What are the Consumer Trends of 2023?

Never has there been a more important time to understand current and future trends in consumer behaviour. Unlike 2022, the next year will be an unusual year. The challenges and trends we can expect to contend with include the Australian economy slowing down, rising Covid-19 cases, and consumers clamouring for more privacy as their concerns rise about safety in an online environment.??

The burning question on every retailer’s mind as 2023 approaches is… “What do consumers want and why?” This is not just a question for the here and now. It relates to the future, as well.?

At RDG Insights, we’ve been gathering intel and insight from retailers and brands on consumer behaviour. Using consumer neuroscience to understand our customers, we break down what consumers have done in the past and their motivations for doing so, to help us forecast what they will do in 2023.??

More significantly, the data gathered will help us determine what brands and retailers can do to better position themselves as the challenges mentioned above turn into trends in the foreseeable future. How do retailers ensure they are able to meet the functional and emotional needs of their customers??

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A Day In The Life Of The Future Consumer?

How will the challenges and trends our research uncovered affect the future consumer???

By monitoring changes in consumer behaviour through 2022 we have determined what we believe will be the future trends of 2023…?

1. The Price Sensitive consumer?
2. Catch me in seconds – The impatient consumer?
3. Experiential Retail?
4. Customer Loyalty Loop?
5. Social Commerce?
6. Brand Humanisaton?
7. Privacy First?
8. Get Circular?

Lets have a look at the first four trends to understand what retailers can do to deliver to customer expectations in 2023.?

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TREND 1: Price Sensitivities?

Price is going to be a focus for 2023 with inflation making consumers research more and spend less.?Consumer are shaky about their financial position due to the increased pressure on household budgets and ongoing concerns regarding a recession. In response, consumers are adjusting?their spending habits and lifestyle behaviours.??

Whilst younger demographics are more pessimistic we are also seeing consumer responses to mounting financial pressure differ significantly depending on their personality. Personality segments that are driven by the balance system of the brain are more cautious for the next 6 months, they want reassurance that they are getting value for money and are looking to retailers they trust to deliver this.?

According to our research, consumers plan to cut back on specially non–essential products and services, on mini-splurges like café/restaurant/takeaway visits and on online shopping amid the rising cost of living.?Free shipping (66%) and discounts (59%) remain important factors when consumers are shopping online. However, we expect consumers to go back to their regular shopping patterns and improved financial confidence by mid 2023.??

2 in 3 consumers will avoid an online retailer if the shipping cost is high.?

Drivers of trust, safety and security will become more vital during this time of financial pressure.?Consumers will look to brands and retailers that they trust to deliver them value and reliability.?Retailers should understand their consumer shopping habits, preferences, how they are adapting to challenges and build the trust to improve brand loyalty and retention strategies.??

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How Pricing Has Influenced Consumer Behaviour?

71% of consumers have changed or plan to change their spending behaviour due to ongoing and increasing high inflation. Seeking for more sales and discounts to help them maintain their current lifestyles, almost 1 in 2 consumers are switching to cheaper brands. In a surprising twist, 39% of consumers are reducing their online shopping behaviours amid the rising cost of living.?

Generic brands – especially those well-made and which mimic the more luxurious brands – have seen an increase in popularity as 41% of consumers make the switch to generic brands, found either in-store where they regularly shop, or at cheaper stores of a similar quality. Other shopping behavioural changes include buying products in bulk (33%), using more coupons or starting to (27%), and making an additional switch to local brands (19%).??

Reduced online shopping habits will result in changes to activities, hobbies, and memberships, with switches and downgrades to plans and memberships (26%), increased cancellations to gym, yoga, and other sporting activities (15%), and growing cancellations to streaming and other similar subscriptions.?

It is rather interesting to note that only 2% of consumers will make little or no change to their behaviours or lifestyles in the year ahead.?

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TREND 2: Catch Me in Seconds?

The digital revolution has given rise to an on-demand economy, calling for businesses to take measures to cater to the “right now”, impatient consumer. Catch me in seconds refers to the carefree attitude of those impatient consumers to live for the moment, and their desire to spend time more efficiently when interacting with brands.?

Today’s consumers look for businesses to help them get the right product they need in a concise and impactful way. Many consumers make their spending decisions based on how soon they receive something without having to do anything?additional outside of their daily routine or the minimal amount of effort. 77% of Millennials indicate that it is important that retailers offer them options to save time whilst shopping (67% of all consumers).??

An on-demand economy changes the way not only consumers make decisions, but impacts the decisions that businesses need to make to continue to be relevant and competitive, both today and in the future. Retailers who are aware of the changes in consumer behaviour will be much better positioned to grow their retail strategy successfully because they’ll better understand the context for growth and the alignment of strategy to real customer drivers.?

Time is the new currency of engagement, and increasingly more important to consumers who value both their instore and online experiences.??

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What can retailers do to save their consumers time??

QR codes became a huge part of our lives during the pandemic and to elevate the QR trend, We have seen retailers roll out QR code payment options across stores. This speeds up the checkout process and seamlessly links payment and loyalty redemption. With electronic receipts then being immediately sent to the consumer. This is a great example of creating a seamless experience to save the consumers time and frustration during an arduous part of the purchase process.??

We have also see the rise and rise of delivery platforms with “instant delivery” models disrupting the sector. What started as a Covid convenience we are now seeing these delivery aggregators delivering all forms of grocers and retail products, even expanding into second hand marketplaces and corner shop convenience.?

Retailers should review all points of the purchase process to understand where they can improve convenience and simplify the process to keep the attention of this impatient consumer.?

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TREND 3: Experiential Retail?

The retail industry is no stranger to change, but the exponential evolution of this industry within the last two years alone has been one of tremendous and unprecedented growth. Instead of still being viewed as destinations for repetitious and habitual purchases, many retailers have created multiple channels for shopping and opted for creating experiences instead of simply securing a sale.?

Retailers have come to understand that their customers now want, nay, demand a seamless 24/7 experience from their retailers of choice. Where perhaps retailers had thought before that building their omni-channel capability would be like?adding a room to their house, they’ve now come to realise that it is rather more like rewiring the whole house.?

Consumers buy and shop with their emotions rather than their wallets. The demand for ‘human touch’ and efficiency has caused retailers to embrace omni-channel strategies that deliver an interactive, engaging experience – both online and offline. This is why many online retailers have built physical locations that allow visitors to browse and shop their products, interacting, experiencing, and connecting with products before buying them.?

Likewise, digital and traditional businesses now use seamless experiences to cater to the needs of their customers. To serve omni-channel customers better, winning retailers are reimagining channels that never existed before in their industries. These retailers are bridging the gap across supply chains, stores, web presence, and partners – and a growing number of consumers are responding positively to the change.?

66% of Millennials look for social experiences in retail, resulting in a trend now known as Shoptimism?, a phenomenon where an in-store experience makes it worth leaving the house for.?

2022 was an underwhelming year for most consumers due to COVID-19 restrictions and limited capability for enjoyment and fun. Many consumers have decided they’re not going to risk making plans for events and holidays due to uncertainty in these pandemic times.?

However, 2023 is set to become the year of retail as an activity. Consumers are seeking ways to entertain themselves with minimal commitment and low expenses (Think about Trend 1!). They are interested in retailers who can create an experience worth leaving the house for, preferring to interact with retailers who can deliver innovative experiences, both in-store and online.??

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The Physical Store is back!!?

Some examples of retailers excelling in this area include:??

• Instore events to learn how to use products?
• Mobile apps to use in store, combining AR and VR??
• Customisation to the next level – with all levels of the customer experience becoming customised.?

Do you have an experiential or transactional retail offer? Do you want customers to take time and enjoy their experience with you or is your offer based on a quick and simple interaction??

By understanding how consumers want to use their time with you will enable strategy to develop store layout and execution, digital experience and how the two shall intertwine.?

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TREND 4: Customer Loyalty Loop?

Consumers want to be in contact with brands and retailers across multiple platforms and 24/7. They are interacting with retailers on multiple channels be it, in-store, website, social media, marketplaces or the metaverse, consumers want it all.??

The ultimate goal for retailers is to understand what goes on in the mind of a consumer, to win their mind and their heart in order to transform them from shopper to a loyal customer.?

To achieve this ultimate goal, retailers need to firstly gain an appreciation or understanding of, and empathy for, the customer from their perspective.??

However we have been talking about “customer journeys” for too long, and whilst this is still a necessary part of any retailers toolkit we now need to go one step further and look at a full “Customer Loyalty Loop”.?

In a customer loyalty loop, from the initial interaction we are considering how we can create loyal customers, going beyond the first purchase, and in turn influencing others.??

Creating emotionally relevant content and offers at every key part of a customers interactions with you will build a tribe of customer advocates. Emotionally connected customers will favour your brand over others, become your biggest cheerleaders and price will have much lower influence.?

Make your marketing expenditure go further by using emotional targeting at each relevant touchpoint.?

Consumers have more data available to them than ever before, more than they could ever use. However, with the multitude of data and points of contact before a consumer makes that purchase how can retailers and brands ensure they are offering the right information at the right time in the right location??

When we dig into the emotional drivers of consumer behaviour we see that different consumers are looking for different things prior to purchase.?

We have consumers who are looking for data, detail and proof! As part of their pre-research, they are happy to read in detail reports and statistics. They want websites with this information backed up with data and real-life examples from consumer forums and chat rooms.??

This differs significantly from our consumers who are looking purely for visual appeal, they want to use minimal effort to find what they want and they want the process to be enjoyable, highly influenced by beautiful adverts and their attention is easily attracted through posters, billboards and other highly visual means.?

Understand these emotional drivers and you can appeal to their subconscious at each step.?

‘The Customer Loyalty Loop’ involves not only adding new customers to the existing customer base but building a loyal emotionally connected customer.??The demands from the pandemic and rising inflationary pressure have increased the importance of loyalty programs from retailers.??

A product alone is not enough to keep loyalty, as brands must meet both rational and emotional needs of their customers. Brand loyalty requires you to deeply understand your customers (and their emotions), and how this comes to life through loyalty programs and ongoing engagement.?

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What is your customer loyalty loop?

Each consumer personality type has very different drivers to loyalty – their first interaction with a brand will play a part in their emotional resonance – leading to their long term loyalty and advocacy.??

Helen and Hanna may live next door to each other, be best friends, same demographics but their emotional needs are worlds apart….?

You need to understand your customers’ personalities and driving emotions. 95% of all decisions are made in our subconscious mind, in the limbic system of the brain. The key to success as a retailer is therefore a better understanding of what your customer wants, why they want it, and how to give it to them.?

RDG Limbic Insights? personality profiling indicates that different consumer segments have very different needs and influences at different stages of their loyalty loop. Here are three great examples of this:

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1. The Performer

Performers are testosterone-driven and ambitious. They are disciplined and value exclusivity. Somewhat self-controlled, everyday rituals and structure are of high importance to them.??

• Pre-purchase:?Research is a must, and Performers use online reviews, blogs, comparison sites, and adverts to do their homework.?
• Purchasing:?Only premium experiences will do, and Performers expect quick and prompt service from knowledgeable staff.?
• Post-purchase:?Limited, high-end, functional, and innovative product offers win the day here, with Performers wanting VIP subscriptions and services available to them.?
• Closing the deal:?Make sure you have an exclusive, expensive, well-worth-it extended warranty in place for luxury items bought by Performers.?

2. The Hedonist

Hedonists enjoy highlighting their body, personality, or skills. They like being in the limelight, and are generally regarded as ambitious and creative people. Trend-driven, Hedonists tend to change their styles and preferences as fast as fashion does.?

• Pre-purchase:?Devourers of all things influential and social media, Hedonists turn to their devices to track what celebrities, social influencers, and their circle are buying, reviewing, and recommending.?
• Purchasing:?Window and in-store displays will attract the Hedonist to enter the store. Inside, digital screens and aesthetic store layouts and designs may hold their interest long enough to browse and shop.?
• Post-purchase:?Keep them coming back with new products and special offers. Stay connected about launches, special events, and blowout sales.?
• Closing the deal:?Offer the Hedonist expensive and impulsive products that are sure to wow their circle of influence.?

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3. The Harmoniser

Harmonisers are deeply family-oriented. They are emotionally-led beings who do their best to avoid taking risks. Though not necessarily traditionalists, they prefer brands they can trust and those that signal positive emotions when shopping.?

• Pre-purchase:?Home bodies at heart, Harmonisers rely deeply on recommendations from friends and family. Online reviews and word-of-mouth play a large part in their shopping decisions, as long as the words they’re reading seem trustworthy.?
• Purchasing:?Harmonisers buy for the long-term investment value of an item. The longer it works, the more they trust the brand. They rely on staff recommendations, and detailed and competent advice to make buying decisions.?
• Post-purchase:?Product recommendations, loyalty schemes, value buys, and incredible discounts on their shopping favourites can be sent via email to prompt them to shop.?
• Closing the deal:?Use positive words in your ad copy and email, and display traditional, family-oriented goods close to luxury items for best results.?

Is your customer-driven by status, scarcity, excitement, or security???

Contact the RDG Consumer Insights division today , and learn how to drive increased loyalty to your brand, while also tailoring your customer experience to enhance loyalty.?

As we can see so far in our 2023 consumer trend predictions consumers are changing, they are more demanding than ever before and have got accustomed to having things when they want, where they want, how they want. For retailers to stay ahead of their expectations you now need to listen to your customers on a personal level, curate experiences that appeal to their emotions on an individual basis and tailor your offering to their 24/7 needs.?

Tune into part 2 to delve deeper into the remaining consumer trends for 2023.?

Do you want to understand your customers on a deeper level, go beyond their demographics and talk to them on an emotional level? Contact RDG Insights Division for a better understanding of your customers’ minds and more importantly HOW to action this is your retail, instore, brand and marketing strategy.?

To read more about our 2023 consumer trend predictions download the whitepaper?here ?What are the Consumer