Modern marketers are old pros when it comes to navigating change. This is especially true if you’re in the retail industry, where your ability to pivot and adapt aren’t just fluffy descriptors to pad your LinkedIn profile — they’re essential survival skills.
Yet, knowing that disruption is inevitable doesn’t make dealing with it easier. After all, you still have an obligation to your business to plan and execute a strategy that will yield profitable growth. So, as you chart your roadmap for success, you’ll need a plan that takes into account the most pressing challenges you’ll likely face. That way, when you are forced to pivot and adapt to address unforeseen changes in the market (and you will be), you won’t be caught off guard.
Now, what about 2023? What’s on the horizon for the retail industry?
To help answer this question, we commissioned the experts at Retail TouchPoints to dig deep and research the challenges retail executives will face as they plan their 2023 strategies. The results were shared in our joint whitepaper: 5 Trends Shaping the Future of Retail Strategy & Execution.
No doubt you’re already planning for the rest of the year, so these insights can’t wait! The whitepaper reveals some of the trends you can expect to see in the coming year, but let’s dive into the challenges that you need to take into account now as you plan your retail strategy and execution.
The Increased Complexity of the Commerce Experience
Long gone are the days when, if a customer wanted to buy something, they were relegated to making the trip to a local department store or shopping mall. The in-store experience still lives on, but viewing it as the one-and-only way to connect with a brand is an old school way of thinking.
Fast forward to today. The commerce experience is much more complex. According to McKinsey, roughly three-quarters of US consumers use a mix of online and in-person retail channels. This means the vast majority of customers are connecting with your brand across all sorts of touchpoints.
Yet on the business’s end, these channels are often siloed. Disjointed data and channels present a problem: you don’t get the complete view of the customer, so you don’t get the comprehensive data-driven insights into their behavior, history, and expectations. Even in 2023, one of the greatest challenges retail marketers face is the complexity of bringing together their data and channels so they can provide a more unified, personalized shopping experience to customers.
If this is still a challenge your business faces, evaluate your current tech stack and ask yourself: does your current technology allow you to fully leverage your data to better understand customers and deliver the connected cross-channel experiences they desire?
“I dislike the word omnichannel. I personally think it’s just called business. And in our world, it’s just called retail. [Because] it’s proven, time and time again, that if we can get our consumers to actually interact with us as a brand in multiple ways […] from a business side, it is a benefit to us. But more importantly, it’s a benefit to our consumers.“
Planning your retail marketing strategy? Learn the industry challenges and trends you’ll face this year and beyond.
Supply Chains Still Have Kinks
To say the COVID pandemic threw a wrench in supply chains is an understatement. Even companies with flawlessly dialed-in supply chains were impacted. The fallout was that many businesses, despite their best efforts, were plagued with empty shelves and out-of-stock products, which undoubtedly hurt their reputation with customers.
Things are better now, but we aren’t out of the woods. SAP research shows that more than half of senior business decision-makers still think that supply chains need improvement. A challenge that retailers will face in the coming year is the ability to get greater visibility into their supply chain to better serve their customers.
Moreover, marketers need to ensure they have ways to stay in touch with their customers, dial-in communications around product availability, and offer alternate products. For example — personalized, always-on automations like “back-in-stock” or “product recommendations” will be vital in keeping communication with customers strong, even if your supply chain has weaknesses.
This year, brace for the possibility of supply chain disruptions and build the appropriate communications and campaigns into your strategy.
“So we’re really using ‘Wait List’ — that’s what we call it, instead of back-in-stock — as a demand signal … If [we] sell out, can we put this item on a wait list and give people a chance to sign up for a size and style, and then get a sense of how many people are waiting for that style to come back in stock? Then, we can determine whether or not we want to recut it. You can imagine all the data points that come in from that, and then also the communications that need to be produced to make that experience seamless [for the customer].
Competition Is Growing… and It’s Everywhere
Your customers are flush with options. The proliferation of digital channels makes it easier for new brands to jump into the mix. Even brands that believe they have a genuinely unique product offering quite likely have at least one or two competitors that can offer the same thing… and perhaps at a lower price point.
Naturally, with so many others clamoring for the attention of your prospective customers, cost-per-acquisition continues to soar. Business Wire reveals that today’s retailers spend $29 for every new customer, vs $9 a decade before. So, if you’re like most marketers who are already being asked to deliver greater results with less budget and resources, those kinds of numbers can be painful to consider.
With this in mind, one of the challenges you’ll run up against this year is driving profitable growth when competition is fierce and acquisition cost high. To get more bang for your buck (and more predictable, profitable long-term results), focus on the customers you already have.
This year, a strong loyalty and retention strategy will be a must for driving the revenue and growth your business demands.
“It’s obviously a lot easier to retain a customer rather than win them back once they’ve kind of disengaged and become inactive. So we really want to be able to nurture our active database. We want to keep them engaged and prevent them from becoming defective by offering them rewards at timely points [in their journey], in terms of communication. And we also, as they become more engaged with our brand, want to push them to make higher-value purchases.”
Inflation Is Shifting Customer Behaviors and Demand Patterns
We’ve all heard the unsettling chatter, spoken in low murmurs in private corners lest it be mentioned audibly enough to bring it into existence: we could be entering the choppy waters of economic recession.
Even with holiday sales up 7.6% in 2022, prudent retailers are bracing for a slowdown in consumer spend. Inflation is on the rise. But economic uncertainty is not a death sentence for your brand — rather, it just means a change in customer behavior and demand patterns is coming, and you need to be prepared.
As customers brace for changes in the economy, it often impacts their perception of value. For some, this could just mean the best price wins. But not always. It’s about getting the most for their money. If they spend with your brand, are they getting the best product possible in exchange? And perhaps more importantly, the best experience?
Expect the impact of inflation to be a challenge this year. In response, consider how you can provide the best value-adding experiences to your customers.
“Now that we have our new SMS initiative, it really turned our opt-in experience to be more focus-grabbing, more ‘right there present upon landing on our site.’ It pushed us to really rethink what is the value proposition that we’re providing to the consumer to give us their information. It used to just simply be ‘okay, well, if they want information about a ticket, we’re going to make this available to them.’ But now we realize we need to have a real, true incentive in place to drive engagement, to give people justification for wanting to communicate with us in this way.”
Organizations Are Reevaluating Their Total Technology Spend
Tech bloat is no joke.
Marketers don’t like it because too much tech slows down their team and can introduce unnecessary complications. Businesses don’t like it because they end up spending too much money on an extravagant amount of tech that looked shiny and promising before they bought it, but perhaps didn’t deliver results that made it worth the cost. And often IT teams are stuck in the middle, trying to frankenstein together disparate technologies so they deliver for both marketers and the business.
Many businesses this year will be cracking down on their tech spend. In an effort to do more with less, retailers will be looking at getting more out of the tech they already have, or working with more comprehensive technologies that deliver greater time to value, play nicely with IT, and solve the challenges of the business. Likely your business is no exception, so now’s the time to put your head together with your IT team and decide how to maximize the value of your technology.
“So the core parts of our tech stack that we needed to utilize was an e-commerce platform, a subscription platform, and then our customer data and communications platform as well … By working with really efficient and data-driven tech companies, we are able to make sure that our subscription models we were creating matched our customer needs and that we could get the most out of them with our customers.”
Take On the Challenge
Disruption. Change. Challenge. If you’re a retail marketer, these aren’t novel concepts — they’re part of your everyday life. Certainly the intention of this article isn’t to prepare you for something you weren’t expecting. However, we hope you’ll get value out of knowing which specific challenges you should expect, based on the insights that came from our collaboration with Retail Touchpoints: 5 Trends Shaping the Future of Retail Strategy & Execution.
In this post, we focused primarily on the challenge retailers will face as they prepare their 2023 strategy. However, the whitepaper goes much deeper and reveals:
- Five key trends that will impact how you plan your strategy and execution.
- Actionable next steps you can take now to navigate uncertainty, improve CX, and drive business results.
- Real-life examples of how brands like Pizza Hut, Harrods, Beauty Pie, The Body Shop, Reformation, and Savers solve CX challenges and deliver business results.
So do what you do best as a marketer: face the ever-changing challenges of customer engagement head on. Download a copy of the whitepaper today to get all the insights you need for a strong 2023 retail marketing strategy.
Get Actionable Next Steps to Face the Challenges and Trends That Will Impact Your 2023 Retail Strategy & Execution.
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