Consumer trends that will shape 2023

From renting luxury items to recommerce and using AR to make purchase decisions - the customer will get smarter, more realistic and more prudent this year

So, what is likely to be the number one consumer trend for 2023? If research by Metrigy is to be believed, it will be the customer experience (CX) — with massive increases in technology spends, and 65 per cent of companies hiking up outlays by as much as 24 per cent to keep customers engaged and happy. What pray is CX? Well, it is best defined as “streamlining tools, interfaces and platforms and reducing friction around giving customers what they want”. So there will be an enhanced focus on digital tools like websites, social media and chatbots, as also the metaverse and augmented reality (AR) to deliver speed, convenience, ease-of-use and customer-friendly service in the year ahead.

Related to this is the exponential increase in demand that we may witness for “try-before-you-buy” AR experiences. More people will want to shop online if they could virtually try a product before buying it. The biggest drawback of online shopping has always been the inability of consumers to touch, feel and try a product. So, simulating an in-store shopping experience online will become critical. Indian retailers have much to learn from the likes of L’Oreal’s virtual makeup experience in the US, launched in 2019, which has effectively doubled website engagement time and tripled conversion rates. Simply put, products with interactive AR content will get a much higher conversion rate than products without AR.

At another level, customer control on spending has been identified as the top trend for 2023 by Shopify. Their consumer tracking shows a shifting consumer need towards tools and methods that allow tracking of personal spending more accurately and in real-time. “Embedded payments” — paying with a single click will become the norm in the days ahead — which means probable decrease in use of credit cards, debit cards, digital wallets and even cash. So, companies will need to strengthen offerings that use stored customer data and information, such that transactions are simple, secure and safe.

Rising prices and increase in the cost of living may mean that consumers will resort to multiple measures to mitigate the cost spiral — starting with driving less by shopping online or closer to home. They may also use more coupons and stock up when items are on sale. Some may pro-actively look for stores with lower price tags; others may shift to lower priced store brands and private labels. Inflation may become a key determinant and driver of consumer behaviour in 2023.

Interestingly, one consumer trend that is gaining massive momentum is online reviews, and will surely get amplified in 2023. More and more consumers worldwide read reviews before purchasing a product. India is no different. A study on movie-going habits recently pointed to the fact that adverse or poor movie reviews on the release of a new film turned off 84 per cent of potential viewers. No wonder that film critics are demi-gods in Bollywood. Globally, consumers read at least six reviews before purchasing a product. That trend is being emulated, by and large, in India too. There is inalienable data to show that people who interact with online reviews convert at a 25 per cent higher rate. And this is not just limited to pure ecommerce goods. Consumers today read online reviews for local businesses too. Reviews, in fact, help in discovering local businesses — the modern day equivalent of good old neighbourhood word-of-mouth feedback.

Which brings me to a very important trend for this year — recommerce. Recommerce or “reverse” commerce is nothing but the sale of previously owned goods. “Pre-owned” cars have been a big category for quite some time now in India, with most auto brands having a dedicated retail channel to cater to customers who would like to buy a second hand car because of mainly cost considerations (though overseas, sustainability is a bigger driver of recommerce because of increasing preference for reuse, recycle and resell). Traditionally books have been a substantial recommerce product. But in current times, pre-owned mobiles are emerging as a huge category. Gurdeep Singh, previously chief operating officer of Aircel, was an early pioneer in this space. He started to recondition and sell mobiles in a big way about five years ago. Today his brand Blynk is a market leader by far, with sales revenues that are truly impressive. Online clothing resale too will surely grow by leaps and bounds in the times to come. Resale, rental and subscription models will all be brought into play. During a recent trip to Punjab, I saw many boards for rentals of wedding lehengas! A true sign of the times to come — why waste a big pot of money on an item that is largely a one event use? More sensible perhaps to just “recommerce” and not feel guilty of needlessly spending on a short aperture luxury, even if it is for a once-in-a-lifetime celebration. The customer is getting smarter, more realistic and more prudent with every passing day. 

2023 will have its opportunities and rewards. Just need to zoom in and focus.   

The writer is managing director of Rediffusion