These changes will involve a notable rise in the level and quality of technology being employed to attract and retain customers. Additionally, we can expect to see established marketing models being replaced with new strategies, shifts in consumer base dynamics, and a constantly fluctuating supply chain.
To keep up with these changing trends, here are the top 10 trends to watch for in the CPS industry this year.
In 2023, a significant trend observed in the consumer products and services (CPS) industry is the use of automation and artificial intelligence. CPS companies are leveraging these technologies to enhance their supply chain, gain insights into customer preferences, and lower operational expenses.
Several prominent CPS companies have already made substantial investments in this area and are starting to reap the benefits. For instance, Otto Group in Germany has implemented machine learning to reduce their out-of-stock rates by 80%. Meanwhile, in China, Wufangzhai, a restaurant chain, has adopted automated ordering and payment systems that cut their labor costs in half and boosted their sales by 40%.
Some companies have gone even further by investing in high-tech solutions that may seem futuristic. For example, Coca-Cola has developed a new flavor of soda called Cherry Sprite by using AI. The company achieved this by creating automated self-service drink machines that allowed customers to mix their own drinks. The data gathered from these machines showed that the most popular mix was Sprite with cherry flavoring, leading to the birth of Cherry Sprite. Coca-Cola is not alone in using machine learning and AI to understand customer preferences better. Five years ago, Unilever tested an in-store AI facial recognition system that used machine learning to gauge customer engagement with its products on shelves, enabling Unilever to develop marketing and R&D strategies based on this data.
Although the use of virtual reality and augmented reality in the CPS industry may sound like something out of a dystopian TV show, it is not uncommon in 2023. Hugo Boss allows customers to create virtual avatars in the VR realm. They can then try on clothes and mix-and-match outfits using their virtual avatar. Not only luxury brands are investing in AR or VR; even Ikea now offers its customers the ability to view furniture in their living space in real-time through their IKEA’s The Place App.
Moreover, AR and VR are also being used by companies to enhance their corporate responsibility initiatives. TOMS in the US gives a percentage of its sales to charity and offers in-store VR tours called “giving tours” to customers so that they can experience where this percentage goes.
Looking forward, we can expect to see more innovative uses of VR and AR in 2023, as most companies are likely to start testing these technologies. It is a trend that has already begun, and those that do not adopt AR or VR risk getting left behind.
Gone are the days of one-sided relationships between businesses and customers, where businesses offer products and customers buy them. Nowadays, customers expect a more interactive and mutually beneficial relationship where they are rewarded for their loyalty, bulk purchases, or buying expensive items. The rewards and perks they desire can vary, but the most effective ones are programs that offer points, such as tier-based programs that unlock new benefits as customers spend more, spend-based programs that recognize high-spending customers, subscription programs that offer upfront fees and rewards, refer-a-friend programs that reward customers for referrals, and cashback programs that give customers money to spend with the business.
Many of your competitors are already using loyalty programs to attract new business. For instance, Marriott rewards its loyalty program members with points for each hotel stay, which can be redeemed for free stays, flights, dining, car rentals, and special rates. Sephora‘s loyalty program offers points that customers can unlock and use to get free gifts.
Subscription programs are becoming increasingly popular among customers. Porsche, for example, launched a subscription program in 2018 that lets young drivers drive the Porsche of their dreams for a monthly fee. Although it is currently only available in the USA, it will likely expand to new markets in the future.
If your company wants to succeed in 2023, it is time to start thinking about how to reward your customers for choosing you over your competitors.
There are several reasons why 2023 is being called the year of buy-now-pay-later (BNPL) and resale. The main reason, however, is that the economy is heading towards a recession, which is being worsened by Russia’s invasion of Ukraine and the collapse of banks like SBV in the USA. This makes consumers cautious about spending money.
Companies like UpLift are capitalizing on the growing preference for BNPL. UpLift allows customers to pay for travel in installments and is integrated with travel agencies, so consumers can use their services without visiting their website. However, travel may not be an option for many consumers during the current economic climate. This is where companies like Sunbit come in. Sunbit offers BNPL options for necessities like optometrist visits or vehicle purchases, allowing customers to split the cost into a few payments.
Resale is also becoming popular. It not only helps consumers save money by offering secondhand items, but it also reduces waste, making it a fantastic ESG initiative. Outerknown’s Outerworn, for instance, enables customers to resell clothing items as secondhand items on their website. This gives existing customers cashback and makes it cheaper for consumers to afford their products.
As we move into 2023, CPS companies need to consider how the recession will affect consumer behavior. Offering BNPL and resale programs may be the best way to cater to consumers during this time.
2023 will be a big year for e-commerce, which was initially boosted by the pandemic, but consumers have continued to prefer online shopping post-pandemic, too. However, businesses in this sector should also be aware that many consumers are trying to reduce their screen time for their mental wellbeing. This means that companies need to ensure their user interfaces are designed in a way that helps customers find what they need in the shortest time possible.
Businesses can use AI to make personalized purchase suggestions to customers, which can anticipate their needs before they even start searching. With consumers becoming increasingly interested in disconnecting from their devices, it is crucial for online CPS businesses to avoid complicated user interfaces that rely on longer scrolling to boost sales. Instead, companies should aim to provide a straightforward and user-friendly experience to help customers quickly find what they are looking for. Failure to do so in 2023 may lead to customers looking elsewhere for their online shopping needs.
In recent years, gamification has become a popular strategy to drive profits across various industries. For instance, language learning apps like Duolingo and fitness apps like Fitbit have incorporated gamification to keep their users engaged. However, this strategy is not limited to just apps; even traditional businesses have been using gamification to attract and retain customers.
For example, KFC Japan released a game called Shrimp Attack that customers could play in-store to earn points and discounts on menu items. This resulted in a significant increase in overall sales growth for the chain. Similarly, M&M launched a gamified promotion for their new pretzel-flavored chocolate, where users had to find the new flavor among ordinary M&Ms. This promotion resulted in high levels of social media engagement for the brand.
In 2023, it is clear that gamification is not just a passing fad. CPS businesses need to prioritize setting up systems that allow customers to have fun and engage with their products or services. These gamification strategies do not necessarily have to be elaborate games; simple animated pop-ups or meters can be just as effective.
In 2023, CPS businesses are focusing on sustainability—and you should, too. Nobody wants to be responsible for the decline of the earth, its people, or the environment, especially not customers who are just looking to make a purchase or use a service. Sustainable products are proving to be more successful in the market, with 17% of the global market value and 33% of the share of global market growth. This success is due in part to the fact that 84% of customers say that poor environmental practices will alienate them from a brand or company, and sustainable products grow 2.7x faster than those that were not marketed as sustainable.
To keep up with customers’ high ESG expectations in 2023, CPS companies need to be open and transparent about where their products are sourced from, how they are manufactured, and what they are doing to mitigate any negative environmental, societal, or economic impact their activities may have. Failing to meet these expectations could lead to the downfall of a CPS business.
Unfortunately, I have some bad news: it seems that supply chain disruptions are not going away anytime soon. For this reason, in 2023, it is important for CPS companies to focus on how they can effectively handle an unstable supply chain. It is worth noting that even if you have not started thinking about this yet, it is highly likely that your competitors have.
To tackle the issue of an unstable supply chain, there are several strategies that CPS companies can implement. Firstly, it is essential to map out your key dependencies, so that you can identify areas of risk and take steps to mitigate them. Secondly, creating multiple scenario plans, including a detailed risk management plan, can help you to be prepared for a variety of potential disruptions. Additionally, it is important to leverage data and technology to flag any potential issues quickly, allowing you to respond promptly and minimize the impact of any disruptions.
In order to gain an advantage over your competitors, it is also worth seeking out alternative product ingredients, exploring new packaging options, and working with more efficient distributors. These steps can help to ensure that you never have to disappoint your customers with out-of-stock items, which can have a negative impact on your brand reputation.
In 2023, the demographics of consumers are shifting, with Gen Z, Millennials, and Gen X making up a larger portion of the market, while the Baby Boomer consumer base is declining. This change in consumer demographics means that companies need to rethink their marketing strategies.
In particular, Gen Z prefers marketing that is delivered through social media platforms such as TikTok and Instagram. Paid influencer marketing is a popular method of marketing on these platforms.
Several companies have successfully used social selling to increase their profits in 2023. For example, Dunkin Donuts has a significant presence on TikTok. They partnered with influencer Charli D’Amelio to promote their products. Similarly, Tinder partnered with influencer Tayler Holder.
Recent surveys show that a high percentage of consumers have discovered products on social media and made purchases using their mobile phones. In fact, 82% of responders have made a purchase after discovering a product on social media, and 29% purchase items on social media at least once a week, with 24% making multiple purchases each week. Companies that do not have a strong social media presence and are not building relationships with influencers are at risk of missing out on potential customers in 2023.
With the CPS industry undergoing significant changes, the introduction of advanced technology that seems to be taken from science fiction, a looming economic downturn, and a future that is uncertain on a global level, it is crucial for all CPS businesses to focus on their leadership in 2023.
Despite businesses spending $366 billion per year on leadership development globally, nearly half of all employees do not believe their company’s leadership is of high quality. The reason for this is that finding, hiring, and cultivating top-tier leaders is an art form that requires the same level of skill as classical music or sculpting from marble. Simply throwing money at the problem will not solve it. Instead, you must invest in a proven system that has been developed over years, if not decades, of meticulous study into the complexities of human psychology, leadership, and how they relate to your industry, company structure, and economics.
Although automation, virtual reality, and social media selling might not be practical for all CPS companies, having effective leadership is something everyone can strive for. Stanton Chase has been a trusted leader in finding transformative leaders for over three decades. With more than 350 consultants worldwide specializing in various industries, we can help you evaluate and improve your leadership team or recruit new executives to drive growth and profits.
“Although automation, virtual reality, and social media selling might not be practical for all CPS companies, having effective leadership is something everyone can strive for.”
If you are ready to embrace better leadership and prepare for the future, click here to connect with one of our experienced consultants.
Milos has almost two decades of executive search and leadership advisory experience, and prior to this accumulated nearly 30 years of human resources and management experience.
Milos is a member of the Serbian Association of Managers and Knowledge Committee of Serbia. He also lectures on management at the College of Hotel Management in Belgrade.
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