According to the Consumer Trends 2023 report by The New Consumer and The Coefficient Capital, some disastrous consequences will soon occur. Due to many reasons like high inflation, the pandemic, and the constant battle in the digital world between marketers to get the consumer’s attention, consumer behavior is also changing.
Here are a few key points that explain the biggest consumer behavior trends shaping retail in 2023.
Celebrity Branding or Endorsement Is Winning the Game
- There are a lot of brands that are getting an advantage over others. Most of those brands like Fabletics, Skims, and the Honest Company are endorsed by celebrities or creators. They successfully get the attention of a larger audience for which they market their products and services.
- The brands that already have established an audience after the loss of third-party data can easily survive compared to other brands.
- Due to celebrity endorsement, many brands have a higher engagement rate, that is, 13% on Instagram. It is better than other brands that are not celebrity-founded as their engagement rate on Instagram is only 3%.
It is evident that celebrity-founded brands will remain relevant and trendy in 2023 as most marketers need help to reach their target audience through ads. However, it’s safe to say that collaborating with celebrities isn’t always a done deal. The example of Gap Inc. and Adidas reflects that parting with celebrities due to unforeseen circumstances can lead to losing millions of followers and profit. These brands faced a tragic situation after ending the deal with Kanye West because of his racist remarks.
TikTok Is Converting Users Into Shoppers Quickly
- TikTok is leading in the digital rat race as it has left behind other social media platforms. Most US users, that is, 23%, use this platform to find new products and services. At the same time, one-fifth of US users say they use TikTok to be aware of what other brands are doing.
- 27% of US users who were a part of the survey say that they have made their purchasing decision after watching TikTok videos.
- According to the data, 27.3% of them have said that they have purchased a product or service using the platform. This number is expected to increase by 39.9% after 3 years.
- 19% of Gen Z Tiktok users say they got to know about some beauty products through TikTok videos.
Tiktok is winning the game by converting its users into shoppers at such a rapid pace. It is a beautiful combo of shopping and entertainment. Despite the odds, TikTok supports many eCommerce businesses by making their promotional videos viral.
Inflation Is Affecting the Sentiment of the Consumer
- Inflation is getting higher with every passing day. According to New Consumer and Coefficient Capital, 64% of US consumers think every good’s price has skyrocketed in 6 months.
- According to other stats by the University of Michigan, there is a 4% rise in consumer sentiment because of inflation. However, consumer sentiments have decreased by 16.3% since last December.
- 47% of US adults think inflation is the most critical issue in the USA. They have stated that “Inflation” is a more serious problem than climate change, violence, COVID-19, and so many more.
Sentiments of consumers are getting better, but overall, the consumer is affected by the rise in inflation. Although it will continue increasing next year, the consumer will start looking for ways to cut down the expenditures to survive.
Consumers Will Prioritize Health Over Wealth
- Wealthy consumers of the US that make more than $150,000 almost every year will start spending more money on their health. So, according to the New Consumer and Coefficient Capital, “Health” will be a new priority for US consumers.
- Consumers are more likely to reshape retail by changing their lifestyle, food selection, supplements, and exercise.
- Due to the pandemic, “Health and Personal Care” was one of eCommerce businesses’ top and fast-growing categories. It showed a 22.1% growth year over year after “Food and Beverages” and “Pet Supplies.” In 2023, “Health and Personal Care” is expected to take the number 2 spot. However, according to the forecast, the growth rate of the health category might slow down to 18.4%.
Consumers are inclined toward buying wellness-related offers. It is the best opportunity for retailers to invest in this category.
Consumers Are Least Concerned About COVID-19
- Consumers have started forgetting about COVID-19. They don’t bother with it anymore as many other problems have begun emerging one after another.
- People are carrying out all activities like dining out, hotel reservations, travel bookings, and others normally as before COVID. It shows that people have started living the life they used to without being scared of COVID.
- Some habits developed because of the pandemic have slowed down for a while but still exist. The delivery sales growth rate decreased in 2020 by 215.5% and is now in double digits. It shows that consumers are still stuck at it even after the pandemic.
People have started living life as before. They have returned to restaurants and stores; however, some adoptions will remain the same despite the slow growth.