Predictions for 2023 – and how best to leverage them to future-proof your business.

Predictions for 2023

There is no denying that the UK ecommerce sector is struggling, as the cost of living crisis and inflation are now impacting consumer purchasing. In spite of this daunting outlook, there are still grounds for optimism. The longer-term outlook for online development as well as modifications in consumer tastes, behaviours, and purchasing channels may provide some solace for UK retailers. Of course, no one can predict with certainty what will occur in the upcoming year, but being prepared never hurts. 

Economy and the Market

As consumers weigh the costs of the worsening energy crisis, inflation in the UK is expected to reach 18% early next year, its worst level since 1976. However, the economy is still expected to grow by 1.6% in 2023, which is somewhat faster than the 1.4% growth rate predicted for 2022. Even after taking into consideration the effects of the Russia-Ukraine conflict, Statista projects that UK ecommerce sales will climb by 29% by 2023, from £137.78 billion to £177.72 billion. This is evident from the fact that UK consumers are visiting stores once again. 73% of all retail purchases will still be made offline in 2023, according to YouGov. However, in 2023, it is anticipated that ecommerce sales would make up 20.8% of all retail sales globally.

Industry Growth 

Although it is impossible to predict which industries will definitely see growth, Statista projects that in 2023, direct-to-consumer sales in the UK will rise most in the furniture and hardware (59%) and sports apparel and equipment (53%) sectors. Online will continue to be the channel with the strongest growth in the UK’s food and grocery sector in 2023, when it will reach £17.3 billion, up 52.4% from 2018. Additionally, UK fashion sales are anticipated to climb by 23.9% in 2023, from £43.23 billion to £53.58 billion. Sustainable fashion is currently a major fashion consumer habit for merchants in the sector. There are chances to embrace alternate retail strategies in addition to selling new clothing as the second-hand and resale markets grow.

Customer Expectations

Three years ago, machine learning and AI were used to automate 25% of all consumer interactions. This figure is projected to increase to 40% by 2023. Despite this, a 2023 consumer trends research by Qualtrics found that 46% of UK customers were dissatisfied with the empathy displayed in their customer service encounters. By 2027, 25% of businesses will use ecommerce chatbots as their primary customer care tool, according to Gartner. Brands are thus making efforts to capitalise on the rising desire for custom, distinctive items that somehow represent our personalities or unique senses of style.

Customers have been demonstrated to respond favourably to personalisation throughout the whole customer experience, from sales promotional and post-sale assistance to marketing and sales where email and ecommerce portals will offer up personalised recommendations. Businesses that effectively respond to this trend in 2023 will be able to use the wealth of data points already at their disposal to produce goods and services that stand out as “special” or are especially suited to each customer. In order to give consumers the impression that they are built just for them and not simply for those who are similar to them, they will establish personalised touch points along the customer journey. Profiting from this trend requires technological application that enables “personalisation at scale.”

As more and more customers search for a retailer that provides excellent service in a hassle-free, effective, reliable, and memorable way, this explains why the idea of the metaverse—immersive, interactive, digital spaces where users may work, play, and even shop—is generating so much enthusiasm. Retailers have already embraced the metaverse with enthusiasm as a new and interesting channel through which they can communicate with and conduct business with customers, despite the fact that no one is entirely sure what form it will ultimately take. The top retail trends for 2023, according to a poll of 101 professionals in the retail sector, will be AR/VR shopping (12.2%), the omnichannel experience (8.4%), and social media (7.6%), with mobile sales making up 73% of all ecommerce sales by that time. Retailers should surely take advantage of this trend as social media is predicted to produce $26.04 billion in sales in 2023 or 20% of all global retail ecommerce sales.

Ecommerce and Delivery 

According to research conducted by Shopify, 39% of brands believe that production and delivery delays as well as shipping prices would remain the top supply chain-related challenges over the coming year. 85 million shipments were sent directly from producers to customers in the UK in 2022, despite this being of concern. That is anticipated to increase to approximately 110 million packets by 2023, a 30% increase. It will be crucial to offer click-and-collect, collection point pickup, and expedited shipping options. In fact, it is expected that by 2023, click-and-collect sales in the UK would total $10.31 billion according to Statista. By 2023, it is anticipated that international ecommerce sales would increase to £552 billion. Given the size of the market, merchants will inevitably need to do some form of foreign trading in the future if they want to grow their operations. Businesses that primarily do domestic business can also discover that their earnings are constrained.

Future-proofing your company is not easy, yet if retailers stay agile, prepare using data and constantly make efforts to leverage technology, then they can ensure that they are ahead of the game, and their competitors. Retailers have proven they can adapt in the past and they must continue to do so in the future. 

Contributor: Gavin Murphy, CMO, Scurri