The consumer goods and retail market is expected to continue to evolve in response to changing consumer preferences and advances in technology this year. New York-based influencer and global tech leader Karolina Gujska steps in to share the latest outlook on the consumer goods and retail sector along with Ravindar Vanam, a Retail Innovations leader at a leading retail technology consulting firm.
In the latest report, Karolina Gujska highlights how retailers are feeling the pressure on their profits and employment levels as inflation continues to soar. Global retail sales are expected to increase by a robust 5% in 2023, but the lower volume of sales and surging costs will weaken retailers’ profits. The rollout of automation technologies will offer opportunities to limit wage growth, which means that retail employment is unlikely to return to 2019 levels.
Inflation-wary consumers will prefer to shop at discount stores and are also open to shifting away from their loyal brands to other brands, helping these retailers to increase their market shares. Meanwhile, the economic slowdown in China will mean fresh challenges for global luxury brands already affected by the loss of Chinese tourists.
In an effort to protect their bottom lines, retailers will try to slash labor costs and invest in automating their backend processes. This means that retail wage growth, which has been outpacing that of other sectors, will slow, and hopes of the sector’s employment levels returning to pre-pandemic levels in 2023 are fading.
Online sales growth will slow, but the online share of retail will edge up to about 14% of global retail sales. Online retail growth will shift to developing markets, with the Middle East and Africa, and Latin America becoming attractive for retail investment.
Gujska also shared important events to look out for this year. As the world becomes increasingly aware of the impact of plastic on the environment, 2023 will see several countries taking decisive action to curb its use in the retail industry. Spain, for instance, has been leading the charge since January by banning plastic packaging for fruits and vegetables and imposing taxes on non-reusable packaging. Following suit, the Netherlands will be adding extra charges on single-use plastic cups and food packaging starting in July. Canada will also be expanding its ban on the making and importing of single-use plastic productsby banning the sale of such products from December 2023.
As the world shifts towards a greener future, the fast-fashion industry is also embracing change. Leading the charge, Inditex, the behemoth of the fast-fashion world, is ditching single-use packaging and opting for more sustainable fabrics. Joining in on the movement, German online fashion retailer Zalando is committed to only stocking brands that meet strict sustainability standards. Alongside these eco-friendly initiatives, the industry will also have to navigate new supply chain regulations in Germany, which will hold companies accountable for human rights and environmental violations. Two of the largest California Cities, Los Angeles and San Diego, also recently voted to ban foamy plastic used in takeout food containers and in disposable coffee cups.
In addition to these environmental challenges, 2023 will also bring new regulations for consumer brands and online sellers in the areas of privacy, competition and data. In Finland, online sellers will have to provide more transparency in their pricing and discounting strategies, while in the US, five states are set to implement laws regulating the collection and processing of consumer data and initiatives like U.S FABRIC Act which aims to protect worker’s rights and New York’s Fashion Act which provides guidelines for chemical use and climate targets, are in play . India, too, is set to launch a revised data protection bill early in the year. As a result, businesses will have to adapt their data collection and storage methods to comply with these laws.
Ravindar Vanam, also shares that the investments in providing immersive experiences for consumers with Web3, Metaverse, AR/VR is also on the rise, along with AI-generated personalized communications. The Retailers are also experimenting with smaller footprint stores for quick commerce in order to continue owning their loyal consumer base as consumers become cost conscious.