The CommerceNext report, 2023 Digital Trends & Investment Priorities: A Brief Benchmark Report On Growth, Risk, And Strategy, reveals that the majority of retail marketers are reporting less growth than expected in 2022, and 42 percent are showing flat or declining sales.
“Inflation and interest hikes cooled consumer demand and forced more consumers to shift spending to non-discretionary items like groceries and gas,” the report states. ”These factors have sobered up retailers and brands who have tempered their forecasts to reflect both the anomalistic nature of 2021 and a new batch of macro forces that could curtail sales further.”
According to the report, this was especially surprising for retailers selling online, as eCommerce has shown robust growth during the past years since the start of the pandemic.
Marketing KPIs Faltered In 2022
For marketers, 2022 meant increased pressure on strategy to deliver conversions. Yet according to the report, most failed to meet expected benchmarks in 2022 in paid social.
The combination of missed KPIs and lowered expectations for consumer spending have led to a new perspective on 2023 among retailers, according to the report.
“Humbled by both disappointing sales and harsh economic trends in 2022, retailers and brands curbed their enthusiasm for 2023,” the report states. “Growth rate expectations are in line with 2022’s actual performance, with nearly half (45 percent) of respondents projecting flat to single-digit growth (see Chart 2) and 11% are projecting negative growth.”
The report states that as economic uncertainty lingers, retailers and brands are limiting technology investments and doubling down on developing more effective strategies to boost marketing ROI. The report states that that will be more challenging in 2023 because of slowing online growth, the complexity of gaining accurate metrics, as well as the apparent downward trend in paid social KPIs.
Marketers May Dive Into Social Commerce
According to the report, over 70 percent of retailers believe that most of their revenue in 2023 will come from retention and acquisition marketing efforts, with just 15 percent seeing improvements to customer experience as a revenue driver. According to the respondents, the bulk of customer acquisition spend will be focused on three areas: paid search, paid social and partnerships and affiliates, with 36 percent allocated to influencer marketing.
According to the survey, as retailers shift their paid social strategy in search of improved ROI, they may look to diversify their spending on social platforms.
“Where will those acquisition dollars go now? In terms of strategic shifts in social specifically, TikTok will likely soak up some extra ad dollars as retailers increase testing and try social commerce,” the report states. “TikTok end-to-end commerce is coming and is worth carving out some testing budget. The social media giant is staffing up its own U.S. fulfillment centers and continues racking up social commerce buyers faster than any other platform other than Instagram.”
Read the full report.