Thriving Amidst Turbulence: How These Brands Beat 2023’s Retail Slump
Many lifestyle retail brands faced steep challenges in 2023 amidst market turbulence with inflation, weak consumer demand, and changing market dynamics playing significant roles.
This situation was exacerbated by consumers tightening their belts, a shift from the post-lockdown demand spikes and strong household balance sheets seen in previous years, as evident by a rapidly declining trend in Personal Savings Rate from all-time highs during the pandemic, where US households were saving up to 30% of their monthly income, to the lowest it’s been since 2008 at the end of 2023.
Yet despite these obstacles, there were some tactical similarities among select action sports and fashion apparel brands that not only weathered the storm but flourished, carrying the momentum into 2024.
Following the acquisition from Boardriders, Xcel Wetsuits went right to work on a renewed focus on the importance of website user experience (UX) and optimizations to improve conversion rate, particularly on a mobile device.
Understanding that consumers would be heavily researching wetsuits before they buy, they invested in high quality product photography, optimized product pages to quickly answer customer questions, and removed friction throughout the website on the path to checkout. This strategic effort resulted in a 27% increase in website conversion rate despite a 28% uptick in overall traffic.
The brand’s digital marketing strategy also underwent a significant transformation, moving from broad awareness and traffic generation campaigns to a concentrated effort on optimizing to maximize website conversions.
In practice, this approach included strategic investments in platforms like Meta for new customer acquisition and refining their Google Ads product feed to improve performance from shopping ads, which collectively boosted attributed channel revenue by 57% and lifted conversion rates by 29% versus the prior year.
“People assume that increasing spend to increase traffic is the unlock to growing revenue, but this isn’t the best option. A focus on finding qualified traffic, optimizing to improve conversion rate and using high quality product creative is a guaranteed path to more revenue.” – Ian Stewart, CMO, Xcel Wetsuits
Beek, founded in 2015 by former Roxy execs Kenna Florie and Birgit Klett, saw its e-commerce business grow 41% in 2023.
The brand’s continued success can be attributed to an unwavering commitment to consistency and building on learnings year over year, from messaging, marketing, and website user experience, to paid media, customer retention, and creative strategies.
In other words, over time they have consistently refined and elevated the quality of each touchpoint with the customer while keeping messaging focus tight, creating a seamless commerce experience.
Following a remarkable 58% growth in 2022 compared to the previous year, Beek remained committed to building upon their success, doubling down specifically on four key areas effectively driving new customer acquisition — Meta, Google Ads, Affiliate, and Direct Mail.
Particularly in the case of Meta, despite increasingly restrictive audience targeting capabilities, the platform has remained highly effective for brand discovery.
The ad creative itself has effectively become the primary targeting lever. In combination with strategically including and/or excluding existing customer segments synced through integrations with email service providers such as Klaviyo, by leveraging ad creatives that are designed to be personalized to the target audience, the algorithm (now nearly 20 years old) is still very effective at knowing when and where to put an ad in front of the ideal potential customer.
“It can be tempting with the number of channels, data, and tactics available to marketers today for a brand to become distracted from focusing on the fundamentals. The key to sustained online growth for our brand has been consistency with our creative and messaging concentrating on product quality, fit, and comfort across every interaction a customer has with our brand.” – Kenna Florie, Co-Founder, beek
Matt Raminick is the Founder & CEO of Sunnyside, a leading performance marketing agency that connects creative and business performance to lift revenue for surf, snow, outdoor, and fashion lifestyle brands. Prior to founding Sunnyside, Matt previously held senior digital marketing roles at Quiksilver, Volcom, and Pacsun. He can be reached on LinkedIn and at [email protected]
Additional Information – More 2023 Retail Insights
Retail growth faced several headwinds in 2023, with factors such as inflation, weak consumer demand, and changing market dynamics playing significant roles. Persistently high inflation and weakening consumer demand directly impacted U.S. retail sales expectations, leading to minimal growth. This situation was exacerbated by consumers tightening their belts, a shift from the post-lockdown demand spikes and strong household balance sheets seen in previous years. Retail sales during critical shopping seasons fell short of expectations, indicating that recession fears and a cautious consumer spending approach affected the retail industry significantly. Moreover, an increase in household debt and a decrease in personal savings put further strain on consumer spending abilities. More from S&P Global here.
The retail industry also had to navigate through a volatile economic landscape marked by Federal Reserve rate hikes and inflationary pressures. The collective psyche of consumers was expectedly bruised, leading to a retreat from the marketplace despite some consumption patterns being buoyed by wage increases or dwindling savings. More from Deloitte here.
Luxury retail, in particular, faced its unique set of challenges and opportunities. Changing customer expectations, social and environmental concerns, and geopolitical events necessitated luxury retailers to adapt quickly. The emergence of Millennials and Gen-Z as the dominant buying force in luxury retail brought a shift towards value-based shopping, authenticity, and innovation, along with a preference for a unified experience across digital and physical channels. Sustainability, purpose, and ESG visibility became paramount, as today’s consumers expect luxury brands to align with their values and demonstrate commitment to environmental and social causes. Additionally, the luxury resale market saw significant growth, driven by consumer interest in sustainable alternatives and the desire for timeless quality and authenticity. More from SIA here.
