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Ready or not, 2023 is upon us. And we feel fairly certain that this is the least certain retailers have ever felt going into a new year. From historic inflation and a potential recession to an unstable supply chain and international tensions, 2023 is shaping up to be a bit like a box of chocolate — brands just don’t know what they’re going to get.
To help ease this anxiety and provide a little insight into what’s likely coming down the pike, we’ve decided to round up some recent statistics that we think retailers should keep top of mind over the next twelve months. From operational efficiencies to digital transformation to responsible fashion, here are 55 stats that we believe are key indicators of what’s to come in the new year.
Operations and Efficiency
Not only does it take most brands an average of 18-24 months to develop a single assortment, but never-ending supply chain issues are causing further delays. Meanwhile, the traditional supply-driven mindset has led to record overproduction and inventory glut that’s wreaking havoc on operational efficiencies.
- Retail overproduction has reached an astonishing 40% per season.
- Stores are sitting on a record $732 billion of merchandise.
To help minimize overstocks, fashion executives plan to:
- Reduce the number of SKUs they produce (61%)
- Shrink product development lead times (43)
- Move to seasonless assortments (37%)
- 50% of retailers are in the process of major transformation to achieve greater assortment development speed and flexibility.
- 53% of merchant and product professionals believe assortment meetings are too frequent or too long.
- More than 70% of CPOs intend to increase their nearshoring share…
- ...and 24% aim to expand reshoring.
- Almost 50% of brands plan to consolidate their overall number of suppliers…
- …and 60% want to increase their number of small-batch suppliers.
- 43% of retailers are changing their shipping strategies to reduce the impact of global shipping delays.
Profitability and Pricing
Retailers’ profit margins are taking a major hit due to so much excess inventory, increased competition, and rapidly evolving consumer interests. Inflation and the looming recession are further complicating matters by leading consumers to seek out discounts and spend less.
- Markdowns now cost brands a whopping $300 billion annually, or 12% of total retail sales.
A recent survey of 3,200 Americans ages 18+ shows that:
- 46% are purchasing more products on sale
- 44% are buying from generic or less expensive brands
- 60% are planning to ramp up “bargain hunting”
- Per capita disposable income is forecast to decline 5.6% in 2022 and increase slowly in 2023.
- Average US retail inventories are rising at a faster pace than sales growth.
- Discount retailers now represent 5 of the top 10 fastest-growing retail companies in the US.
Responsible Fashion
Consumers are holding brands accountable for helping the environment and demanding more products made from eco-friendly materials. However, not only are most claims about these materials misleading, but this doesn’t solve the overproduction issue ultimately driving both environmental and economic waste. Instead, brands must explore other responsible initiatives.
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About 13 million tons of textile waste are generated by manufacturers and retailers each year…
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…60% of which is made from mixed materials that contain plastic and are simply not recyclable.
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Nearly 60% of sustainable fashion claims are now considered greenwashing.
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75% of consumers are concerned about the environmental impact of the products they buy.
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Two-thirds of US consumers are willing to pay more for sustainable products.
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41% of consumers say brands that make it easy to understand what they’re doing to achieve their environmental and/or social impact goals have a significant influence on their purchasing decisions.
According to consumers, the top three most important issues that brands and retailers must address are:
- Reduce the amount of harmful chemicals used in the manufacturing process (56%)
- Minimize the amount of carbon emissions during the manufacturing process (51%)
- Make clothes that are durable and last longer (50%)
- 42% of shoppers have thrown away clothing they would have preferred to keep because they couldn’t get it repaired.
- The circular fashion economy seeks to extend the life of products and minimize overproduction, and is estimated to be worth a potential $5 trillion.
- Nearly two-thirds of executives have found that sustainability helps boost revenue…
- …and 77% say that it leads to increased customer loyalty.
Consumer Data
The most effective way for brands to appeal to consumers, create products they love, and maximize profitability is to pulse check new products with target segments. Feedback data should be used to inform assortment development at every stage of the value chain and help shape decisions around concepts, colorways, fabrics, patterns, and more.
- Nearly 70% of product creators report that their brands’ assortments are not consistently informed by consumer input.
- 54% of brands fail to consistently use data to collaborate around assortments.
- 50% of companies are still missing Voice of Consumer/Customer programs.
- About three-quarters of product and merchant professionals believe that their brand must become more data-informed to stay competitive.
- Over 90% of CEOs recognize data on customer preferences and needs as critical or important, ranking it the #1 most valuable data type.
- 47% of brands plan to start using customer feedback to improve products or customer experiences.
- 60% of fashion executives intend to improve analytics for consumer insights to help avoid overstocks in the future.
- Using consumer data to guide assortment development increased Faherty’s average weekly sell-through rate by 2x.
- Harnessing consumer testing to inform product creation decisions led Taylor Stitch to reduce annual markdowns by 10% and profit margins by 2%.
- Leveraging consumer sentiment data to guide product strategy enabled Dearfoams to cut proto sampling by 50%, as well as shave 3 months from its assortment development calendar.
Omni-channel Retail
In addition to understanding consumer preferences and demand, brands must also make an effort to adapt to shoppers’’ evolving purchase behaviors. Going beyond traditional brick-and-mortar or eCommerce only and adopting an omni-channel retail strategy is critical for meeting modern consumers where they are.
- Fewer than a quarter of consumers say they do all their shopping in-store….
- …and just 5% shop exclusively online.
- Flexible, blended shopping and shipping options like BOPIS (buy online, pickup in store) are now important to more than half of consumers.
- In the US alone, social commerce sales are expected to grow from $37 billion in 2021 to $56 billion in 2023…
- …with global social commerce anticipated to grow 3x faster than eCommerce by 2025.
- 81% of brands plan to increase or maintain their investment in livestream selling.
- Omni-channel customers make purchases 70% more often….
- …and spend nearly 35% more than those who shop using only one channel.
Digital Transformation
Improving operational efficiencies, engaging in digital commerce, and capturing and analyzing consumer data requires brands to tap into the latest technologies at their disposal. Retailers are rethinking traditional tools and approaches to product creation and assortment development and embracing digital transformation.
- 72% of product and merchant professionals still use Excel and Powerpoint to manage assortments, making them the most-used applications during the product creation and line review process.
- Chief Purchasing Officers rank “Lack of digital tools supporting efficient product development and sourcing processes” as the number one hurdle in implementing speed and flexibility to manage demand volatility and supply risk.
- 30% of companies plan to use virtual sampling for more than half of their products by 2025.
- About two-thirds of retailers have started migrating at least some key supply chain systems to the cloud.
- Research shows that the best digital testing platforms are able to run roughly twelve detailed, highly targeted consumer tests in less time and for far less money than four live, 6-person focus groups made up of general-population 18-49-year-olds in a single city.
What’s Next for Your Brand?
Of our 55 stats, which ones stand out and speak the loudest to you? Has your brand already started to take action on any of these insights? What are your predictions for 2023?
To learn more about where we think the market is headed in the new year and how your brand can prepare, download our free guide: The Top 5 Trends and Predictions Impacting Retail Brands in 2023.
