Q4 2023 Emerging Retail & Consumer Trends

Emerging Retail & Consumer Products Trends Report: Q4 2023

Entering the last quarter of 2023, retailers have adopted innovative approaches to engage with customers to maintain growth and sales during a period of ongoing economic challenges. Deloitte has identified the following insights:

• Consumers remain cautious with regard to their spending, with a notable increase in bargain hunting
• Transferring return responsibilities to the customer might lead to short-term cost reductions, yet poses the risk of long-term customer dissatisfaction and erosion of loyalty
• Embracing emerging social media trends centered on personal, one-on-one interactions can help retailers establish close-knit communities, acquire valuable consumer insights, and harness the ever-evolving digital preferences of the younger generation

Trend 1: Amplification of Bargain Hunting

Consumers are increasingly seeking value as the U.S. economy battles persistent inflation and the 2023 holiday season begins. Shoppers are shifting spend patterns across retail categories, cutting back on high-priced items and home goods that saw a sales bump over the pandemic, and hunting for bargains at discount and off-price retailers instead of higher-end department or luxury stores. The following data reflects the evolving consumer preferences and spend patterns. While consumer spend grew 0.7% from July ’22 to July '23, shoppers are increasingly looking for sales and discounts, confirmed by off-price retailers such as Marshalls reported a material rise in sales. Additionally, in a 2023 holiday retail survey of consumers Deloitte found that, “consumers only plan to shop 5.8 weeks this year, down from 7.4 weeks pre-pandemic,” alluding to the fact that retailers’ could see the most opportunity for gains around promotional periods.

Trend 2: Shifting the Burden on Returns

As many retailers look to capitalize on the holiday shopping surge, they are also starting their sales earlier than ever. At the same time, aiming to minimize costs, many have chosen to tighten their return policies and transfer the responsibility to consumers. While this strategy might result in short-term cost reduction, the possible negative consequences of upsetting their customer base and eroding consumer loyalty could give rise to lasting challenges.

Trend 3: Building a Digital Community: Nurturing Brand Loyalty in the Digital Frontier

Retail and consumer product brands are in hot pursuit of staying relevant and connected with the younger demographic, especially Gen Z, as they trade public forums for more personal and intimate social media platforms. Messaging and digital community apps are gaining popularity and becoming a more preferred platform for shoppers. Retail and Consumer Product brands are taking notice and dedicating more of their marketing efforts to these platforms.

Conclusion

As 2023 comes to a close, retailers face both an acceleration of known trends around returns and economic distress while also facing new frontiers and opportunities. As we enter the new year, retailers will continue to need to think innovatively in order to grow in continued economic uncertainty while also seizing opportunities to build community and attract and retain customers.

The authors would like to thank Carol Cui, Jamie Curran, Madelyn Harvey, Anirudh Panuganty, and Sylvie Wallin for their contributions.