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January 13, 2023

Five ways retailers will rethink experience in 2023

From the metaverse to supply chain resilience, the top retail and consumer goods trends this year are all about the customer experience.

Customer experience has always been important in retail and consumer goods. But in 2023, it will reach new levels of prominence and dominance.

The newly launched metaverse strategy? A way to reach shoppers and build loyalty through immersive experiences. The shift to direct to consumer (DTC)? All about controlling the customer experience. Supply chain resiliency? Yes, even business optimization initiatives tie back to experience since stress in the supply chain often introduces friction in the customer journey.

Here are five of the top retail and consumer goods trends we expect will shape the coming year—and how they are ultimately driven by the need for a strong, seamless, multi-dimensional experience.

Trend 1: The push for more product personalization

Across the retail and consumer goods landscape, calls for personalization are challenging brands to find creative and compelling ways to stand out. For example, Nike delivers an immersive experience at select stores for customers to create custom shoes that are tailored virtually in real time using augmented reality (AR). At the most recent Boston Marathon, Adidas created personalized highlight videos for all 30,000 runners. At the product level, Gatorade now offers a sweat patch that provides personalized sweat profiles for athletes and customized product recommendations.

The ability to deliver a product that matches the customer’s personal preferences and needs is one way brands can drive loyalty through a strong and differentiated experience.

Trend 2: The rise in DTC

Whether companies are selling high-tech products, clothes or everyday essentials, brands see DTC as an opportunity to reestablish control over their experience or open a direct line with their customers for the first time.

And with the shift to DTC, many consumer brands are, for the first time, generating first-party data about customer behaviors, habits and preferences. Companies must take steps to find insights in that data to drive product personalization, develop new products or deliver a more meaningful experience.

For example, food & beverage giants like Coca-Cola and Pepsi have introduced drink kiosks and at-home soda-streaming appliances that not only deliver the product directly to the consumer but also enable them to collect first-party data and use that information within the product research and development process. This data is also valuable for personalizing marketing materials.

Trend 3: The transparency imperative

One word you’re probably going to hear a lot in the coming year is LOHAS. Short for “lifestyles of health and sustainability,” the LOHAS segment is growing, representing a $472 billion market opportunity in the US today.

Consumers are drawn to sustainable brands; they’re demanding transparency in how products are manufactured and ingredients or materials are sourced; they want to know what the product’s carbon footprint is and so many other attributes that would have been considered fringe just a decade ago.

The impact for brands is that they must find ways to gather this information and share it with shoppers as part of the journey. For example, outdoor brand Patagonia has long been a market leader in terms of sustainability and brand transparency. The company launched the Footprint Chronicles, which uses videos, interviews and slideshows to share more information about how materials are sourced, how products are made and how the warehouse operates.

Honesty and authenticity are key. To that end, companies need to be ready to meet consumers on their sustainability journey and have a compelling story to share.

Trend 4: Managing stress within the supply chain

Over the past several years, the pandemic, geopolitical issues, inflation and rising commodity prices have disrupted traditional demand and supply models, making it difficult for retailers and brands to maintain a healthy balance between the two.

This has renewed the focus on supply chains needing to be nimble, responsive and resilient, to manage not just traditional supply constraints but also unprecedented events and wild fluctuations in demand.

For example, as global warming trends change expected weather patterns, demand for items like outerwear and winter coats may also shift. Since consumers tend to shop for these items during a cold snap, and winter coats take up valuable floor space, retailers are now fine-tuning their supply chain—and store layout—to meet this demand when it occurs.

The supply chain has also become a very strong influence on the customer experience, especially with Amazon setting the bar on fulfillment. As delivery times for some e-retailers became increasingly unpredictable due to supply chain disruptions, consumers came to appreciate the accuracy and precision of Amazon’s delivery system. They also valued the marketplace’s credit policy when deliveries did not arrive as planned.

In the coming year, brands will be challenged to increase supply chain transparency and resilience, not just to keep the business running smoothly and efficiently, but also to provide a strong experience.

Trend 5: The metaverse as the next frontier of innovation

While metaverse applications within the retail and consumer goods industries are still in their infancy, there’s no denying the possibilities the technology presents for boosting the customer experience.

For example, this past Thanksgiving, Macy’s created a virtual version of its annual holiday parade, which included several non-fungible token (NFT) galleries where visitors could vote for the virtual parade balloon they wanted to physically recreate for next year’s event.

On the brand side, Snap and New Balance released The Holiday Gifting Concierge Lens, an interactive holiday gift application that uses speech recognition and augmented reality to provide gift recommendations across the company’s footwear and accessory lines.

Metaverse technology can also drive efficiency and sustainability within the business. Digital twins—virtual recreations of a real-world process or system—are revolutionizing many aspects of business operations, including product research and manufacturing, training and development, supply chain operations, delivery and more.

For example, Kroger is using digital twins to replicate product freshness, meat-cutting schedules and the store’s physical layout. With these insights, staff can easily assess current performance and quickly test how different scenarios may play out.

Delivering on experience in 2023

With all roads leading back to experience, now is the time for retailers and brands alike to reimagine how they can demonstrate and deliver value. Retailers and brands need to frame every decision and action in 2023 within the context of the customer journey and take the shopper closer to a seamless, personalized, multidimensional experience.

Rajeev Saraf
Head of NA Retail, Consumer Goods, Travel & Hospitality
Picture of DIgitally Cognizant author Rajeev Saraf

Rajeev Saraf serves as Head of NA Retail, Consumer Goods, Travel & Hospitality at Cognizant. He is a senior exec with vast experience spanning strategy, ops, business and practice development across multiple geographies, roles and services.

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