What’s in store for retail media, the metaverse, AI content generation and more in 2023
By Lisa Lacy
2022 is officially behind us, ferrying trends like retail media networks and live shopping to the annals of commerce history.
Now, the natural question is: What’s next?
While we don’t have a proverbial crystal ball, we do have expert sources. They made both familiar and unexpected predictions for retail and ecommerce in 2023. Their 10 projections follow:
‘A transition year’
For starters, expect 2023—and the first six months in particular—to be what Brad Jashinsky, director analyst at research firm Gartner, described as “a transition year” for retailers.
That means reductions in budgets and headcounts—which we have already seen at Amazon and Bed, Bath and Beyond—and “doing more with less.” Expansion plans, as well as advertising and services, will scale back as retailers reduce overhead.
“We expect most retailers are going to take a wait-and-see approach,” Jashinsky said. “We’ve seen that a lot with the recent layoffs—and more to happen—as this economic uncertainty continues.”
Jashinsky does, however, expect to see continued investment in in-store technology like cashierless commerce, which yields cost savings.
“For example, back office, merchandising [and] advancements in computer vision, AI and machine learning are getting to the point where they’re helping both with efficiency, but also reliability and getting the right goods to the right places,” he added.
Meanwhile, the economic climate means promotions and discounts will remain big drivers of conversions in 2023.
“This goes back to the core basics of ecommerce and just overall retail strategy,” said Zach Weinberg, vp of ecommerce at performance marketing firm Reprise Digital.
Retail media = media
Arguably the hottest trend of 2022—retail media networks—will continue to flourish in 2023.
“We certainly are seeing clients inquire more and more about how they can start to leverage the different targeting options available across multiple retailers, whether that be Amazon, Walmart, Target or even some of the newer retailers that are starting to come on, like BJs,” Weinberg said.
In addition, Jeff Malmad, global head of commerce at media agency network Mindshare, believes retailers will expand their media networks by partnering with publishers and social platforms.
“For example, you can leverage Kroger data to find audiences in CTV via [streaming platform] Roku and [sell-side platform] Magnite,” he said. “You will begin to see your retail media buy evolve into your overall media buy, focusing on greater data integrations and personalization.”
A retail media ‘canvas’
Within these networks, retailers, agencies and brands will emphasize what Malmad called “creative experiences and storytelling” given the abundance of first-party data, as well as the ability to optimize in near real-time—and drive sales.
“Retailers that have scale across various channels will allow for that canvas,” he added. “One example of this is Amazon with Twitch, Fire TV, podcasting, NFL, Amazon.com and their studios. This type of canvas will help drive brand building and it won’t just be looked at as performance, but as both.”
For her part, Elizabeth Marsten, senior director of strategic marketplace services at performance marketing firm Tinuiti, expects to see more video in more places, including product pages and social posts.
She also expects more self-service options and emphasis from retailers on moving up the funnel—specifically with onsite static banners and video—as brands continue to invest in search and sponsored products early in the year due to external economic headwinds.
“Budgets won’t meet the appetites for test and learn with the same voracity we saw at the end of 2020, so there will need to be more incentives for brands to participate in alphas/betas, like media credits or execution assistance,” she added.
The giants get bigger
One retail media giant, Amazon, will see ad revenue growth driven by non-endemic brands, or brands that don’t sell products on the platform, in 2023.
“Amazon’s overtures toward brands [like] car manufacturers, insurance companies [and] restaurants will start to pay off,” said Kiri Masters, head of retail marketplace strategy at growth marketing platform Acadia. “These brands face rising customer acquisition costs through other channels, and Amazon’s ad inventory, audience targeting and measurement capabilities are robust.”
Meanwhile, Walmart will grow its share of the retail media pie.
“In 2022, Walmart made fundamental changes like adjusting its advertising auction format and offering a free tier of analytics,” Masters added. “In response, brands are indicating more interest in Walmart as both a sales and marketing channel.”
Brands demand more than ROAS
At the same time, retailers will have to provide greater transparency as marketers demand more accountability from retail media networks.
For his part, Erich Parker, svp of integrated media at the agency Blue Chip, noted many brands have complained retailers don’t provide meaningful reporting—or prove the value of their spend—and brands will ultimately shift spend to other channels if they don’t get it.
“Specifically, return on ad spend (ROAS) won’t be enough to persuade marketers that retail media is growing their businesses meaningfully,” he said.
Instead, marketers will demand more insight than just how many sales came from an ad.
“They will need to know what existing and new customers are buying and exploring, so their paid ads don’t compromise organic results,” Parker added. “That requires more robust analytics, including incrementality measurement.”
In fact, Masters believes return on content will re-emerge as a performance metric.
“Shoppers are seeing more immersive, striking and detailed brand content, and they are starting to expect it from all brands,” she said.
Live commerce grows up
Another trend from previous years, live commerce, will continue to mature in 2023.
Weinberg noted clients are “starting to figure out what’s the right way to really leverage this technology, particularly around key events and/or exclusive product launches” as this is one way brands have figured out how to drive the largest traffic and/or engagement from a live event.
He also noted interest in simulcasting these events to attract a broader audience. That means hosting the events within their own domains, as well as on channels like YouTube or TikTok.
Secondhand is no second fiddle
We can also expect further growth in secondhand marketplaces, which offer used products at attractive prices. They reduce overhead and help move underperforming new products, which can then be priced more competitively. And, of course, they appeal to Gen Z.
“The Gen Z focus on sustainability and a greater emphasis on the circular economy [is making] shopping secondhand more acceptable and more in demand,” said Jen Olliges, svp, managing director and commerce lead at digital agency Momentum.
The metaverse goes commercial
We’ll also see a new trend emerge: Metaverse shopping.
Jason Alan Snyder, global chief technology officer at Momentum, noted a few brands experimented in the space in 2022, but many more will set up shop in 2023. In fact, Deloitte forecasts retail within the metaverse will surpass $800 billion in 2024.
“2023 will be the year we see brands step up their game, treating the metaverse as a legitimate commercial platform and growth opportunity,” Snyder said. “Retail engagement in the sector will encourage consumer spending, opening new opportunities for the physical world and online retail connections by ‘meta-linking’ products, services and experiences.”
AI content generation infiltrates ecommerce
2023 will also see what Snyder called “the democratization of AI through products like OpenAI’s ChatGPT,” which enable anyone to create images and copy in seconds.
“Now imagine in the future you can use AI for help in things like drafting actual product detail write-ups for your commerce destination,” he added.
Masters, however, believes this will ultimately bifurcate content quality.
“AI writing tools will make it faster and more affordable for many brands to bridge their existing product and brand content gaps,” she said. “But widespread adoption will create an ocean of undifferentiated content.”
Instacart faces opposition
Finally, Parker predicts delivery platform Instacart will see its dominance challenged in 2023 by not just Amazon and Walmart, but grocery chains who will look to break away from it. Many have already tested the waters by investing in trucks and infrastructure.
“Omnichannel shopper behavior begs for a consistent experience and that requires grocers to have control over the channels in which their shoppers interact with their brand,” he added. “If these flagship banners can stand up on their own ecommerce and delivery, they won’t have any reason to stay with Instacart. And they’ll get all the associated ad revenue.