In the post-epidemic era, consumers' lifestyles and consumption psychology are different from those in the past. While inflation is forecast to stabilize in 2023, small businesses will need to grapple with shifts in consumer demand and loyalty as costs rise.
What new shopping behaviors are emerging?
Which consumer trends will have the greatest impact on brands?
How should business owners respond?
We will combine data and expert forecasts to help you develop marketing strategies, meet customer expectations, and grasp the future of your business. Finally, we describe clear trends across generations of consumer groups, demographically.
1. Inflation -- discount-hungry consumers
One way to do this is to offer discounts or other financial incentives to attract price-conscious consumers. This may not be the case for every brand, however, as it could cut into already tight profit margins for businesses facing rising costs. Some business owners will even avoid offering discounts because it can negatively affect the image of the brand. In these instances, bundling products, adding subscription options, and offering gift cards with minimum purchases can all help increase conversion rates.
2. Social media advertising--the biggest factor influencing purchase decisions
Before investing in social media advertising, understand where your ad dollars get the most bang for your buck. Choosing a platform where your target audience mostly hangs out, or a channel where you've already had success with organic marketing, is the best first step. Start small and test, test, test!
3. Brand Loyalty - Consumers who are becoming less and less loyal
The cost of retaining an existing customer is still lower than the cost of acquiring a new one, which means investing in loyalty is key. Reward loyal customers with exclusive discounts and perks. Re-evaluate your inventory management strategy to avoid losing customers because products are out of stock. Finally, engage younger consumers by implementing sustainability strategies and communicating environmental impact.
4. Cost reduction secrets - brand cooperation
Businesses can leverage partnerships with other complementary brands, influencers, and creators to reach audiences of their target audience. Brand-to-brand collaborations can include co-creating a product, experience, competition, or event. Collaborations with influencers and creators are often paid endorsements, but can sometimes involve co-created products or experiences. Don't forget to reach out to the influencer's loyal followers for authentic testimonials.
5. TikTok’s unstoppable social commerce and discovery
TikTok can be a powerful secondary sales channel for e-commerce businesses looking to tap into the platform by targeting young Millennials, Gen Z, and the latest Gen Alpha demographic. Creators can also sell through the TikTok and Shopify starter plans, monetizing their audience without having to build a website from scratch. As more and more young people shop through mobile devices, merchants can consider investing in vertical video content on TikTok, Instagram Reels, and YouTube Shorts.
With margins tightening, offering free returns can be difficult for some small businesses. But that doesn't mean you can't find a creative way to make the return process less painful. Be the first to intercept returns before they happen by improving size charts, photographing garments in various sizes, offering personal shopping assistant services, or using virtual try-on apps.
7. Brands Seek Omni-Channel Experiences to Reach More Customers
Taking an omnichannel approach can help brands expand their presence in an increasingly noisy space. In addition to your eCommerce store, sell your products on other channels such as Amazon, through online marketplaces, social selling, and in brick-and-mortar stores.
8. Build Relationships – Start Locally
Brand experience is also increasingly important to customers, whether your brand owns retail stores or not. Don’t just sell the product; sell them your brand story, offer them value beyond the product, and engage directly in community channels. Alternatives to a full brick-and-mortar experience include launching pop-up stores, wholesale to other retailers, and entering local markets.
The 2023 Shopify Plus Commerce Trends Report offers this advice for businesses looking for the fulfillment network of the future.
Keep more stock on hand to avoid stock-outs.
Find more suppliers to diversify product sources.
Reduce return rates by helping customers make smarter purchases.
Digitize the supply chain by using apps and artificial intelligence to automate and streamline processes.
10. Strong demand for personalization
Take a balanced approach to using personal data to create experiences for your customers. Rely less on third-party data solutions and instead collect data directly, and be transparent about how you use that data to maintain trust with customers and stay compliant with privacy laws.
You can use artificial intelligence to personalize the customer experience and make product recommendations based on customer activity. Try a quiz or chatbot personal shopping assistant and send customized marketing messages based on their buying habits and preferences.
11. Buy now, pay later - the new favorite of young consumers
Enable store pay installments on your online store to easily offer BNPL options to your customers. This gives them the flexibility to make purchases over a period of time within their budget with interest-free payments, removing a potential hurdle to sales.
Consumer Trends by Generation
While many of the above trends are consistent across all consumers, businesses should understand the needs of their specific target customers. Here are the notable trends emerging across generations.
Baby Boomer Trends:
Brands targeting baby boomer audiences should not ignore the more traditional advertising channels. Sixty-two percent of this group said they most often discover products through cable TV ads.
In terms of product trends, Pinterest search data shows this generation's interest in party supplies is on the rise. Those of you who are in the "YOLO period" are celebrating birthdays and golden anniversaries with gusto.
Gen X Trends
Trust, loyalty, and personal experience are key to winning money with this demographic. One study found that 82% of Gen Xers would pay full price for a product and that this group prefers in-store shopping, with 73% saying they buy products this way.
Trends of Generation Y (Millennials)
The key to winning this generation's sales requires more than just offering a great product. More and more Gen Ys are using their money to represent their intentions, with 41% saying they are more willing to support brands that offer sustainable products or take a stand on social issues.
In the U.S., one in four parents are Gen Yers, so it's important to understand what matters most to this group before offering products and marketing information to them. Pinterest predicts that young parents will focus more on the "postpartum twelve months" as they prioritize self-care and mental health after childbirth. According to a survey report conducted with Generation Y mothers, life circles and communities often influence their purchasing decisions.
Gen Z Trends
Sustainability is very important to this demographic, with 75% saying it has more influence than a brand name. Gen Z also has unique social media habits: more than half plan to get fashion and beauty inspiration from influencers. Their thirst for AI doesn't stop there, though -- 85 percent say they prefer chatbots and automated customer service to live human agents.
Trends in Generation Alpha (Generation Alpha)
The oldest members of this generation are now teenagers, a future consumer segment that brands should not ignore. Even before these children have their own disposable income, they already have a significant impact on household spending. Experts say brands can appeal to Alpha Gen by delivering transparent, meaningful, and authentic messages.
Adapting to Consumer Demand in 2023
Many small businesses are still reeling from the effects of the past few years. By adjusting the business model and increasing choices for customers, the enterprise will develop in the long term. As consumer trends shift again, brands should keep feedback systems open, ensure supply chain diversification, and explore new sales channels to meet customer expectations while protecting their bottom line.
With the help of Shopify's new features, and grasping trends early; you will have prosperous business opportunities this year📈!