are retailers spending on technology enhancements? In fashion retail, business owners invested only 1.6% to 1.8% of their revenue in retail technology in 2021, but by 2030 that investment is expected to double to between 3% to 3.5% of annual revenue. And the investments should pay off, with McKinsey predicting that fashion companies that embed 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.
Technology is a growing part of the retail experience, and consumers are adopting more retail tech and expecting more tech from retail businesses. In fact, for the first time, a majority of consumers are expressing interest in hands-free technology, including augmented or virtual reality (AR/VR) and quick-response (QR) code payments after those technologies boomed in proliferation during the pandemic.
QR code usage has grown by 96% from 2018 to 2020. More than a third of consumers have used QR codes as a payment method, while 53% say they would use QR codes as a payment method in the future.
Additionally, social commerce is a growing force—between 2020 and 2026 the number of people buying via social platforms is supposed to nearly double to over 179 million users with sales hitting $2.9 trillion worldwide. Although Facebook was the top social commerce platform in 2022, Tiktok is poised to surpass Facebook by 2024 in its share of users who are social buyers.
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.
Though business owners show confidence regarding revenue and growth, economic confidence has dipped compared to 2021. Only 39% of business owners think their local economy will improve over the next 12 months, compared to 56% in 2021. Business owners’ top concerns include inflation, prices of commodities, political environment, supply chain, and international unrest.
Did you know?
Of the 88% of business owners worried about inflation, 68% are raising prices.
More than 40% of business owners say labor shortages are currently impacting their business and have had to take steps to mitigate their lack of workers. To combat this, 26% of small businesses plan to hire in the next 12 months, up 5 points in just the past year (and double the 13% from mid-2020).
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 and rapid acceleration in retail technologies. 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.