NielsenIQ Highlights 6 Transformative Trends Impacting Retail in 2023
6 Trends Retail Needs to Know to Beat Disruption in 2023 published in Sourcing Journal reported on a presentation by NIQ at NRF 2023 in New York City which outlined six transformative retail trends impacting the current consumer spending landscape.
NIQ data showed that 59 percent of the people it polled believe America is already in a recession and that 49 percent of those believe the recession will last more than a year. Among all those polled, 33 percent only had enough money on hand for basic survival needs, making competition for the middle-class dollar all the more cutthroat.
In the presentation, NIQ reports that “…consumers now say they’ll likely spend less. But in the midst of this enduring disruption there are also major waves of transformation under way, altering the future state of retail.” Sourcing Journal summarized NIQ’s six big retail trends as:
– Financial polarization will define price tiers and assortment
– Global and long-distance supply chains will undergo major transformation
– Sustainability shifts from promise to proof
– The geography of spending in the U.S. is shifting
– The digital and physical retail world will become one
– Gen Z is transforming the future of shopping
A video recording of the NRF Big Ideas session — 6 transformative retail trends for 2023 — is available and NIQ has also provided a summary of the presentation on its website.
While it is true that retailers and brands are facing several industry-wide issues as 2023 begins that could challenge growth and negatively impact operations, Planalytics, a NIQ Partner, sees opportunities for businesses to better align inventories with consumer demand through predictive analytics. Planalytics provides weather-driven demand calculations based on NIQ sales data to help retailers and suppliers know when, where, and how much changes in the weather will impact consumer buying.
For example, on the first trend regarding “financial polarization”, NIQ discussed how the top earners are less impacted and will keep demand for premium retail strong, while the low earners and the “cautious” middle consumers have begun to focus more on need-based purchases at the expense of discretionary. Day in and day out, the weather drives consumer needs. Maintaining and growing market share means having product available when and where the customer wants it, and predictive weather-driven demand insights help limit costly out-of-stocks.
On the third trend, NIQ notes that sustainability can mean a lot of different things to different people. One measure of sustainability that resonates with many people is the reduction of food waste and carbon emission ramifications that come with it. The weather will shift spending towards (and away from) certain categories as it changes. For retailers and brands, the flip side of making sure you have enough product to meet periods of elevated demand is knowing when and where inventories on perishable products can be reduced ahead of weak demand. This can result in significant declines in food waste, often 10% to 35% annually for weather-sensitive perishable categories.
NIQ’s fourth trend regarding “the geography of spending” is another area where demand analytics will be needed. As noted, consumers are changing the way they shop, where they shop and how they consume, and a lot of that modification is based on where people are moving to and from. Work-from-home lifestyles are dramatically changing shopping patterns and behaviors. Through the NIQ Partner Network, Planalytics is able to use NIQ point of sale data alongside its solution. These data sources used together allow companies to leverage predictive analytics to better understand how the critical external influencer of weather impacts spending choices (for example, in-store vs. online vs. delivery, etc.) in different ways across categories, locations, and times of the year.
To successfully navigate all these significant trends, NIQ suggests retailers must understand their consumers by leveraging first-party data and gaining a full view of the retail landscape beyond their stores. Retailers will need to improve their collaboration efforts with suppliers to navigate disruptive trends successfully. A full view of the market will identify cross-channel dynamics without blind spots. Predictive demand analytics that leverages first-party data to provide actionable insights is a critical success factor enabling businesses to stay ahead of these changing trends in consumer purchasing while driving scalable and sustainable benefits.