Brick-and-mortar retail has faced many challenges in recent years but has remained strong. Inflation and COVID put dramatic pressure, but the sector adapted and proved its relevance despite these obstacles.
Many companies have also uncovered opportunities to establish new channels, grow into new markets, and cater to new audience segments.
This paper looks at the key trends likely to shape the retail landscape in 2023. Stay with us, or read the whole report here.
Trend 1: Retail Media Networks
Retail media networks are creating an exciting opportunity for retailers, landlords, and product companies alike.
According to Placer.ai, this is the top trend for 2023. Companies like Amazon, Best Buy, Walmart, Target, and Albertsons are investing in physical stores as a way of increasing revenue and profitability and capitalizing on the immense levels of traffic coming through locations.
For advertisers, the key attraction lies in the level of intent of visitors.
Investing in everything from billboards to endcaps to stadium naming rights and concert promotions means better utilization and efficiency.
Source: Retail Trends Forecasts 2023 report
Trend 2: Diversity Among Tenants Is on the Rise
Pre-pandemic, the defining narrative in brick-and-mortar retail was the retail apocalypse, but a far more significant trend was emerging where retail-oriented centers and malls were embracing new tenant types.
The growing presence of non-retail tenants has made a lasting and significant impact on the brick-and-mortar retail landscape.
Non-retail tenants increase opportunities for retailers by generating new off-peak traffic and reducing competition between retail tenants. They also allow shopping center visitors to have a more holistic, immersive experience.
Source: Retail Trends Forecasts 2023 report
Trend 3: Shops In Shops & New Store Formats
In addition to uncovering the non-traditional tenant trend, a more detailed analysis of store closures reveals the push by retailers across segments to improve their retail footprint.
👉 Shop-in-Shops
Leading retailers have jumped headfirst into the world of shop-in-shop concepts, looking to drive visits, increase basket size, and create engagement with new audiences.
The results so far are incredibly promising, with many retailers seeing locations with shops-in-shop benefiting from greater year-over-year and year-over-three-year visit boosts than those without. The concept also has a unique level of staying power.
👉 Shifts in Store Size
The experimentation with new store formats centers around shifts in store size. Small-format stores can maximize impact in a given market, while larger locations can create space for more experiential concepts.
Format flexibility is a key component of maximizing a company’s retail footprint.
Retailers can optimize their physical presence beyond choosing an appropriate site for their store. This will help them drive greater success.
Source: Retail Trends Forecasts 2023 report
Trend 4: The Rise of MAlls
The idea that the U.S. is fundamentally overcalled is almost as widespread as the retail apocalypse narrative, but a key trend indicates that the narrative may be exaggerated. Retailers that struggled to stand out within a packed top-tier mall may find their role elevated in less popular malls.
There is very real potential for retailers to look at less popular malls for their next location – and the opportunity here is significant.
Lower-tier malls must focus on differentiation and audience targeting to drive necessary visits because top-tier malls are increasing, not diminishing.
Source: Retail Trends Forecasts 2023 report
Trend 5: Dining with Inflation Obstacles
The past year has been challenging for consumers and restaurants. Many chains raised menu prices by high-single-digit or low-double-digit percentages, but Chipotle has done exceptionally well compared to pre-pandemic levels.
Chipotle has insulated itself from price increases by attracting higher earners and offering new menu innovations. This has given the chain an advantage during times of tighter consumer budgets.
Source: Retail Trends Forecasts 2023 report
Trend 6: Stabilizing Migration Trends
The migration of high income consumers into new areas can drive significant waves of visits and spend to key categories such as home improvement and home furnishings, giving retailers a chance to tap into markets that were previously less capable of enjoying their offerings.
Migration trends are bringing new and affluent audiences to the suburbs, and in some cases, younger audiences are coming to major urban areas. This could provide unique opportunities for retailers.
Source: Retail Trends Forecasts 2023 report
Trend 7: Office Recovery Will Be a Big Story
The rise of hybrid work has had a major effect on the real estate sector and local restaurants and retailers.
The visit recovery to offices in major cities throughout the country has plateaued in recent months, which could indicate that the current office occupancy patterns will likely serve as the new baseline.
Recent trends indicate that a new equilibrium has emerged and that the current office occupancy patterns will likely serve as the new baseline.
The likeliest scenario is that Q1 will bring a boost to the workplace recovery process, but a full return to pre-pandemic norms will remain elusive. Offices will continue to play an important function in attracting employees and promoting appealing company culture.
Source: Retail Trends Forecasts 2023 report
Trend 8: Retail’s Big Bump in Q1
In 2023, the summer shopping season will likely face significant challenges due to the difficult comparison to a particularly successful season in 2021.
Q1 2022’s brick-and-mortar retail performance sets a very low bar that should be exceeded by many different retailers and tenant segments in 2023.
The beginning of the year offers retailers another opportunity to drive urgency on returns and gift card use from the holiday season.
Source: Retail Trends Forecasts 2023 report
Trend 9: Fitness Recovery
The pandemic kicked off an extended period of extreme volatility, but the fitness segment was among the biggest winners of 2022, thanks to lower monthly fees, high interest in health and wellness, and increased connected fitness options from the chains themselves.
The fitness recovery story is critical because it can be applied to other service segments like full-service restaurants and retail chains like Old Navy that were also heavily affected by the unique events of the last few years.
Some retailers and retail segments that have been unfairly impacted by the unique elements of this volatility are still likely to bounce back.
The pandemic has changed the way we think about brands, but not all will recover.
Over to You
The retail industry has proven its resilience. Key trends for 2023 include retail media networks, diverse tenant types, and innovative store formats like shop-in-shops. Have any trends already proven themselves in your area? We hope so!
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