2023 can expect to see a continued shift in consumer behaviour

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In 2023, we can expect to see a continued shift in consumer behaviour. Following the de-escalation of the pandemic, 2021 saw the return of the high street, while in 2022, hybrid shopping became the overarching norm. Now, an estimated 11-12% of retailers’ income is from online sales; this number is sure to grow in the coming year as consumers push for even higher levels of convenience. This will benefit those who have already have significant online presence, while retailers that have so far been unable to accommodate hybrid shopping practices will find themselves in a challenging position and will be forced to commence their digital evolution. Companies will have to balance the increase in online shopping with the sustained requirement for physical stores – after all, it remains next to impossible to sustain ecommerce without the backdrop of a physical space. Intertwined with the need for more shopping convenience is the growing monopolization of e-commerce by the largest players in the space and the slow death of direct-to-consumer brands, with Amazon now selling Peloton bikes and Glossier products appearing in Sephora stores.

The looming recession will also have tremendous impact on the retail sector. The contracting economy will push price-conscious consumers to trade in premium brands for more affordable options and greater savings. Similarly, inflation will kickstart a new production cycle: as retailers become more selective in their purchases, CPG companies will be equally selective in their production of goods. This limitation will then cause retailers to restructure their assortment, and so the vicious cycle of contraction begins. In response to such challenging circumstances, inventory planning will become more abrupt and even aggressive than before: carrying dead costs and tighter margins will push retailers to make more clear-cut and direct inventory decisions on a regular basis. Collaborative forecasting and planning will be a useful tool for retailers, wholesalers, CPG and material vendors globally to support with changing circumstances and overall difficulties.