The only constant in commerce is change. And the only way forward is to adapt. In the past year, we’ve seen millions of businesses display resilience in the face of the unexpected, contributing to over $27 trillion USD of retail sales worldwide. But 64% of global businesses are still recovering from the negative impact of the pandemic.
Economic obstacles from the pandemic were compounded further in 2022, when the Russia-Ukraine war led to sanctions that delayed or halted trade altogether. The fiscal instability is driving the highest inflation in 40 years.
Online shopping jumped 77% year over year just months into the pandemic, accelerating the innovation and adoption of digital commerce by half a decade. Shopping, working, and socializing online became a commonplace.
But after years of lockdowns and restrictions, people now crave meaningful connection across all facets of life—including commerce. Physical spaces make those points of connection between merchants and customers possible, including online and offline commerce.
As brands grapple with the challenges in 2023, they'll need to respond by adding flexibility to their products, plans, and policies. With an economic recession on the horizon, being agile has never been more important. This report outlines the global trends equipping brands to confront the unexpected.
The economic outlook forces e-commerce businesses to brace for a sluggish economy. While commerce growth is slowing, total retail sales in 2022 have climbed 15% since 2020, and they're projected to reach more than $31 trillion in 2025. But it will be a slow climb.
The World Trade Organization became less optimistic about trade growth volume as 2022 progressed. The organization's estimate for 2023 was a growth rate of 3.4% in April. By October, the forecast for the year had plummeted to a dismal 1.0%.
As commerce growth slows down, worries around inflation are ramping up.
Business owners aren’t the only ones with higher costs on their minds. The average person is 208% more concerned about inflation than the coronavirus, which has dropped down the list of global worries while inflation rose to the top. Worry about rising prices isn’t likely to go away in 2023.
Although some say the recession fear is overdone, let’s face it—even the possibility of a recession affects how businesses spend, how venture capitalists invest, and how people shop.
Consumer Trends
Consumers have more options than ever, and in today’s economic climate, they’re ready to exercise that freedom of choice. More than seven in 10 consumers bought from the competitor of their go-to brand between May 2021 and May 2022. And, if spending power decreases as expected in 2023, consumers will continue to shop around for better deals.
But shoppers aren’t just aware of the price tag. Environmental, social, and governance concerns influence about half of global consumers. Buyers want to support more ethical businesses with more sustainable supply chains—even though consistency in freight, distribution, and especially fulfillment are nearly impossible for many businesses to control. That’s why product shortages motivate nearly half of all brand switching: 46% of consumers move to competitors who have the products they want in stock.
Discovering new brands to try is also easier for consumers—and most are ready to buy. More than seven out of 10 like the convenience of instantly purchasing products where they're browsing. And they’re browsing on social media: 60% of the globe is already on social media, so they need only go to the platforms they're already on to find new brands and products.
That same expectation for seamless immediacy is seeping into physical retail too. While we see customers really interested in coming back into the store space and having a personal approach, they've also gotten used to having everything immediately. They want it now. This is just the era we're living in. Everything available at the click of a button.
Consumers want their shopping to be personal, instant, and responsive—and they want that high-value experience anywhere.
That's why, aside from growing revenue, improving customer experience is the top priority for global businesses.
This attitude of ultimate flexibility and interconnectivity is hitting all aspects of commerce—including employment. Employees are moving their talents to the companies that will benefit their wallets, lifestyles, and values. For one out of five employees, flexible schedules and locations are keys to retaining them, something that brands with a strong retail presence will need to keep in mind.