The Top 5 Trends Affecting Retail in the Year Ahead

This report explores consumer behavior and developing trends in the retail space to help retail brands better navigate the market in the year ahead.

Here are five trends that will shape the retail industry in 2023 and beyond.

Trend #1: AI, AR, VR, 3D tech in retail

Technology has been reshaping the retail industry for a long while.

We analyzed the last six months’ worth of social mentions of AI, VR, AR, 3D, virtual try-on, and machine learning in conversations relating to retail, e-commerce, and shopping. 

Overall, the conversation is picking up. The last six months saw over 512k mentions, a 4% increase from the previous six-month period. Also, close to 249k unique authors, or an 8% increase from the previous six months, discussed the topic on social media. 

Emotion analysis: How do consumers talk about new tech in retail? 

In the chart below, you can see how consumers expressed their emotions toward AI, VR, 3D, and AR in conversations relating to retail and e-commerce between September 1 2022 and March 1 2023.

We looked at emotion-categorized data, and with over 109k mentions, joy was the most prominent emotion expressed in related conversations. Joy also accumulated 14% more mentions between September 1 2022 and March 1 2023 than within the previous six months. 

The next level of shopping: Metaverse, virtual marketplaces, and gamification

What will the future of shopping look like?

Virtual marketplaces provide a wealth of possibilities for consumers to not only shop from the comfort of their homes but make that experience as realistic as possible. 

Recent reports suggest that 72% of consumers have already used a virtual assistant for voice search during their online shopping sessions.

Today, many virtual marketplaces also offer to look at items in 3D. 3D tech can help accurately represent products online, and 3D assets provide a close-to-reality experience that can be replicated across multiple devices.  

To make the shopping experience even more immersive, some brands enable consumers to view items in their own space using augmented reality. 

Many retailers, especially in the home improvement sector, have already started offering 3D and augmented reality to help consumers with room planning.

And other retailers, such as Walmart and Home Depot, are trying themselves in the metaverse – digital spaces that create realistic online experiences using a combination of 3D, AI, virtual reality, AR, and other advanced technologies.

Retail shopping using AR can also be made simple. One example is Walmart, who recently introduced the Be Your Own Model in-app feature, allowing customers to upload their photos and try on clothes and accessories virtually before making a purchase.

AR-powered tech can enable brands to help consumers navigate the huge selection of product choices available online and optimize the shopping experience to better meet consumer expectations. 

In the video below, a consumer demonstrates how a clothing item looks on her in real life vs a model on the website. This consumer has a piece of advice for retail brands, “Brands that show their clothing on a variety of bodies are the brands that are winning.” 

And what is a better way to integrate this consumer demand into the shopping experience if not for AR? Virtual retail destinations offering consumers a way to find the best fit possible before completing the translation will likely have a better chance of succeeding. 

How do consumers feel about virtual destinations in the metaverse?

We used Consumer Research to aggregate the last six months’ worth of social mentions of “metaverse.” While the volume of mentions was down 49% between September 1 2022 and March 1 2023 compared to the previous six-month period, the number of unique authors discussing the topic grew 91%, from 1.32m to 2.52m, suggesting that more people are talking about this topic. 

We also checked the sentiment in those conversations. 

The data suggests that in the last two years, the metaverse conversation generated more positive mentions than negative ones.

In positive metaverse-related discussions, consumers mentioned gaming and entertainment, with many praising BLACKPINK and the band’s winning MTV’s “Best Metaverse Performance.” 

On the brand side of things, in its recent press release, retail brand H&M stated that it “explores the blurring boundaries between our online and offline lives.” As part of this initiative, H&M Philippines launched a metaverse collaboration with BGYO, a popular Filipino boy band, and this metaverse concert gathered a lot of positive reactions on social. 

Lastly, the “Play and Earn” metaverse concept, where consumers can take part in virtual adventures and earn rewards, seemed to generate excitement on social, with some consumers happily mentioning their winnings in their social posts.

Overall, consumers seem to enjoy the idea of merging fun and retail to create a unique and fully immersive experience in which one can shop, play, and everything in between. And brands looking to stay competitive need to closely monitor consumer attitudes and integrate their preferences into their business strategy. 

As the metaverse is gamifying the retail experience, brands have an opportunity here to do initial campaign activations, monitor results and user behavior, and facilitate real-time interactivity within the digital storefront. 

But not all consumers are ready to embrace the emerging retail tech. 

AI and supply chain

AI is changing every corner of the retail sector. 

AI technology can enhance the customer shopping experience and make it more seamless. For example, AI-powered platforms like Dokuso may offer a unique shopping experience, helping consumers search for clothing using specific filters and criteria. 

Browser extensions, like PayPal Honey, will search the internet and compare and predict price changes. And other applications, including Vetted.ai, will do their best to find the internet’s best products by analyzing millions of reviews online.

But one of AI’s most important functions in retail is regulating the supply chain. 

We looked at the trending topics in conversations relating to AI and retail between September 1 2022 - March 1 2023, and “supply chain” was one of the biggest topics discussed by people on social.

Supply chain problems emerged during the pandemic, bringing shifts in demand and shortages across all sectors.

We tracked mentions of AI in conversations relating to supply chain and logistics.

The conversation around AI and supply chain gathered 437.3k mentions between September 1 2022 and March 1 2023, a 14% increase compared to the previous six months. The last six months also saw a 35% increase in unique authors discussing the topic on social. 

The integration of AI can help e-commerce brands track customers’ activity on the web, including their browsing and purchase history. Brands can then use all of this data to build enhanced demographic profiles of their customers, which can be used to provide more personalized purchase recommendations. On top of that, AI algorithms can help brands generate new promo content, such as images, text, audio, or video, based on a set of learned patterns and data.

Creating more personalized recommendations means customers are happier with their purchases, which will positively impact inventory and risk management – ultimately increasing sales by limiting returns. 

Trend #2: Brands lead the way in customer experience 

A recent industry study suggested that 90% of consumers are more likely to make another purchase from a business after a positive customer experience. 

What constitutes customer experience?

We tracked mentions around six categories relating to customer experience in retail and e-commerce to understand the upsides and downsides within each category.

Before we dive deeper into the insights, it’s important to note that when it comes to customer service discussions, conversation sentiment tends to be more negative regardless of industry.

Chatbots

Overall, the conversation around chatbots and customer experience is growing. Between September 1 2022 and March 1 2023, the topic gathered 23.87k mentions, a 34% increase compared to the previous six months. The last six months also clocked in 50% more unique authors discussing the topic on social, from 12.8k to 19.2k.

Among the benefits, consumers shared that they like that chatbots respond in seconds, can handle simple queries and help customers fast(er), and that chatbots speak their language. 

Common customer complaints in conversations relating to chatbots included that AI bots are often untrained to help or miss an important piece of context, making the answer irrelevant or not helpful, which causes frustration for consumers.

Customer service 

In online consumer conversations about their overall experience with customer service, fast delivery was one of the aspects praised by people. Accurate product descriptions on the website were also mentioned in positive conversations as they help consumers search and find the right products faster. 

As a downside, no response or a response that took too long was one of the biggest complaints seen in consumer discussions relating to customer service. Brands need to remember that while some consumers may dismiss not getting a response as non-critical, others may take it as a sign to stop shopping with your brand altogether. 

In-app shopping 

In positive-like contexts, consumers mentioned apps that have an easy-to-use interface and in-app chat feature. Grocery shopping and food apps received positive feedback for features like in-app tipping and the ability to add ingredients to the shopping cart straight from the recipe. Versatility was another desirable feature, such as scanning in-store coupons with a mobile app.

Of the negatives, consumers mentioned the speed of the app, not finding deals as they normally would in-store, prices inconsistent with brick and mortar, and issues with in-app data not properly syncing with the inventory data.

Live chat

In positive conversations, live chat was mentioned as an accessible option. Consumers also liked to be able to pick up from the previous conversation, as the rep saved their chat history. 

The downside, as always, is when a customer is left ‘on read’ with no resolution. Long wait time was also mentioned among the key issues. Occasionally, when comparing two similar brands, consumers leaned toward the brand that offered a more convenient customer support option.  

Self-service and checkout

Many consumers shared that they enjoy the self-checkout in-store, as they can finish their shopping with little to no interaction. And some added how not having this option in place brings a lot of discomfort and may even be anxiety-inducing. After all, grocery shopping is pretty personal. 

The photo below shows diet supplements packs at the register. 

In negative discussions, we saw several issues relating to checkouts. Some consumers were bewildered, and others plainly concerned about privacy issues when having to present and scan their IDs at a self-checkout desk.

Long self-checkout lines and broken computers had consumers complaining about the inefficiency of the self-service tech. And some consumers expressed their disappointment with being closely watched and followed around by store employees while shopping at a self-checkout section of a store.

Lastly, another group of consumers expressed their moral objection to replacing store clerks with self-checkout, worrying about the impact of the technology on the job market. 

Virtual try-on

Consumers like to be able to try items before they buy, ideally from the comfort of their homes. Many brands have joined the ‘virtual try-on club,’ from eyewear to makeup to clothing. And there’s definitely demand as consumers seek more convenient ways to shop.

While the technology works great for some products, like glasses and accessories, for other items, there’s still room for improvement. As one consumer put it, “Virtually trying on shoes does absolutely nothing for anyone.”

And as with all technology, not everyone is ready to embrace VR as their shopping assistant. Designing comfortable and flattering fitting rooms for camera-shy consumers could be one of the tactics for brick and mortar to drive in-store traffic and craft a positive customer experience.

Trend #3: Sustainability in retail

With the climate change conversation growing worldwide and more consumers concerned about the environment and their carbon footprint, sustainability is an important topic for retail businesses this year.

In the last six months (between September 1 2022 and March 1 2023), the online retail conversation relating to sustainability grew by 7%, from 147k mentions to 157k. 

How do people feel about the topic of sustainability in retail?

Between September 1 2022 and March 1 2023, joy was the most commonly expressed emotion, detectable in almost five times as many posts compared to the second-most common emotion: fear. Fear, however, saw a 46% increase in mentions in the last six months compared to the previous six-month period. 

We also found that 42% of all sentiment-categorized mentions around the topic were negative (with neutral mentions filtered out).

We looked at four major topics discussed in conversations about sustainability and retail:

• Fashion
• Manufacturing
• Packaging
• Supply chain

When looking at all sentiment-categorized mentions, manufacturing gathered more negative mentions than the other categories. 

We also examined how the conversation changed around these four topics in the last six months. 

The chart above shows that the conversation around the first three topics have all decreased in mention volume. On the other hand, the discussions around supply chain increased by 8%. 

Trend #4: Thrifting and resale

In one of our recent blogs, we wrote about a steadily growing interest in sustainability in fashion. 

There are many ways to stay sustainable, from using ethically sourced fabrics to buying less and shopping for quality over quantity. Thrifting is another way, and it’s becoming increasingly popular among consumers.

Thrifting or resale is becoming so popular that Statista is projecting that the resale apparel market value will reach $218bn in 2026. 

Between September 1 2022 and March 1 2023, we tracked 334k social mentions relating to thrifting, an increase of 10% from the previous six months. The topic also gathered new audiences: 213k unique authors discussed thrifting online, a 9% increase from the previous six-month period.

The growing focus on sustainability in retail and fashion has pushed the concept of thrifting to a new level, giving rise to a niche term: recommerce.

Recommerce: Consignment shop meets online shopping 

We tracked online mentions around six popular resale brands: Depop, Etsy, Mercari, Poshmark, TheRealReal, and ThredUp.

Overall, the conversation is not showing any signs of slowing down:

• 14.37m mentions in the last six months, a 4% increase from the previous 6 months
• 1.6m unique authors discussing these brands, a 34% increase from the previous 6-month period

However, when looking at the six brands individually, there are subtle differences in how consumers perceive and feel about these brands.

Looking at the chart above, we have several winners by volume of mentions: Etsy and Poshmark have the highest share of the resale brand conversation.

However, the conversation relating to smaller and newer brands is also growing, with Mercari, ThredUp, and The RealReal all seeing a growth of 7%, 8%, and 13%, respectively, in the last six months compared to the previous six-month period. Depop saw an 8% decrease in conversation compared to the previous six-month period. 

Recommerce: Sentiment and emotion analysis

Poshmark accounted for the highest volume of positive mentions, with 54% of all sentiment-categorized mentions being positive. 

One of the bigger contributors to so much positivity is a prebuilt line of text Poshmark users can share along with links on social media: “So good I had to share! Check out all the items I'm loving on @Poshmarkapp.”

Between September 2022 and February 2023, this phrase was mentioned close to 572k times. And it serves as a great reminder for all retail brands that if they want to boost their exposure online, they should make it as easy as possible for consumers to share links from the website. And adding branded hashtags and social handles to the copy can help maximize the impact.

Depop gathered the highest percentage of negative mentions. Looking at Depop-related conversations online, we discovered that one of the biggest themes in those conversations was price. Some people complained about prices being too high for how they think thrifted items should be priced. And others said that Depop sellers, who add huge markups, are exploiting the humble concept of thrifting to stay fashionable at a bargain to their benefit. One consumer shared in a video her opinion on how thrifting with the goal of reselling at a huge markup is unethical. 

After Depop, The RealReal was the second-most negatively discussed brand among the six, with 25% of all sentiment-categorized mentions being negative. 

Inadequate customer service seemed to be one of the biggest complaints people discussed online. 

As we’ve talked about above, customer service can make or break the brand-consumer relationship. And retail brands need to pay close attention to customer complaints about the service they are receiving. 

Despite all the issues described above, joy was the most prominent emotion in conversations about the six brands, with close to 91% of all emotion-categorized mentions being positive. And it’s a good indicator of where the resale industry is today. 

Trend #5 Flexible payment options 

The cost-of-living crisis has changed consumer spending patterns, with many consumers intending to spend less on big-ticket items and others looking for more payment flexibility.

We used Brandwatch Social Panels to understand how different generations discussed payments. For that, we chose to analyze the 12 most popular payment methods and the general buy-now-pay-later (BNPL) conversation, with consumers mentioning “BNPL” or “buy now, pay later” in their discussions. 

Consumers are changing the way they approach financial decisions. What does this mean for brands in the retail sector?

How do different generations discuss payment methods?

Share of voice by payment method

When looking at the buy-now-pay-later discussions, social data suggests that more millennials (Gen Y) discuss BNPL in related conversations, accounting for 42.3% of the entire conversation, followed by Gen X (23.5%), Gen Z (21.4%), and baby boomers (close to 13%).

When looking at the share of voice per each payment method, millennials held the highest share of voice for all but two, PayPal and Apple Pay, for which the highest share of voice was among Gen Z.

Share of voice by generation

When looking at each generation individually, our analysis of the conversation relating to the 12 individual payment methods showed that among all payment methods, baby boomers discussed credit cards the most; and Gen X, Gen Y, and Gen Z frequently mentioned Cash App, representing the peer-to-peer payment apps, which appear to have become the go-to payment option for many consumers.

Try it before you buy

The inability to try on clothes is one of the consumers’ biggest concerns when shopping online. 

Many retail brands know this and are actively trying to solve this issue. We’ve already talked about some brands leveraging artificial intelligence and augmented reality to help consumers “try on” items virtually in the comfort of their homes.

Another theme we see emerge in consumer discussions relating to payments is the concept of “try it before you buy it.” 

This payment and sales model allows consumers to try on clothing, accessories, or even furniture and home design items at the convenience of their homes before purchasing them. Typically, based on the terms and conditions of the program, customers can send back the things they don’t want within a given trial period for free or for a small fee.

We tracked mentions around “try it before you buy it,” and between September 1 2022 and March 1 2023, there were 44.72k mentions, an 18% increase from the previous six months. Also, we saw a slight increase in the volume of unique authors discussing the topic, from 22k 22.51k.

We also looked at Google Search data, which shows a growing interest in this payment model.

The try-before-you-buy model originated in 2021 and received a lot of exposure with the likes of Amazon Prime. Today, many brands, including Gemist, Elyn, ASOS, La Perla, Casper, Warby Parker, ThirdLove, Wantable, DailyLook, StichFix, and more, offer this type of sales model to their customer base.

From the comments below it looks like the try-before-you-buy model could easily become another great sales tactic, differentiating brands from their competitors.