CommerceNext’s latest benchmark report sheds light on the sentiment of retailers and brands across a wide swath of categories regarding business conditions. It’s not a pretty picture.
The report revealed a pessimistic outlook for the year due to various factors. Regarding consumer spending, the report’s authors said while last year’s survey showed 97 percent of respondents expected sales to grow in 2022, “less than half of those polled this year expect some growth in 2023 — a sobering summation of retail’s current state compared to the confidence that echoed across last year’s benchmark survey.”
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“Instead of heading into this next year with rose-colored glasses, hoping for a rebound, retailers are clear-eyed on the macroeconomic factors at play, grounding their predictions and essentially reversing their perspectives on investment,” the report stated. “Humbled by both disappointing sales and harsh economic trends in 2022, retailers and brands curbed their enthusiasm for 2023. Growth rate expectations are in line with 2022’s actual performance, with nearly half (45 percent) of respondents projecting flat to single-digit growth.”
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Dragging things down is slowing online growth and the impact of inflation, which, respondents said, is slowing sales. There’s also a lack of investment dollars. As a result, retail leaders “will concentrate resources into refining and improving their current customer experiences versus investing into new technologies,” the report’s authors said adding that retention and acquisition “remain go-tos for growth.”
For the acquisition of customers, the top three methods this year will be paid search, paid social and affiliate/partnerships. For customer retention, the top three were email, SMS and loyalty programs.
The report noted that retention will have a slight edge as companies “move away from paid social and seek alternative marketing channels.” The report also eyed prospects for Meta’s Facebook, describing it as “canceled.”
“Of the 68 percent of respondents who reported declining KPI [key performance indicator] performance, 66 percent of them are pulling back spending on Facebook and 46 percent are pulling back on Instagram,” the report noted.
“For advertisers, it certainly doesn’t feel like Meta is in its prime anymore — social KPIs rapidly declined for the majority of retailers, pushing them to divest in social and reinvest bigger into search,” the report’s authors said.
The report also found retailers seeking growth overseas and via new channels. Thirty-five percent of respondents said they saw opportunities for growth via online marketplaces, which was followed by international and social commerce — both with 32 percent.