Industry watchers, retail experts and leaders share insight on what’s to come in the new year regarding retail customer experience trends and strategies.
Retail in 2022 was a year of rebounding, rebuilding and invigorating customer experience strategies to pull consumers back into brick-and-mortar stores while at the same time enhancing the digital shopping channels consumers tapped heavily during two years of COVID-19.
The year was also one in which the metaverse began to take root, revealing yet another way for retailers to engage, entertain and sell, of course, to young consumers eager for greater digital experiences.
As 2022 comes to a close, RetailCustomerExperience reached out to industry watchers, retail experts and leaders to get insight on what’s to come in the new year regarding overall retail customer experience trends and strategies.
Isaac Krakovsky, EY Americas Retail Leader:
Looking toward 2023, consumers are worrying about financial hardships brought on by the current state of our economy, including cost of living and rising inflation. While retailers need to respond to the world we live in today, they also need to anticipate the demands and desires that these emerging challenges will create tomorrow.
As a result of these economic challenges, 26% of U.S. consumers surveyed in the EY 11th Future Consumer Index report that they’ve embraced frugality as a way of life. And 94% of U.S. consumers are concerned about the U.S. economy, with 44% expecting it to worsen in the next six months. Normally, all this worry would mean the consumer would slow down spending and brace for impact, but that’s not necessarily the case.
What will grow in 2023 is this gap between feelings and actions for the American consumer. Though Americans seem to be adapting practices like spending less on non-essentials (49%) and switching from brands to private label (30%), when you really break it down, we found that rising costs and price sensitivity have not really changed buying habits. In fact, 43% of Americans have not changed their product purchases on clothes, shoes and accessories as a result of price increases and 57% haven’t changed their purchases on fresh/packaged food despite inflation and the economic outlook.
The real battle retailers will face is that consumers will be more discerning about how and where they choose to spend. 2023 will be a year all about creating consumer value. Retailers and brands can provide value by providing connected experiences, catering to individual consumers and focusing on actually delivering on promises of a personalized experience. It’s up to retailers and brands to understand the consumer response to challenging times and find a way to provide value.
Elaine Coffman, SVP of human resources at Majorel:
The skills expected from customer service providers will change. Customers will have a greater need for consultative services to enhance the customer experience, replacing traditional transactional offerings, which will be replaced by robotic process automation and AI.
More will be asked of front-line agents. Those working on the front lines in call centers will need to hone their conceptual thinking skills as their jobs change to be more client/customer partners in continuous improvement.
Contact center workforce structures will evolve beyond the traditional supervisor and agent breakdown. The supervisor-to-agent ratio structures will change as front-line agents evolve into more independent contributors.
Cybersecurity in contact centers will become more important than ever. Work from home will continue to be the norm, requiring contact centers to figure out how to solve for safety and security risks that are inherent when working outside of the office.
David Naumann, marketing strategy lead and resident retail industry expert at Verizon:
Retailers are recession proofing. Retailers are paying closer attention to supply chain challenges and in 2023 are working on reducing their own fixed costs in order to weather the unknown economic circumstances ahead.
Neil Costa, founder and CEO of HireClix:
The looming recession will not stop hiring needs in healthcare, transportation and retail. As boomers retire, they leave the workforce expecting to travel more, eat out more and need more healthcare services. This will create plenty of opportunities in these categories for younger generations to find jobs. The main street storefronts and the logistics behind getting products to their destinations will be critical and generate countless jobs, even in a tight economy.
We expect in-person hiring events to come back with a vengeance in 2023. As we see more distance between the world and the peak of the pandemic, we anticipate everyone will want more face time when it comes to making one of the biggest decisions anyone can make in their lives — getting a new job. We believe that both employers and candidates will want to get the in-person time to get a real, genuine look into cultural fit.
As most employers will continue to offer flexibility and work from home accommodations, employers need in-person time to find candidates that will turn into high quality employees. No one really screened employees for this ability to be productive while working from home, but assessing that ability now will be part of the interview and screening processes.
Sanjay Mehta, head of industry and commerce at Lucidworks:
While traditionally more prevalent in B2B commerce, more consumers are demanding product personalization and sellers will follow suit. This will lead to supporting technology adoption such as 3D printing. The enablement of privacy regulations such as CCPA and GDPR will move the focus of personalization away from using explicit consumer data to more predicted approaches such as neural- and vector-based approaches. These approaches leverage anonymous data points such as context and behavior to form hyper relevant experiences.
Waterfield CEO Steve Kezirian:
We predict creating this omnichannel customer experience will increasingly be top of mind for decision makers, all the way up to boards of directors asking their senior executives what they’re doing to drive it in their organizations. Digital transformation was initially about getting rid of voice costs, but it’s now become a fundamental expectation as organizations are under the gun to be more competitive and meet the needs of their customers.
Kahly Berg, SVP of digital experiences, SAP:
In 2023, marketplaces will invest in strategies to retain and extract value from existing customers in three ways:
- Seamless experiences for cross-selling and up-selling of products, applications and services both with direct business lines and partner business lines to enable deeper customer penetration into new buying centers within existing accounts.
- Continuing to advance solution recommendations through advanced personalization. Marketplaces that don’t do this today will need to learn fast in order to pivot quickly and should look to AI based multi-variate personalization testing.
- The shift toward a focus on excellent user experience will continue. Smart companies will understand and continue with strategic investment in experience design even when overall budgets may be tight.
Eric Carrasquilla, president, customer engagement solutions CSG:
As CX alarm bells are ringing and business leaders are rushing to implement and see ROI on CX programming, we’re seeing some steps skipped. Leaders want to go big, fast. They’re itching to jump right to full-blown self-learning and prediction — but that won’t be possible without the building blocks in place. In 2022, we found that 98% of CX leaders surveyed report that their organization has experienced the consequences of poor CX. In 2023, those leaders will be challenged to revisit the basics: data aggregation and normalization, journey analytics and testing/measurement. With the foundation in place, CX leaders will finally get a true understanding of the problem they need to solve — that’s when we’ll see some really exciting transformations to the customer experience. From a CX tech perspective, once business leaders have identified the problem to be solved, they can have specific conversations about which technologies can get them there. Starting with the trendiest tech applications (AI) and implementing them as a silver bullet solution will waste money and fall flat — at worst jeopardizing customer retention.
Consider the customer experience as Maslow’s hierarchy of needs. The overall quality of the customer experience is solely at the water and oxygen level — the bare minimum for survival. And yet companies are stuck in this stage. The peak of the pyramid is a transformative stage that reels the customer into a sticky and engaging long-term relationship with self-learning algorithms, predictive insights and real-time optimization. In 2023, companies will advance up the pyramid by focusing on their customer experience speed and iteration, as well as the small details that create a personalized, white glove experience for their specific customers. By unpacking the speed and iteration needs at each step of the customer journey, companies will eliminate specific friction points that they were previously unaware of. This will become necessary for companies to adapt, or else they’ll be drowned by the over saturation of competitors at the base of the pyramid.
Mark Smith, SVP, digital experience CSG:
Loyal customers are both a money saver and a money maker. In 2023, we’ll see CXOs and business leaders respond to an economic downturn by adjusting their customer experience to prioritize retention over new customer acquisition. Successful brands will focus on the customers they currently have and resist splurging to gain additional customers. Instead, CXOs will focus on how to get the most ROI out of current customers and develop offerings that will create a stickier relationship with the customer.
In 2023, organizations across industries will rethink the organization and ownership of the experience. As businesses reorganize to put the customer at the center of operations, they will soon realize (as some have) that the role of CMO needs to be elevated and expanded. They will realize that experience is vaster and more holistic than marketing, as the very personification of the brand. As a result, the role will need to grow accordingly — with oversight over the touch and feel of the brand as well as the customer and employee journey. Keep an eye out for a wave of CMOs moving into CXO roles in the coming year.
Steve Sivitter, CEO at 1WorldSync:
Moving into 2023, compelling product content will matter more than ever. While a majority (70%) of online shoppers say they often don’t buy products because of poor content or no content at all, retailers with quality, interactive content will drive good commerce. In addition to achieving low returns, more upsells and cross-sells and larger shopping carts, consumers will feel confident in their purchases, knowing that what they see on a brand’s website will match what they order.
Brian Walker, chief strategy officer at Bloomreach:
On average, a customer will buy about one or two times per year from most brands outside of grocery and CPG — though even there businesses need help to foster more long-lasting brand loyalty. How we communicate with consumers has to improve and become more relevant and to treat them as known and important customers — moving away from generic marketing that has little meaning in the customer’s mind. Over the last decade there’s been a massive bias toward customer acquisition, but far too little emphasis on customer retention. The tables have shifted as the costs of customer acquisition channels have increased dramatically, as privacy changes — in particular Apple’s iOS 14 changes — have eliminated retargeting techniques marketers had become overly reliant on, and pressure on marketing budgets driven by the challenging costs of capital and economic conditions. Now the game is focused on being better at marketing to the customers you have already acquired, and thus the data customers share as they engage directly with brands and retailers is of paramount importance to driving personalized and tailored communications and marketing as never before. The coming year will see many brands turning to the existing customers that they’d previously been neglecting and focusing on repurchase rates and more profitable marketing channels such as email and SMS.
And the key to successfully re-engaging those customers will be the personal and contextual communications and content that retailers can infuse into the experiences they deliver across their digital channels. When the brands I love send me generic emails for products I don’t need or want, it dampens my enthusiasm and makes me do the work. But when I get communications and products that resonate with my interests and activities the opposite happens and I feel the company understands me — and thus I’m more apt to give those brands my business. Brands underestimate the power personalized marketing can have in making a customer feel valued. Increasing sales from a customer you’ve already acquired is the most cost-effective marketing strategy you’ll ever use.
Benjamin Dorr, COO at Cordial:
Everything will be about pricing for the next 18 months. Last year, the greatest challenges facing merchandisers and marketers arose from supply-chain issues. Now, most supply chain issues are mitigated, but prices are inflating while consumers are strapped. To identify revenue generation sweet spots, marketers will need to leverage different audience models and run more experiments than in the past. For the next 18 months, marketers will feel like they’re going after a moving target — because they are.
Paul Brenner, CSO and president of Audio OOH of Vibenomics:
One significant story emerging from the retail market this year is the prioritization of brick-and-mortar, in-store experiences. The pandemic led to rapid e-commerce growth, but online retail growth has plateaued since conditions have normalized. More than 80% of products being sold are coming off of the shelves in brick-and-mortar stores. Customers still want to shop in person, and companies continue investing in retail media and expanding their inventory to enhance the in-store experience. While technology will never completely overtake our lives, innovative companies will keep creating technology designed to meet and benefit the U.S. in non-digital environments. In 2023, we’ll see brands prioritize their in-store presence and how they can leverage new technologies like digital out-of-home and audio out-of-home to target key audiences in brick-and-mortar settings. Forward-thinking grocery and retail environments like Kroger are the perfect example of coupling technology with the in-person experience.
For retailers, it will be a long time — if at all – before the metaverse becomes relevant to their bottom line and product marketing strategy. While the technology is certainly cutting edge, the metaverse has not yet become a widely accepted technology capable of driving a sustainable income for retailers. The barriers of entry that metaverse users encounter — like owning specific VR equipment or having enough technological understanding to navigate between channels and apps — will prevent it from becoming a mainstream platform. Some of the most popular metaverse platforms, with $1 billion valuations, still have fewer than 10,000 daily active users. While the metaverse’s alarming low user rates aren’t preventing national chains like Walmart and Publix from investing in the platform, the average retailer isn’t about to invest millions to build a retail experience in the metaverse.
Ready Player One is not our future. We don’t want to sit on our couches wearing goggles all day. We want to live in the real world and leverage technology as we need it, and innovative retailers have foreseen this future. Dick’s Sporting Goods is testing a store where a display of video screens greets customers instead of the traditional wall of shoes. You can interact with the digital image, pick your color/size and instantly know what’s in stock. You don’t have to rely on an employee to check the back for size 10s. Physical stores that interact with shoppers — not the metaverse — is the future of retail.
Amy Williams, founder and CEO of Good-Loop:
Consumer confidence is at an all-time low, as families prepare for a tough winter with high bills, expensive food and less disposable income than years past. But tighter purse strings won’t change the fact that we have all been through a collective experience of adversity. United by the common enemies of COVID, war, social injustice and climate change, to list a few… we are more aware than ever before of how those less fortunate are in need of our support. In fact, in the U.S. the last 12 months have seen direct personal charity donations increase by 10.8%. From washing on a colder cycle, supporting local food banks or buying less fast fashion, we can expect to see a trend for frugal, civic responsibility in the year ahead as consumers look to exercise their social values in affordable, everyday ways.
Cindy Brown, CRO at ViralGains:
In 2023, we’re going to see retailers rely more and more on zero-party data or information a consumer voluntarily shares with a brand. We’ve already seen this utilized by marketers in traditional marketing campaigns like emails or websites, but we’ll start to see it incorporated more transparently in digital advertising.
For example, we’re starting to see retailers ask customers questions about their preferences and opinions via surveys within digital ads to then serve them future digital ad content based on their responses. It’s a win for consumers because they’re getting more relevant advertisements based on their proactive feedback, but also a win for retailers because their campaigns can now be optimized to what the consumer is actually looking for in the market. We predict that more retailers will be building their own audiences instead of relying on cookies, and can include those in increasingly popular places like data clean rooms. It will be a highly utilized privacy-friendly approach that ensures an improved customer experience.
Fayez Mohamood, CEO and co-founder, Bluecore:
In 2023, we’ll see the work that enterprise retailers have done behind the scenes begin to unfold. While these retailers have traditionally been tied down to legacy marketing platforms that have long confined them, many have spent the past few years doubling down on technology that allows them to go beyond these platforms. This means prioritizing technology that empowers their digital marketing teams to move at the speed of the shopper. With this, retailers can deliver the highly-curated experiences that shoppers need to make purchases — exactly when and where they need it. We’ll see the retailers delivering these hyper-personalized shopping experiences in 2023 drive increased revenue and customer retention — even as consumers’ spending fluctuates.
This article originally appeared on Retail Customer Experience.