Retail includes brick-and-mortar stores, e-commerce platforms, omnichannel retailers, and more. The industry, expected to reach US$ 32.8 Tn by 2026, plays a crucial role in the global economy. 

In 2023, retailers will face many challenges and find ways to improve operations and grow. 

Retailers must be strategic and flexible and use retail tech and data to understand and respond to consumer, economic, and societal pressures and demands. 

Challenges and Opportunities in the Retail Industries 

We’ll look at the retail industry’s challenges in a competitive environment and its opportunities from changing consumer behavior and technology.

1. Retailers will adjust inventory and efficiency to consumer spending and economic conditions

High global inflation is affecting consumers’ budgets and retailers’ profit margins. 71% of shoppers consider finance plans, and 30% say compelling promotional offers make them try new brands the most. 

Smarter promotions that target profitable customers and offer the right products at the right time will boost sales and brand loyalty as consumers expect more personalization and value. 

ML and AI-enabled forecasting must narrow inventory selection to increase margins. 60% of shoppers return after a personalized shopping experience. 

Inventory planning and operational efficiency can help retailers avoid markdowns and clearance sales and focus on high-demand, fast-moving products.

2. Supply chain variation will require actionable insights to improve customer experience and reduce losses

29% of customers switch brands due to out-of-stock items. Retailers should rethink inventory, supplier networks, and distribution to cut costs and keep customers. Additionally, supply chains must be transparent. 

Data and analytics can optimize the supply chain to reduce manual intervention and deliver products directly from the manufacturer to stores and consumers. This reduces store-to-store transfers and keeps inventory organized. 

Supply chain resilience helps retailers reduce concentration, streamline transportation, and improve warehouse management. Prioritize order fulfillment and last-mile delivery to strengthen the chain. 

Also, RFID tracking and smart shelves will help retailers cut supply chain costs in 2023. 

Walmart uses supply chain management to cut costs and pass savings on to customers, allowing it to offer competitive prices.

3. A shift in consumer shopping habits will redefine retailers’ priorities and focus

Rising consumer expectations drive industry change. 67% will spend more on experiences and goods. 

Due to the economy, consumers will wait for sales and discounts to get the best deal. Customers will compare prices and anticipate sales and retail holidays. 

These shifts require retailers to meet consumers’ customization needs. Despite 68% of shoppers preferring in-store shopping, subscriptions, rental models, and DTC engagement can benefit retailers. 

Pop-up shops, experiential marketing, and immersive brand experiences will improve the store’s customer experience. 

In a volatile economy, personalized offers, suggested products, and targeted marketing can boost customer loyalty and repeat visits, driving revenue.

4. ESG will be the foremost consideration for consumers defining brand values

Values-aligned brands that consider sustainability, waste reduction, emissions, and fair employment are gaining popularity. ESG is a long-term commitment that affects every business process, from concept to creation, supplier evaluation, distribution, and delivery. 

Aligning these processes with widely advocated ESG standards can boost profit margins because some customers will pay more for ethically sourced and environmentally friendly products and services. 

Data and technology will enable intelligent inventory management, intuitive pricing strategies, and satisfying guest experiences, helping retailers stand out and strengthen customer relationships. 

Brands like Patagonia use eco-friendly practices in their supply chain and educate customers about their environmental efforts. 

Retail Trends That Will Drive Industry Growth 

Despite the pandemic, inflation, and supply chain disruption, retail is poised for strong growth. Retail sales will reach US$ 5.5 trillion in 2027, with 30% online sales. 

Let us look at some trends:

1. Developing omnichannel experiences – Despite three-quarters of US retail sales being offline, the forecast points to ‘everywhere commerce’ with an omnichannel presence.

Retailers must combine online and offline shopping to compete with digital shopping. Omnichannel shoppers spend 1.7 times more than single-channel shoppers. 

Omnichannel marketing and engagement integrate physical and digital retail using new and traditional media. Customers research online before buying in-store. 

Brick-and-mortar retailers must complement online shopping rather than compete with it.

2. Redesigning the shopping experience – Smart shoppers only shop online. 53% will repeat last year’s habits. This suggests a need to reimagine shopping.

Due to changing customer expectations, retailers must offer in-store and online shopping, unifying website, social media, app, in-store, and third-party shopping. 

Retailers must optimize supply chain, inventory, data-driven marketing, and customer engagement and meet customers where they are.

3. Virtual sales assistants and payment systems – 69% want touchless product experiences, and 76% prefer digital payments. H&M, Macy’s, and Walmart’s in-store digital tools reflect this.

Contactless display and payment solutions include intelligent vending machines, virtual sales assistants, menus, QR codes, digital price tags, pre-ordering, and app-first stores. Examples include in-store catalogs, navigation, inventory, and automated checkouts.

4. Digitizing backend operations – 70% of online shoppers abandon carts due to checkout issues. Retailers must use digital solutions for backend operations and internal processes for efficiency and security.

In-store retail analytics, mobile POS and inventory management systems, sales floor assistant tools, virtual retail audit tools, ERP systems, and self-service HRMS platforms can streamline processes and maximize capacity. 

Cybersecurity must protect digital data and assets from malicious actors. 

Finally, retailers can improve the in-store and online shopping experience in many ways: 

• Staffing and training for customer service to handle peak, 
• Upgraded in-store point-of-sale (POS) systems, 
• Provide multiple delivery options, including Buy Online Pick up in-store (BOPIS), 
• Convenient returns, 
• Autonomous checkout with multiple payment methods, such as digital wallets, buy now pay later, and peer-to-peer applications. 

Finally, deliver on your omnichannel promise. Ensure in-store employees have inventory visibility before directing customers online for items they cannot locate in-store. 

Draup can help retailers and manufacturers mitigate any effects of disruptions. Its sales intelligence platform gives sales teams insights into accounts and stakeholders, which enables microtargeting. 

Since the retail industry is changing quickly, sales teams are racing to get real-time and 360-degree prospect information, including digital efforts, technology investments, outsourced alliances, and the ecosystem. 

The platform gives hyper-contextualized insights that help close deals faster and better.