New year, new you, new business concepts.
As retailers ring in the new year by being on the lookout for the hottest products likely to be the new “it moment” in 2024, it’s also a good time to reassess brand goals and remodel marketing strategies to ever-changing consumer interests.
Specialty Retailer spoke with a variety of retail experts to get their opinion on what will be big in 2024 and what brands should be working towards. Here are their thoughts:
A Continued Focus on Reducing Carbon Emissions
Retail supply chains are currently responsible for 25% of global GHG emissions, which stresses the need to continue to seek out eco-friendly solutions and reduce your carbon footprint.
“I think we all know the intensity around the changes we need to make with the unfortunate climate events that are coming in fast and furious, and the retail footprint is one of the largest categories in terms of square footage,” Sam Ramdadori, CEO of BrainBox AI, says. “Big fleets of delivery trucks are just as important, but the scope of the real estate market makes it high up on the list of priorities.”
BrainBox AI offers a variety of solutions for retailers to be able to reduce their carbon emissions by using AI. Through some of these solutions, retailers can reduce their emissions and energy costs with AI-powered HVAC. These solutions from BrainBox AI, along with other companies, can also help you to save money down the line by reducing energy costs.
Retailers Should Expand Loss Prevention Strategies
With rising rates of retail theft and the growing cost of shrink, retailers are advised to pursue new solutions. In 2022, the NRF found that the average shrink rate of 1.6% represents over $112 billion in losses, putting additional pressure on retail sales headed into a challenging economic climate in 2024.
“As a result, many retailers are turning to technologies like RAIN RFID in the year ahead to supercharge their loss prevention strategies by providing insights into where, when, and exactly what items are leaving a store,” Ashley Burkle, Business Development Director, Retail Solutions Partner at Impinj, says.
Generative AI Will Transform How Retailers Get Insights
Generative AI promises to democratize access to insights previously only attainable by highly specialized data analysts, according to Matt Hopkins, Head of Global Retail at Board International. With the implementation of GenAI, anyone from the boardroom to the warehouse will be able to ask plain-English questions and get immediate responses, presented back in a way that’s easy to understand, where previously they had to rely on specialist analysts to pull together intricately complex reports about the state of their inventory management.
“This will have a massive impact on the retail planning process as more retailers adopt GenAI, reducing the time to make decisions from days to minutes, enabling retailers to respond to supply and demand changes much more rapidly,” he says.
Consumers are also growing used to AI and are beginning to expect it from all brands. On top of gaining insights, it can also greatly help retailers to step up their marketing campaigns this year.
“AI is increasingly being used in personalization,” Zheng explains. “For example, AI can be used in generating personalized marketing messages as well as for online style recommendations. In stores, AI can also be used in robots to help detect out-of-stock items, improving supply chain visibility and forecasting different items needed in stores.”
Consumers Continue to Focus on Value Products
Sunny Zheng, Research Analyst at Coresight Research, suggests that one of the most prominent trends that will continue into 2024 is consumers’ focus on value products.
“Because inflation is still high, along with consumers continuing to cut down on discretionary spending, they are being more cautious with their purchases,” she says. “They are spending less on apparel and home products, while spending more on food and beverages.”
Retailers Investing in Grab and Go Tech
While self-checkouts were once lauded by retailers for boosting efficiency, reducing labor costs and improving speed, Burkle says many are starting to pull away from the traditional self-checkout as they have become a growing contributor to shrink across major retailers globally through increased shoplifting and customer error rates.
“This has prompted major retailers including Walmart and Target to limit self-checkout lanes and, in some cases, cease use of the machines altogether,” she says. “As a result, we’ll continue to see Just Walk Out technology rise in popularity among retailers looking to streamline the checkout process, improve loss prevention, and enable accurate and fast transactions for customers.”
Greenwashing Needs to Take a Seat
In terms of impact, retail is one of the biggest industries affecting the environment, accounting for 10% of annual global carbon emissions. That’s more than all maritime shipping and international flights combined, according to Hopkins.
“Until very recently, retailers could get away with superficial nods to sustainability but those days are coming to a swift end. Instead, consumers will demand full transparency and will only buy from brands based on how good their supply chain is, their ethical practices, and approach to compliance,” notes Hopkins.
Return Rates Will Continue to Rise
Historically, large retailers have offered free and flexible return policies in order to encourage consumer spending. However, the average rate of returns rose to 16.5% in 2022 at a cost of $816 billion in lost sales – putting enormous financial pressure on retailers during a year of already reduced consumer spending and high inflation, according to Burkle.
“As a result, many retailers have begun to implement paid returns policies and charge customers in some areas to send back their purchases,” she says. “Retailers that fail to get a grasp on the growing challenge of returns will push the cost of returns back on consumers by limiting return windows and charging return fees in a move sure to be unpopular with their customers.”
Retailers Shifting From Seasonal Planning to a More Dynamic Approach
Instead of relying on previously well-performing products, fabrics, price points and planning based on just two seasons, Hopkins says retailers will start adopting dynamic planning by constantly assessing and testing what’s working well in their stores in order to introduce new products and collections based on real-time consumer signals.
“While this won’t be an easy shift for retailers, it’s a necessary one that can be accomplished by applying the proper tools and mindset to think outside of the box,” he explains. “Those who don’t adopt this new way of thinking will be faced with the painful reality of not having the right products in the right channels at the right time based on real-time customer needs.”
Growth Rates Will Moderate in Apparel, Fashion and Beauty Purchases
Zheng says that she is seeing slow growth rates in the apparel, fashion and beauty markets compared to 2022 and 2021. Even though these segments will continue to slow down, it simply means that they can’t keep growing forever. So we are beginning to see moderation.
“From a business perspective, retailers are worried about their cost structures, sales growth, margins and products. Consumers want newness in the apparel sector, but they have a limited budget, so they want products that can be useful, functional and will last a long time. So brands need to think about what newness they can bring to their merchandise and the different costs that can be reduced,” she says.
Retailers Will Invest Heavily in Inventory Visibility
As every supply chain leader knows, the ability to react swiftly and confidently to disruptions is key. Looking ahead to next year, increasing insights into customer demand, speeding fulfillment and real-time inventory accuracy are the top challenges driving retail digital transformation, according to Burkle.
“As a result, more retail leaders are investing in improving supply chain visibility through technologies like RAIN RFID to help them meet these challenges alongside the rapidly changing needs of their customers by delivering new levels of inventory visibility,” she explains.
While there are some challenges ahead for brands in 2024, overall, the U.S. retail market is expected to grow by 5.6% year over year (YOY), up slightly from 5.5% in 2023, according to Coresight Research statistics.
“The market should see sustained growth in 2024, and even in 2025 and 2026 as well,” Zheng states. “We are optimistic of the market, even though there is some softness in certain segments such as electronics, home furnishings and general merchandise. But overall, the market should see solid growth from an absolute value perspective.”