Retail Industry Outlook for 2023: Key Trends to Keep an Eye On
As the new year approaches, retailers are facing a number of challenges, including the possibility of a recession and economic uncertainty. Despite these challenges, some areas of the retail industry are expected to experience growth in 2023.
One trend that is expected to impact retailers in 2023 is an increase in bankruptcies. In recent years, bankruptcy filings have risen as the pandemic has hammered retailers, but as the market shifts, these filings may continue to increase. Federal stimulus payments have ended, inflation and economic uncertainty have affected consumer spending, and these changes could result in fewer deals or no deals at all next year. This might result in an increase in retail bankruptcies, with some notable companies possibly at risk.
Another trend that is expected to grow in popularity in 2023 is the metaverse. The term ‘metaverse’ encompasses virtual worlds and virtual reality and various brands are increasingly entering these digital realms to enhance their visibility and connect with youthful audiences.. Companies such as Gucci, H&M, Puma, and Gap have all dipped their toes into the metaverse, and this may be the continued trend as the metaverse has the potential to bring in real-world revenue. McKinsey & Company forecasts that the metaverse value can be $5 trillion by 2030, with e-commerce alone potentially seeing an impact of $2 trillion -$2.6 trillion.
Despite some uncertainty around whether a recession may occur in 2023, macroeconomic forces may still impact discretionary spending and consumer sentiment. Though stabilization of inflation can be seen, retailers are cognizant that it doesn’t require a major recession to make consumers nervous, as their household finances have been constrained for more than a year.
Malls, which have struggled in recent years, are expected to recover post-pandemic, with an emphasis on improving the shopper experience in brick-and-mortar stores. Foot traffic is expected to recover and retailers are expected to focus on providing an enjoyable experience to shoppers. Furthermore, Circular fashion, initially started as an environmentally aware shopper initiative, is now becoming a major trend in the industry as it focuses on sustainability and minimizing waste.
Overall, 2023 will be a challenging year for retailers, but with some areas of the industry expected to experience growth, retailers can look for opportunities to adapt and thrive.