The US retail industry is facing headwinds this year, as persistently high inflation and weakening consumer demand have led to reduced sales growth expectations. S&P Global Market Intelligence economists predict that retail sales growth will be 0.5% in 2023, which is a 0.1% decline when accounting for inflation, before returning to slower growth than pre-pandemic levels. Price growth will also shrink from 8.9% in 2022 to 0.6% in 2023, with consumers tightening their belts and hindering sales in 2023 compared to previous years.
This year's retail sales will play a crucial role in determining whether the US enters a recession, as consumer spending accounts for almost 70% of the country's GDP. The combination of historically low savings and rising debt is putting a strain on consumers that will weigh on retail sales in 2023. The labor market, however, will likely help bolster consumer spending, as unemployment remains low, the economy keeps adding jobs, and wages are growing at a faster pace than before the pandemic. Nonetheless, recession fears, inflation concerns, and rising debt are likely to continue weighing on consumer spending and retail sales in the coming year.
Staying Ahead of the Curve: Leveraging Digital Tools to Enhance the Customer Experience in Retail
Retailers need to use digital retail tools to adapt to changing consumer preferences and behavior. As foot traffic decreases, retailers must find new ways to communicate with their customers while retaining their physical store visitors. However, many retailers rely on data-driven decision-making for their online operations but ignore the same approach for their brick-and-mortar stores. In fact, retailers need to leverage data to understand customer behavior and preferences to improve the overall customer experience.
As the retail industry evolves, it is crucial for businesses to prioritize the customer experience through digital retail to stay competitive. Retailers are increasingly turning to new technology such as artificial intelligence and data analytics to better understand consumer behavior and preferences and personalize marketing efforts. Retailers are integrating physical and digital technologies, like augmented reality and virtual reality, to provide personalized and engaging shopping experiences.
How Retail Media is Helping Brands Reach Consumers and Drive Targeted Growth
All of this leads to the emergence of retail media as a major tool for brands to leverage retailers to reach consumers and drive targeted growth is made possible by the confluence of better data management and the in-store digital marketing displays and other tools. By leveraging their customer data and analytics, retailers can offer highly targeted advertising options to their partners, providing a more relevant and personalized experience for their customers. Retail media can provide a unique opportunity for retailers to generate additional revenue streams and drive sales at the same time.
Additionally, retailers can use their own retail media channels to promote their own products and services, driving sales and boosting revenue. By utilizing their digital platforms and customer data, retailers can create targeted advertising options that benefit both their brand and their partners, ultimately helping them weather the challenges of a recession. Retailers can use this form of media to promote their own products and services, as well as sell ad space to other brands looking to reach their target audience.
Hanshow's in-store marketing solutions provide a fast and cost-effective way to integrate the newest digital marketing touchpoints in offline stores to leverage retail media. This includes displaying QR codes, mini-program codes, and other information to conduct marketing activities such as member acquisition, coupon distribution, and mini-program promotion. Hanshow's full-color and dynamic displays with customizable templates and pricing updates, make it an effective way for retailers to enhance customers’ in-store shopping experience.
Data Privacy, Sustainability, and the Future of Retail: Balancing Customer Trust and Ethical Standards in the Age of Big Data
Experts all agree that data-driven merchandising can benefit retailers, retailers should balance data usage with customer privacy and put people first. Although data plays an important role in brick-and-mortar retail operations, the human touch in merchandising is still essential. Retailers need to strike a balance between using data insights and maintaining ethical standards while preserving the human element of merchandising. Retailers will be enticed by the ability to use data from a customer's previous purchases, browsing history, and demographic information to offer personalized product recommendations, marketing messages, and promotions to drive sales, but in order to maintain consumer trust they must protect and privilege data privacy.
In addition, sustainability and social responsibility have become critical factors in customers' purchasing decisions, requiring retailers to adopt sustainable practices and engage in corporate social responsibility initiatives. Consumers are more aware of sustainability issues and taking steps to adopt more sustainable behaviors. A Deloitte survey found that over 80% of consumers in the UK and US consider sustainability when making purchasing decisions, and 42% are willing to pay more for sustainable products.
Retailers can Thrive with the Right Tools
However, retailers can leverage digital retail tools to adapt to changing consumer preferences and behavior and prioritize the customer experience in a tough economic environment where consumers are reluctant to spend. Retail media is emerging as a major tool for brands to reach consumers and drive targeted growth, and retailers must balance data usage with customer privacy and put people first. Additionally, sustainability and social responsibility have become critical factors in customers' purchasing decisions, requiring retailers to adopt sustainable practices and engage in corporate social responsibility initiatives. As the industry continues to evolve, retailers that prioritize these areas will be better positioned to navigate the challenges of the current economic climate and remain competitive in the long term.