Q1 2023 retailer and consumer trends

Emerging retail trends to reach consumers

Following the 2022 holiday season and approaching the end of this year’s first quarter, the outlook for the US economy over the next few quarters remains mixed—with some bright spots coming from various reports amid signs of continued softness from other reports. Retailers and consumers alike should think strategically in terms of how and where they spend their dollars. Deloitte has identified the below insights:

• By leveraging smaller brick-and-mortar formats, large retailers can optimize how they reach and cater to target markets, realizing comparatively greater success per square foot.
• Buy now, pay later trends and solutions are increasing in popularity: Retailers are introducing their own buy now, pay later services, and consumers are increasingly leveraging them in day-to-day purchases.
• Retailers are expanding their engagement with consumers, leaning heavily into social shopping experiences by embracing both live production shopping and short-format, scrolling-based reels.

Rightsizing by resizing stores

Big retailers are reaching a new group of customers through downsized, small-format brick-and-mortar stores. This approach of rightsizing by resizing stores is picking up steam in 2023 as retailers seek out new, innovative trends to reach the right consumers with the optimal physical footprint.

E-commerce has surged over the past decade, particularly during and following the COVID-19 pandemic, drastically affecting both the utility and operations of brick-and-mortar stores. Furthermore, many remaining storefronts are observing the popularity of integrating digitally native solutions within their in-person shopping experiences, such as continuing to have storefronts serve as hubs of digital fulfillment. With 37% more online shoppers in 2022 than in 2021 affirming that they opt to pick up orders in-store, within the wave of shoppers’ return to stores we are seeing a coupled desire for digitally enabled, streamlined shopping experiences. These trends, among other factors, are enticing future-facing retailers to experiment with a smaller footprint solution.

These storefront players include big-box retailers, department stores, and grocery stores. In these industries and beyond, retailers are experimenting with small-format stores and are observing noticeable lifts in their operational metrics.

Buy now, pay later trends

As American consumers grapple with 30-year inflation highs, a looming recession, and uncertainty in the labor market, alternative forms of payments, such as buy now, pay later solutions, are increasingly attractive for retailers and consumers alike, with the trend exhibiting formidable growth from the pandemic through today.

Buy now, pay later is a form of interest-free credit that allows a consumer to fully purchase a product and then pay back the loan over multiple monthly installments. Most buy now, pay later loans range from $50–$1,000 and are subject to late fees if a payment is missed. Buy now, pay later allows consumers to take instant possession of a purchase. Buy now, pay later advantages include convenience and flexibility for the customer; plans that are easier to get approved compared to traditional credit lines and cards; payments that are easier to make and smaller in size; and varying interest rates, some of which can be low. Buy now, pay later solutions have recently gained a lot of traction, with the growth of major players such as PayPal Credit, Afterpay, Klarna, and Affirm.

Social commerce: Shopping and social media

Nearly three years after the first national lockdowns, many retailers continue to experience the lingering effects of the pandemic. Many of the negative effects have seen resolution; however, this “new normal” is spurring retailers to adopt fresh practices to better reach their consumers in a post-pandemic world—they are turning to social media. Social media usage has increased drastically in the last five years, reaching over 4.5 billion users worldwide at the end of 2022. This thriving user base combined with the growing calls for retailers to adopt omnichannel marketing has culminated in the rise of a new digital storefront: social commerce.

Disclaimer

This RCP Trends report is an independent publication and has not been authorized, sponsored, or otherwise approved by Apple Inc.

Apple Pay is a trademark of Apple Inc., registered in the U.S. and other countries.

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.

Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

With special thanks to Scott Luvin, Carol Cui, Katie Morgan, Madelyn Harvey, Anirudh Panuganty, and Sylvie Wallin.