Tuesday, March 5, 2024
HomeSpecial FeatureGlobal 2024 Retail Forecast

Global 2024 Retail Forecast

Exciting Times Ahead

Another year has come and gone and within it there have been additional challenges and unexpected disruptions to the retail industry that few could have predicted. However, the sector has grown resilient in the last few years and continues to evolve, offering unique and exciting solutions to any challenge that comes its way. In this article, RLI takes a look at the state of the industry and some of the trends that will shape the 12 months ahead.

With the effects of climate change and geopolitical ructions dominating the headlines in 2023, trying to make sense of how the industry will be impacted in the future seems harder than ever, highlights P-Three’s ‘Perspectives Predictions: subtle but important shifts in 2024’. Add to this other global events and it is a retail industry that today, almost four years on from Covid, which is still making regular adjustments to changing consumer needs and wants. However the fact remains that it continues to do this and this brings with new opportunities, new markets and new segments that were previously untapped. Here, we take a look at the retail, F&B, hospitality and social & e-commerce sectors and what they can expect in 2024.

Retail & Leisure Sector
Beginning with the largest of the sectors, here we list some of the most notable trends the retail and leisure industry will see throughout 2024, trends that reflect a blend of technological innovation, personalised experiences, sustainability and the integration of physical and digital spaces:

Technological Integration: Retail spaces increasingly incorporate advanced technology like augmented reality (AR), virtual reality (VR) and AI. These technologies enhance customer experience, offering personalised shopping and immersive environments.

Omni-Channel Retail: The boundary between online and offline shopping continues to blur. Retailers are offering seamless experiences across various platforms, allowing customers to shop through mobile apps, websites and in physical stores interchangeably.

Personalisation: Leveraging data analytics and AI, retailers offer personalised shopping experiences. Custom recommendations based on shopping habits, targeted marketing and personalised customer service are becoming the norm.

Sustainable and Ethical Practices: Consumers are more environmentally conscious, driving demand for sustainable products. Retailers are focusing on ethical sourcing, sustainable materials and eco-friendly practices.

Experiential Retail: Stores are becoming destinations for experiences, not just shopping. This includes in-store events, interactive displays and leisure activities that create a more engaging shopping environment.

Health and Wellness Focus: The health and wellness trend will continue, with leisure activities and products focusing on mental and physical well-being. This includes fitness-related retail, wellness spas and health-oriented cafes.

Local and Community Focus: There’s a growing emphasis on local and community-centric retail spaces, supporting small businesses and creating community hubs for leisure and shopping.

Smart Supply Chain Management: With the aid of AI and machine learning, supply chains are becoming more efficient. This leads to faster and more reliable product availability, enhancing the customer experience.

Automated and Contactless Services: Automation in retail, such as self-checkout kiosks and contactless payments, continues to rise, driven by efficiency and health considerations (especially post-pandemic).

Hybrid Leisure Spaces: Leisure spaces are diversifying, combining shopping, entertainment, dining and workspaces, offering a comprehensive experience in a single location.

Looking at the sector from a different perspective, David Gottlieb, Chief Revenue Officer at Trax Retail, argues that despite economic uncertainties and consumer frustration around high prices this year, the economy showed robust growth, presenting both challenges and opportunities for brands.

In his article ‘Five Retail Trends for 2024’, he puts across his key trends that will influence sales and consumer engagement in 2024:
Consumer spending to continue: There’s a major discrepancy between Americans’ negative sentiments about the economy and actual spending patterns. Consumer spending remains robust and consistent, supported by both data-driven insights and anecdotal evidence. Restaurants are full, airplanes are full and there doesn’t appear to be any signs of slowing. As unemployment remains at historical lows, there are no apparent macroeconomic factors signalling a slowdown in consumer spending in the near term.

AI’s rising importance in 2024: In 2024, artificial intelligence (AI) will become an increasingly important tool for consumers and retailers. Even though reports indicate limited AI use among shoppers, interest in using the tech in the future is high. AI-driven retailer solutions will provide a means to maximise operational efficiency and enhance the consumer experience by addressing out-of-stocks, overstocks and more. We’ll also see retailers and CPG brands use data to create hyper-personalized but not overly invasive experiences for consumers.

Impact of retail theft causes reinvestment in in-store workers: Retail theft will continue to be a real problem for an industry that doesn’t yet appear to have a sustainable, scalable solution. Defensive merchandising — locking up items or making it harder for shoppers to buy them — is the temporary best practice, but it creates significant additional shopper friction. Combined with the sparsity of retail labour, defensive merchandising creates real pressure on sales and is costly for the manufacturers. As a result, we will see retailers moving away from self-checkout as they start to shift their focus towards loss prevention. They are recognising that the costs of the theft associated with fewer workers in-store outweigh the value of reducing labour costs.

Brand shifts to more intentional merchandising: Certain CPG categories with high supplier proliferation will start to consolidate the variety of items they have on offer. There simply isn’t enough room in stores for 25 energy drink brands, 25 sparkling water brands and so on. In 2024, brands should be more intentional about stocking their high impact SKUs at high impact locations.

Changing consumer expectations: A byproduct of the pandemic was the entirely new cohort of consumers that began to experiment with e-commerce as a way to interact with grocery and mass retailers. The shift that we are seeing is that the way people shop in physical stores has changed; they now expect more from their in-store experiences, as they’ve gotten used to the convenient and flexible options offered by digital platforms. Consumers want to be able to interact with stores in new ways, including the ability to search, filter and find products in the store the same way they do online.

Food & Beverage Sector
The food and beverage industry has witnessed healthy growth over the past couple of years and with this trend there have been some significant shake-ups. The sector has evolved across all its component parts, from food preparation to packaging, restauration, home delivery and homemade. Social media has become a powerful force that propels food trends to spread rapidly through our cultural consciousness. Food and drink trends are currently being shaped by two core drivers, firstly technology – namely AI – and secondly, consumer demands, for which both have experienced a big evolution.

In the wide-ranging food & beverage industry, global trends are increasingly important. As cultures intertwine and borders blur, the industry must cater to a palate that is constantly evolving and universally connected. This is the viewpoint of Egor Cherenkov from EHL Insights in his article ‘Food and beverage industry trends 2024: Cultural harmony unveiled’. Discussing digital innovations, Egor highlights the key points of service trends, convenient transactions and helpful AI. In terms of service trends, he feels the process of ordering is changing.

With QR code menus and sleek tablet interfaces, diners are granted autonomy and the stage is set for an efficient, error-free performance. Commenting on convenient transactions, he argues that traditional payment methods are used alongside modern ones. Contactless payments and mobile wallets twirl gracefully, ensuring swift, secure finales. Finally, he says that on the topic of helpful AI, nowadays, machines not only compute but also learn and predict. They serenade diners with personalised recommendations, crafting an experience that feels both intimate and grand.

Hospitality Sector
In the dynamic world of hospitality, staying ahead of the curve is not just a goal – it is a necessity. This is the point put across by Jody Hewitt in her article ‘Top 10 Hospitality Industry Trends to Watch in 2024’. In her article, she explains that green initiatives will continue to take centre stage, as consumers today are very concerned with sustainability and want to know that the businesses they support are behaving ethically. She continues by saying that restaurants and hotels are responding with innovative green initiatives, from sustainable sourcing of ingredients to energy-efficient practices.

Her article goes onto mention that the demand for locally sourced food and experiences will continue to grow, saying that despite the rising cost-of-living, the “buy local” trend shows no sign of slowing down. Whether they are concerned about the environment or want to support the local economy, more consumers are choosing to buy from local merchants.

In a separate article by Sulagna Goswami entitled ‘Hospitality Horizons 2024: Navigating the Top Trends’, they highlight that hoteliers today face the challenge of adapting to this evolving landscape while staying true to the core essence of hospitality – providing exceptional guest experiences. They continue by saying that modern travellers seek more than just a comfortable bed and a welcoming smile; they desire an experience that leaves a positive footprint. Endorsing sustainability in accommodations involves a holistic approach, from energy-efficient lighting to water conservation initiatives.

Social & E-Commerce Sector
A format that continues to see tremendous success is online commerce, as social media outlets continue to draw in more and more customers. Alexander Otto, Head of Corporate Relations at Tradebyte, comments that 2024 will see the continued growth and success of social commerce, particularly as brands look to connect with Gen Z and millennials to harness their increasing purchasing power. We’ve already seen significant traction in the premium luxury market amongst these age groups and expect this to expand to other sectors.

He continues by saying that both Gen Z and millennials have ‘grown up’ with social media and use it daily when browsing, researching and making purchases. Full-screen apps like TikTok and Instagram that focus on video content are particularly popular with these age ranges, which is good news for luxury retailers. Video enables them to more fully and accurately convey a product’s features, adding to its perceived value and desirability. Live shopping on platforms like TikTok combines three key factors for engagement with these demographics: direct engagement and participation, full-screen product visibility and a seamless and convenient purchasing experience.

He concludes his argument by saying that social media enhances purchasing convenience for consumers, where browsing the finest deals and comparing prices has never been smoother with just a few taps. While previously conventional e-commerce marketing tactics required customers to switch platforms for checkout, social commerce allows on-platform purchases, minimising the potential to lose a sale due to inconvenience. This is particularly attractive for younger generations, as studies report both shortened attention spans and an increased number of applications, websites and brands competing for their attention at any given time.