5 shopping trends for 2023, from embracing Gen Z to going green

Consumers are more digitally savvy and increasingly concerned about sustainability – retailers must be ready for them

By Mohammad A Baker

December 23, 2022, 10:25 AM

Shopping — The distinction between shopping online and offline has blurred

For retailers, 2022 was a year of consolidation after a tumultuous period. Over the next 12 months, even as uncertainty lingers, Middle Eastern merchants can lean on the technological gains and supply-chain evolution of the recent past to deliver on customer service.

Here are five key trends in retail to watch out for.

1 Blurring the divide between physical and digital

Online shopping surged during the pandemic, but bricks-and-mortar stores remain relevant in a region where malls are part of the social fabric. A hybrid physical/digital environment has emerged that is set to define the regional retail landscape for years to come.

There’s also a growing realisation within our ranks that online and offline are not substitutes or competitors but complementary.

The challenge is making the e-commerce operation feel like a bricks-and-mortar store where staff react to customers’ needs in real time.

Customers no longer distinguish between online and offline shopping – they often start shopping in one and check out in the other – so retailers shouldn’t either.

2 Embracing Gen Z

Gen Z now accounts for more than 30 percent of the global population. This group – which the Pew Research Center defines as people born after 1996 – has disposable income of $360 billion, according to a 2021 Bloomberg report. Understanding this demographic is essential to thriving in 2023 and beyond.

Gen Z is value-driven and compares prices online to find the best offer. This makes it more difficult for brands to compete on price and highlights the need to consider other ways to attract their attention.

These young shoppers are also driving social commerce, where customers buy products and services directly through social media platforms.

Social media is near-ubiquitous in the region, with 98 percent of young Saudis surveyed by the Arab Youth Survey saying they use Snapchat daily. Social media’s interactive nature also leads to higher sales conversions than traditional e-commerce.

Young shoppers are driving social commerce, where customers buy products directly through platforms such as Instagram — Young people drive social commerce, where customers buy directly on platforms such as Instagram. Picture: Unsplash

3 Green all the way

Consumers are increasingly conscious of environmental and health concerns. Retailers, therefore, need to align with social causes that resonate with customers, particularly with Cop27 and Cop28 taking place in the region.

Strategies such as greening the supply chain and choosing sustainable products can motivate suppliers to develop more eco-friendly products. Retailers should also demand accurate information on products’ sustainability credentials from suppliers through track-and-trace procedures.

Retailers should also proactively encourage consumers to purchase eco-friendly products and provide advice on waste disposal and recycling opportunities.

4 Supply chains remain volatile

The pandemic stretched global supply chains to their limit. Some of those disruptions remain, driven by a tense geopolitical environment. Inflation will keep pressure on consumer spending across the region in 2023.

It’s crucial to build resilient supply chains. Measures should include implementing decentralised supply chains and having an in-country presence.

Modern fleet management software can automate back-end and other administrative processes to optimise delivery. McKinsey research has found that AI-enabled supply-chain management enables retailers to improve logistic costs by 15 percent, inventory levels by 35 percent and service levels by 65 percent, compared with slower-moving competitors.

5 Data is our biggest currency

After digital transformation proved its worth during the pandemic, we expect to see further investment in 2023 to lower costs, streamline supply chains and improve customer service.

Data is our biggest currency as retailers, aided by surging online shopping. Improved access to advanced AI tools, even for smaller retailers, allows firms to mine rich insights to transform the consumer experience.

We can use these insights to anticipate what consumers want, improve service at the individual level and move towards hyper-personalisation.

Mobile has also lowered the barrier to entry for cutting-edge technologies such as augmented and virtual reality. AR/VR is the next evolution in online shopping, allowing customers to ‘try on’ outfits virtually at home.

Customers enjoy these interactive experiences and they can also help reduce the burden of returns, which cost $761 billion a year to US retailers alone.

Mohammad A Baker is deputy chairman and CEO of GMG