Retailers are emerging cautiously from recent macroeconomic challenges. As inflation moderates and supply chain pressures ease, businesses are looking ahead with measured optimism.
The economic outlook for next year shows gradual global recovery, though with regional differences and a widening wealth gap. Politically, 2024 is set to be a year of change with the UK preparing for a general election.
The unpredictability of retail has been brought into focus by the impact of global events. However, winning retailers will be those that keep their foot on the pedal, flex quickly to meet customer needs, balance bold investment with prudence, successfully leverage data and step up brand evolution.
The Retail Horizon 2024 Industry report, the fourth in our Retail Horizon series, explores the industry, economic and political landscape to identify the risks, opportunities and winning strategies for retail.
Subscribers can read the full Retail Horizon 2024 Industry report today.
Elevated omnichannel and unified commerce
Proximity to customers should be retailers’ obsession, operating a dynamic omnichannel model that brings together all potential touchpoints to personalise the customer experience.
With digital still heavily influencing sales, retailers will leverage their digital presence to drive sales in their physical stores and vice versa.
Businesses that have strong data integrity will excel as they push beyond omnichannel into a unified commerce environment, bringing together everything from customer data to inventory management on a single platform.
Continuous brand evolution at pace
As consumers’ price focus softens amid easing inflation, disruptor brands are evolving at speed to keep the attention of increasingly channel-agnostic shoppers, emphasising the importance of constant improvement and innovation.
Retailers must continue to elevate their brand, finding new methods of brand building, whether through expansion, partnerships, acquisitions, product launches or brand resets.
Brands will elevate both digital presence and store concepts with data being used to drive decisions around brand building in a way that engages new and existing customers and brings return on investment.
Case study: Flannels
Widening its appeal to Gen Z customers, Frasers Group-owned Flannels rebranded its Oxford Street store to Flannels X, describing it as “an ever-evolving cultural playground of pop-ups, gigs, exhibitions and exclusive brand experiences”.
The rebrand included the launch of a Creative Council “next-gen advisory board filled with six of the most exciting voices in the industry” who will adopt Flannels X as “their creative playground with a series of talks, multimedia exhibitions and exclusive pop-ups”.
Recognising the popularity of the rental market to the next generation of shoppers, Flannels has also launched a rental offer in partnership with circular fashion platform Hurr.
Leveraging data for new revenue streams
Retailers that can leverage the swathes of data gathered through multiple touchpoints will be able to unlock new revenue streams.
Data and intelligence will drive hyper-personalised and engaging shopping experiences, building consumer profiles and implementing powerful recommendation engines.
More retailers will monetise their data. The grocers are among those leading the way by investing in fresh revenue streams across retail media and advertising.
Increasingly, data will be used for new product development with AI tools helping to analyse data across digital platforms to drive product innovation.
Case study: Sainsbury’s
As part of a partnership with Nectar360 and Clear Channel, Sainsbury’s is expanding its network of connected digital screens to around 800, vastly growing its media reach.
Brands will be able to tailor campaigns on the screens to the weather, location or events and host competitions.
Cautious optimism driving growth
Few retailers have come through recent macroeconomic events unscathed but those that have are delivering encouraging reports of revenues reaching or surpassing pre-pandemic levels and healthier-looking bottom lines.
However, consumers are still spending conservatively and business costs remain elevated. Retailers will push ahead with cautious optimism, with delayed or abandoned strategies moving up the agenda.
The International Monetary Fund anticipates a “slow and uneven” global recovery with UK growth forecast at 0.6% in 2024. Polarisation of wealth is increasing and retailers must take into account customer segmentation and find ways to resonate with wary consumer groups.
Detailed scenario planning and segmentation will help businesses win, as they plan strategies to benefit from falling inflation while continuing to support consumers who are struggling.
In 2024, we anticipate retailers will look for growth opportunities that balance cost saving with investment. But there are many opportunities for the cash-rich and the bold.
Retail Horizon 2024 is Retail Week’s exclusive strategic toolkit for subscribers.
Across four in-depth reports, Retail Week research director Lisa Byfield-Green and our team of analysts explore the most significant trends that will shape the sector in the year ahead across consumer, technology, sustainability, and industry, economy and policy.
The Industry report is part four. Discover the other reports in The Strategy Hub.
No comments yet