Recent years have seen rapidly evolving changes in all areas of consumer behaviour and there is little doubt it will continue in terms of the products and services that people want, who they want them from, and where and when they want to access them. While recent shifts have been driven by management of the pandemic – from isolation to suppression, then immunisation – consumer behaviour is now being impacted by the twin effects of ‘Covid-19 normality’ and rampant inflation. As we
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As we enter 2023, here are five global trends in consumer behaviour that brands should be across. 1. Conscious living and consumption Rising costs and inflation are key concerns as we transition from 2022 into 2023. Indeed, as inflation continues to have a negative effect on household finances, many consumers are seeing their pandemic-era savings decline. This is being driven by significant increases in spending across all areas, with escalating costs in essential items such as food and utilities, disproportionately impacting low income consumers and younger people. Beyond financial considerations, consumers have adopted a ‘buy less, buy better’ mentality and are actively living and consuming based on social and ethical values. This shift will see shoppers engaging more with brands that have strong environmental and social credentials. While these consumer behaviours are wide and varied, we can expect marked growth in rental, re-commerce and subscription retail markets and a decrease in people buying ‘brand new’ products. Customers will also seek multifunctional products and consider ways to extend the life of their goods. At the Global Fashion Summit last year, Mulberry CEO Thierry Andretta announced the introduction of digital IDs for its products to help “revolutionise the way luxury brands and customers connect and steward circularity in luxury fashion”. Customers will be able to tap their smartphones to an NFC-enabled tag on each bag and access a personalised digital experience, including information about the item, exclusive content and services such as authentication, repair and sale. According to Mulberry, “We take great pride in creating objects that are made to last, to be loved and passed onto the next generation. Through the digital ID, Mulberry can offer customers increased transparency into the unique journeys of our products, deliver services such as lifetime repair, buy-back and resale, and ensure that every bag can have multiple lives.” 2. In pursuit of self-improvement While many post-pandemic consumption patterns appear to be returning, or aligning with a new ‘normal’, people continue to remain focused on their mind and body. Specifically, the intersection of physical and mental wellbeing is expected to remain in the spotlight in 2023 and provide opportunities for brands to connect with customers on this basis. There is no doubt the pandemic shook up the health and wellness market, with lockdowns forcing the closure of gyms, and consumers finding new ways to work out and extend their health pursuits beyond nutrition and exercise. This year, people will be concerned with more dimensions of wellbeing, extending into the emotional, social, environmental, and even financial. Sleep and mindfulness will also be a focus to enhance their overall quality of life. Savvy brands will engage customers in their evolving self-improvement pursuits, as Kathmandu did with its ‘We’re Out There’ campaign. Developed in response to research finding that just two hours a week in green spaces can boost mental wellbeing, the campaign highlighted the emotional and mental impact of outdoor activities, or wilderness-for-wellness adventures. “Other outdoor brands are very much achievement-focused — you see people climbing mountains and suffering against the elements, but for us at Kathmandu, it’s about having fun, getting outside and enjoying yourself,” then-CEO Reuben Casey told Inside Retail at the time. “Rather than talking about what we do when we’re out there, it’s about how it makes us feel.” Despite the obvious draw of nature and outdoor activities in consumers’ self-improvement pursuits, a strong tech angle will continue to play out in 2023. In fact, following initial exposure during the pandemic, a large proportion of people remain willing to engage in virtual health. A high proportion are also willing to share their health data, either with retailers, brands or in digitally-enabled health systems – so long as they receive some benefit or convenience from the exchange. 3. Craving community and connection A desire for community and social connection is critical for consumers in the post-pandemic world. Indeed, some are looking for opportunities to socialise during e-commerce experiences. An example is squad shopping, where users collaboratively shop with friends in virtual environments. Friends can also share their baskets mid-experience, collectively evaluate purchases, and even shop virtually in groups within the metaverse. Early adopters include Sephora in France and Godiva in the UK. Even in the traditionally individual pursuit of bingeing TV shows, consumers are craving community and gathering online to watch shows together. Streaming services are tapping into this behaviour, with Amazon Prime expanding its ‘Watch Party’ to all smart TVs. Up to 100 people can now log in to their Prime accounts and chat with others while watching synchronised content. Connection to community can also be expected to amplify consumer demand for local products, services and experiences, both literally and in terms of culture and identity. In uncertain times, consumption based on a local origin or theme offers familiarity and reassurance for people. The renewed commitment to ‘localism’ can benefit retailers and brands alike. Relatedly, consumerism is no longer about gaining status from the product, but from community, knowledge and skill. This shift has seen many brands evolve their product offering to include local services. For example, cycling clothing and accessories brand Rapha offers a series of service experiences around its products in spaces they call ‘Clubhouses’ for its passionate communities of cycling fans. 4. Engaging with trusted brands Consumer demand to engage with trusted brands is not new, but is increasingly important due to the continued state of uncertainty resulting from the pandemic, inflation, fake news, and in particular, corporate data breaches. As such, consumer interactions with brands that actively demonstrate good values and prioritise consumer needs and rights will be prominent in 2023. Wary of being mis-led and savvier about their choices, consumers are also more proactive about scrutinising a brand’s values and ensuring authenticity from the brands they engage with – authenticity is key to trust. Consumers are now willing to invest more time and resources to ensure their choices align with their own personal value systems and beliefs and those of society. Importantly, consumer trust is difficult to recover from once broken, and issues related to mistrust can amplify widely and rapidly thanks to social media – cancel culture is a prime example and no brand is immune to its potentially detrimental consequences. But if trust between customers and a brand is built and maintained, the resulting advocacy for the brand is invaluable, as consumers primarily trust the opinions of their friends and family members. Shoppers that have built a foundation of trust with a brand are also likely to be loyal. Interestingly, retail brands rate high on Australian consumers’ most trusted list of brands, including Woolworths, Coles, Bunnings, Aldi, and Kmart. 5. Seeking immersive experiences While price, value and quality continue to play an essential role, people are seeking immersive brand experiences. These may blend technologies like augmented reality, virtual reality, mixed reality, and artificial intelligence, combined with real-world elements. For example, last year, Salvatore Ferragamo launched a concept store in New York, where the brand gave away NFTs to customers alongside effusive products and made-to-order. Sneakerheads could also customise a pair of sneakers using the brand’s hologram sneaker program. One immersive experience that is increasingly being adopted by retailers is virtual try-on technology to better serve customers and reduce returns. Think of Amazon’s AR shoe-try on feature, Walmart’s use of AR for everything from optical products to furniture and Gap, which acquired its own virtual try-on tech, Drapr. Estée Lauder, Shiseido and Revlon are also embracing AR technology and all use the same platform, Perfect Corp. Tech giants like Meta, Google and Snap are also licensing Perfect Corp to let users try before they buy within their own platforms. Immersive experiences are certainly becoming a key differentiator for brands, strengthening customer relationships and inspiring loyalty, while evoking a sense of wonder, freedom and joy. Critically, immersive experiences also offer the opportunity for brands to support various aspects of consumer wellbeing (i.e., the aging body and mind) and represent and accommodate a myriad of mental and physical abilities.