Top 10 Trends Driving Retail Growth

A lot of people are making a good living forecasting what’s going to happen in retail. Things like ecommerce will soon eclipse brick-and-mortar, retail is facing an apocalypse or delivery to home will become the norm in grocery shopping. None of these is true, but it doesn’t stop people from predicting them, and others from believing.

The fact is, when it comes to what’s ahead for retail, no one really knows. But if you’re interested in what’s driving retail growth right now, in 2023, you’ve come to the right place. There are 10 Trends unfolding before us right now, very much worth watching.?

1. Shoppers have returned to stores, again.?2022 was a record year for foot traffic in physical retail. This drove the 18% sales growth last year in brick-and-mortar stores, while e-commerce sales grew 14%.?In fact, when it comes to online shopping for groceries, there was no growth at all in 2022.?It hit 11% share of the total grocery channel spend by year-end, same as it was 2021.?This is partly why retailers spent billions on new store openings in 2022, up 13% versus 2021. As 塔吉特百货 CEO Brian Cornell said, “Our stores are at the very center of our strategy.” This seems to be working, as our latest research shows Target is ranked #1 for delivering the best overall in-store experience.?

2. Expectations have changed.?COVID drove shoppers online of necessity. The increased familiarity with all things digital led to an expectation that physical stores will incorporate more of the convenience that online shopping can deliver. Lowe's Companies, Inc. brings VR-driven navigation to its app, so shoppers can find exactly where that screwdriver is. Augmented reality delivers product demos in-store for coffee makers. QR codes unlock online experiences around the product in a shopper’s hand.?If you’re not bringing the benefits and personalized experience technology can bring to your brand and category in-store, you’re missing an opportunity to win.

3. Personalization is unlocking new opportunities in-store.?Our research shows 95% of shoppers actively use a retailer’s app for things like customized offers and content, checking inventory, pricing, wayfinding and list customization while shopping. 沃尔玛 scores highest in our survey for the app shoppers love most. In fact, Walmart has designed its newest stores to be shopped while being guided by the app.?This combination of physical and digital needs to be taken into account as you consider ways to drive positive changes in shopper behavior, and create new growth.

4.?Checkout continues the move to frictionless.?About half of all checkout lanes are self-checkout and this percentage is growing weekly. “Just Walk Out” technology, first introduced by 亚马逊 Go in 2018, is now being delivered by a variety of tech companies ( Zippin , Trigo , Grabango ) at retailers as diverse as 特易购公司 , ALDI USA , Giant Eagle, Inc. , and more. The good news for shoppers? Checkout lines will be a thing of the past, as they simply walk out with the items they need. The bad news? This changes how retailers and CPGs think about sales of impulse items (candy, chips, beverages, magazines, etc.) typically sold near cash registers.

5.?Buying groceries online is evolving.?Buying groceries online peaked in March 2021, at $9.3 billion per month (Mercatus). By March 2022, this had declined to $8.7 billion. And 2022 was overall flat to 2021. As shoppers increasingly head back to stores, online purchases will settle to some lower monthly sales number, likely closer to $7.0 billion, about 12% of all grocery sales.?The forecasts for growth have all been revised downward, and the latest forecast from BricksMeetsClicks is online grocery spend will reach just 13.6% over the next five years.

6. Delivery to home is in decline.?Consumers are learning that the prices retailers charge for items purchased online are actually higher, and delivery to home can come at a cost of $10 to $15, on top of groceries purchased. Given inflationary times, delivery to home has fallen steadily. And with that diminished outlook, the market valuation of companies like Instacart , DoorDash , Uber and others have all dropped precipitously in the past months.

7.?BOPIS is growing.?Consumers find the experience of buying online and picking up at store to be easy, convenient and a time saver. Albertsons and Kroger have both integrated Google Maps into their shopping apps; as shoppers drive to the store for pickup, their location is tracked and relayed to the store so that all is staged and ready for arrival. Target has even added a last-minute “forgot this, please add” functionality to its app, plus the ability to order a cup of 星巴克 to be waiting when you arrive.?The experience will continue to improve over time.

8. Retailers are joining forces.? Ulta Beauty and SEPHORA between them have 4,000 stores, but they’re also investing substantial dollars in opening “store within a store” formats at Target and Kohl's . Gap is now delivering branded sections within Walmart. Caspar mattresses have mini-stores in Bed Bath & Beyond . Smaller retail brands are looking to larger retailers that have the traffic and efficiencies built into their business model. In a very real way, stores like Target and Walmart are beginning to deliver something akin to the mall experience of yesterday.?

9. Healthcare is changing the face of retail.?Walmart is hiring more doctors now than most major hospital systems. Amazon has committed to opening 2,500 in-person healthcare clinics over the next five years. CVS Health will build 4,000 Health Hubs. Retailers are increasingly providing x-rays, dental care, mental health counseling and vaccines for up to 80% less cost, and 50% less time, than at traditional healthcare providers. This creates a whole new revenue stream for retailers that’s based in services, not things.?

10.?The Metaverse is Real, but Maybe Not Ready for Prime Time.?As gaming has gotten more immersive and real, unique worlds have taken hold, where people congregate, build things, attend virtual concerts or just throw parties. And people spend real money in these worlds, on their avatar fashions, experiences, and even hard goods.?Yes, you can order McD’s in the metaverse, and 30 minutes later someone will bring it to your door.?The real opportunity here??It will be how retailers develop and adopt their online shopping experiences into this fully realistic fidelity.?That will be a game-changer for what we currently view as the largely functional experience of “e-commerce” today. But yes, it's nascent.

The Top 10 trends driving retail growth today are not predictions; they’re real and happening right now. What makes retail marketing so interesting? The shifts and changes in these trends, and how retailers, brands and solution providers adapt their strategies to make the most of these.?That’s the work that gets me going, every day.

Peter Cloutier?is Commercial Strategy Lead at? ChaseDesign , helping clients translate how and why people buy into more profitable retail experiences. He is a frequent speaker at industry events like Groceryshop, Retail Innovation Week and the CMA, and his thought leadership is published across leading industry journals.?This is an update of an article that first appeared in Retail Leader.