Global Consumer Trends 2023

Global Consumer Trends 2023

The world has changed to a greater extent than we expected. Our pre-pandemic way of life has given way to a strange new reality marked by war, galloping inflation, record-high interest rates, devastating public sector strikes, and failing public services. Many of us continue to work from home despite its inefficiencies in many areas. But life goes on, and we are all driven by the same needs and desires as we were before, though there has been a sea change in cultural attitudes, particularly of Generation Z and the Millennials.

Born into the internet age, Gen Z lives much of their lives online, and the millennials are not far behind, though they tend to be more risk-averse and careful. Both groups are highly socially conscious, caring deeply about society and the environment. However, they tend to dismiss ideas that challenge their perceptions of identity and related issues. Work-life balance, physical and mental health, and social issues dominate their agenda.

Generation Z and Millennials are today’s biggest consumers; they are considered the biggest consumer group in history and dominate current consumer trends across the developed world. As a result, unsurprisingly, most consumer-facing businesses focus efforts on satisfying their needs.

However, we shouldn’t dismiss earlier generations. Overall, society is getting older, and although spending patterns amongst older people are less volatile than the young, they remain a significant income source for retailers.

Here we look at:

Our relationship with the internet is changing
Consumers will use alternative ways to find products
A new look for real-time maps
Voice product search
Artificial Intelligence, machine learning and targeted advertising
Car ownership

Our relationship with the internet is changing

Our relationship with the internet is changing. Yes, we still make extensive use of it, but our relationship with it isn’t the same as it was pre-covid, especially for generation Z. Although internet usage peaked during the pandemic, it has now fallen back to pre-pandemic levels. Naturally, we have less time now we are working again, but it goes deeper than that. We use search engines significantly less to discover information; their use has fallen by 14% since 2018. Generation Z is as likely to use Instagram as they are to use Google. Neither do we spend as much time sharing our thoughts and opinions online. We are also warier of social media – the number of users who complain that social media causes them anxiety has increased by 11% over the last two years. There is far less trust in the major news publishers. To add to the confusion: Meta has almost abandoned its metaverse ambitions; Facebook is no longer the go-to platform for younger people; the future of Twitter appears uncertain, though TikTok is in its ascendency. Perhaps 2023 will see a significant disruption of social media with new and alternative platforms being launched.

Consumers will use alternative ways to find products

e-Commerce will be significantly affected by our changing relationship with the internet. According to Google, we are turning to TikTok and Instagram as alternatives to Google maps and search. No longer do young people focus on keywords for searching – they ask different kinds of questions that are more immersive. Also, searching for products is more likely (55%) to start on Amazon than Google.

A new look for real-time maps?

In terms of maps, most young people have never used a paper map, yet map apps attempt to emulate paper maps. However, an alternative way of mapping might be more appropriate; for instance, augmented reality might better answer young people’s expectations. Google mapping is also working on new 3D modes and immersive views. These will almost certainly gain large young audiences very quickly.

Voice product search

Voice assistants are now ubiquitous but do people use them for online shopping? According to Statista, we are doing so increasingly. In 2021 the global e-commerce transactions value via voice assistants was around $4.6 billion, which is set to rise to $19.4 billion in 2023. That represents a growth of approximately 400% in just two years. As you might anticipate, there is a significant divide over age groups and voice-e-commerce, with younger people more willing to embrace it than the older generation. However, this may change over time as older users become more familiar with voice assistants and learn to trust them more.

However, voice e-commerce remains problematic in several areas. While it is undoubtedly a convenient way to search for products and shop, the software driving voice assistants remains a little flaky. Despite the application of artificial intelligence, interactions with voice assistants can be frustrating. A sea change improvement is necessary before voice assistants fulfil their early promises.

Artificial Intelligence, machine learning and targeted advertising

Over recent years it has become almost impossible for consumers to avoid or bypass targeted advertising. However, while such advertising has several benefits in that it can simplify consumers’ lives and remove the inconvenience of dealing with irrelevant ads, it has some significant downsides. One of these is the danger of narrowing down the choice. Whether watching a streaming video channel, shopping online or chatting on social media, product recommendations made by AI make it easy for consumers to choose their next purchase. Still, such advertising can also reduce consumers’ bandwidths.

Already there are rule sets that targeted advertisers must abide by. These address issues such as privacy, including consenting to cookies, processing of personal data, ensuring targeted ads are identifiable, and prohibiting unfair, misleading, aggressive and subliminal advertising. However, more draconian rules are being formulated to protect consumer rights further. We can expect advertisers to toe these lines and adopt voluntary codes of conduct and standards. Whether or not this will make it easier on the consumer, we have yet to see,

The changing face of influencer marketing

Influencer marketing has grown from humble origins to the massive marketing channel it is today, an industry worth $16.4 billion globally, up from a relatively modest $1.7 billion in 2016. Brands love influencer marketing, and 97% of marketers use it as a marketing strategy. Its primary appeal is its effectiveness. For every dollar spent on influencer marketing, merchants can expect, on average, to make $5.78 in revenue. During 2023 we can expect its exponential growth to continue with new trends emerging.

TikTok is the leading platform for influencer marketing, and its dominance in the field will likely continue. However, we can also expect growth in the micro-influencer market. While most influencers engaged by big brands have upwards of 100,000 followers, micro-influencers can have substantially less, perhaps as few as 1,000 to 25,000 followers. However, micro-influencers tend to demonstrate a significantly higher engagement rate. The average engagement rate for most influencers with over 100,000 followers is around 2.4%, while micro-influencers with 25,000 or fewer followers typically have engagement rates of over 7.0%. During 2023 we can expect to see the micro-influencer market blossom.

Transportation

We are gradually falling out of love with car ownership, a trend that will continue through 2023. We might also be less willing to embrace electric vehicles as their running costs become equivalent to internal combustion engines. Car ownership declined by 0.2% during 2022 as it had the previous year. While that might appear insignificant, it is only the second year out of 100 when ownership levels fell. Is this a black swan event, or is it the beginning of an ongoing trend that will gain momentum in the future?

Our attitude to private car ownership is changing. Many people view the motor car as an environmental pariah, saved only by the electric vehicle’s popularity. But the electric vehicle (EV) has also lost some of its early charms. We now associate the massive lithium batteries that power EVs with exploitive and environmentally destructive rare-earth mining in China and some third-world countries. There is also the problem of generating sufficient electricity to power them, and the 2022 energy crisis doesn’t help this. It will cost more to charge an EV than to fill a petrol or diesel-powered car. And when the wind doesn’t blow, we will have to fire up old polluting coal-powered energy stations.

Public transport, shared car ownership and carpools are more in focus with the current zeitgeist than private car ownership. This sentiment tends to be the view of many younger people. In a recent survey, 61,7% of under 30-year-olds said they would happily give up car ownership if efficient public transport were available. While we don’t anticipate a significant decline in cards on the roads of Britain, it is a trend of which we should be aware.

Opportunities

Although some internet giants have posted significant staff reductions, there remains a talent shortage of consumer-facing technologies. CEOs consider the talent shortage to be a major factor slowing down growth. Software supports the majority of operations in most consumer-facing businesses, so the effect is ubiquitous. While firms like to hire experienced staff, with technologies such as AI evolving rapidly, flexibility, adaptability, and willingness to reskill are equally valuable assets.

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