5 Ways Retailers Can Make the Most of 2023

As customers set the bar higher each year and retailers face pressure from various fronts, businesses that quickly take the necessary steps to the meet their and customers’ needs will emerge ahead of the competition. Ram Venkataraman, CEO, Kibo Commerce, identifies five trends that will separate leaders from the laggards.

As we wrap up 2022, retailers continue to feel pressure from labor shortages, inflation, supply chain woes, and fast-changing consumer shopping behaviors. We will continue to see many of these challenges in 2023, along with continued economic uncertainty. As a result, we can expect retailers to focus on process automation, cost-saving innovations, additional revenue streams and transformative technology.

B2B buyers and B2C consumers will set the bar high for online and offline shopping experiences. Businesses that can quickly pivot their organizations, processes and technology to meet those needs will come out ahead.

We have identified five trends that we predict will determine the leaders from the laggards in 2023.

Retail Trends to Watch for in 2023

Automation and machine learning will play a significant role in order and inventory management

With many retailers still facing labor shortages, they can no longer rely on manual processes and data entries to keep up with customer expectations. We will likely see organizations with multiple distribution centers evaluating order management systems that can support and automate complex order routing rules and unify inventory data in real-time. This will allow them to gain fulfillment efficiencies and ensure they are using inventory across their entire network, resulting in increased inventory turn, reduced markdowns, and optimized carrying costs that maximize profit margins.

With the additional layer of machine learning, retailers can further optimize their inventory and order management. Machine learning takes historical data, and predictive analysis and estimates demand levels, minimizes stocking issues and streamlines the order lifecycle based on specific internal and external conditions.

See More: 5 Ways AI is Impacting Retail Marketing

Paid product subscriptions will continue to grow in popularity

As we head into what many economists are calling an economic downturn, retailers will look for ways to generate additional (and predictable) revenue while driving customer loyalty. For many, the answer will lie in product subscriptions. However, it is not enough to implement a subscription business model to attract shoppers. The competition for wallet share will only intensify, forcing retailers to drive home the value of their subscription offerings.

According to a Kibo surveyOpens a new window , 64% of U.S. consumers do not have a product subscription. This finding presents a huge opportunity to tap into. To convert these consumers, retailers need to understand what is preventing these people from purchasing a product subscription. When asked why they do not have a product subscription, Kibo’s survey found the following results: 

• Lack of control: 55% of respondents said they chose not to sign up for a product subscription because they like to control how often they purchase a product. 
• Preference for in-store shopping: 36% of respondents said they prefer visiting a brick-and-mortar store to make purchases. 
• No value: 20% of respondents do not see the value in product subscriptions. 
• Not interested in new products: 16% of respondents are not interested in exploring new or curated products from a retailer.

Leading retailers that decide to adopt this business model will look for subscription management platforms that allow them to control the end-to-end experience, from complex promotions and pricing to a frictionless checkout flow and accurate delivery. This level of flexibility allows businesses to continuously evaluate their strategy and evolve their subscription model as business needs and customer expectations change.

Online-only brands will seek marketplaces, retailers and cross-brand opportunities to stay relevant

The low barrier to entry, thanks to modern commerce technologies, enabled the explosion of digital-native brands. But now, these brands face the challenge of scaling their businesses beyond the online direct-to-consumer (DTC) channel. According to McKinseyOpens a new window , over the last two decades, fewer than 0.5% of these brands have reached $100 million in revenue, making investor returns rare.

We expect many of these businesses to seek new channels to adapt to changing shopping behaviors and tap into new audiences. This could be in the form of selling on marketplaces, such as Amazon or Walmart, setting up pop-up shops in retail stores like Macy’s, or partnering with other brands to cross-sell items. Since launching its DTC online store, Casper has expanded into retailers (Target), marketplaces (Amazon), and its own brick-and-mortar locations. By expanding into new sales channels, Casper generated $497 million in revenue in 2020, for a compound annual growth rate of 31% over the previous four years.

But to successfully sell through multiple channels, these online-only brands will need to ensure they have an inventory and order management system that can accurately segment inventory and fulfill orders.

See More: 5 Reasons Retailers Are Failing in Their Loyalty Programs

Retailers will leverage inventory visibility to build customer trust

Many retailers, particularly those that rely on multiple sources for inventory data, struggle to set realistic expectations and then meet those expectations successfully. In our current environment, retailers cannot afford to deliver items late, oversell products or present inaccurate availability in local stores on the website.

Inventory visibility is the foundation of seamless omnichannel experiences. Without the right systems in place to connect and unify inventory data, it is challenging to manage disruptions in the supply chain and meet demand proactively. A modern order management system with real-time inventory visibility allows retailers to know exactly where products live and how long it will take to deliver to the customer and accurately set and meet delivery expectations.

Inventory visibility can also streamline customer service as it allows customers to track their orders, check delivery dates and see the inventory availability by location without contacting customer service. As a result, the customer service team can focus on building customer relationships and proactively enhancing the buying journey.

Organizations will re-prioritize their business functions

As organizations launched their digital commerce ecosystem, many favored build over buy, with regard to software implementations, to meet their unique business and technology needs. As a result, they are spending significant amounts of resources to maintain integrations, customer user interfaces and data migration.

But with the emergence of headless and composable architectures, retailers can replace their homegrown systems piece-by-piece with best-of-breed technologies. Pivoting to commerce solutions that re-prioritize business functions over technology architecture enables retailers to focus on delivering unique products and customer experiences.

What do you think are some of the key trends in the retail industry in the coming year? Share with us on FacebookOpens a new window , TwitterOpens a new window , and LinkedInOpens a new window .

Image Source: Shutterstock 

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