New Year, New Opportunities for Retailers
Your roadmap for engaging consumers and driving demand in 2024.
The current economic landscape may make 2024 a difficult year for retailers. Joel Beherndt, Point B’s Executive VP of Consumer & Retail, offers insight on how retailers can position their CX, technology, and brand strategies to pave the way for growth despite challenging times.
Market Trends Impacting 2024's Retail Outlook
Economic uncertainty and prices remain high
While inflation shows signs of easing, elevated interest rates and prices linger due to years of atypically high inflation. The Fed's direction of rate cuts in 2024 sparks optimism. However, debate casts doubt and uncertainty over the timing and magnitude of the reductions. Excessive easing could even stem from mild recessionary pressures. These persistent conditions continue to impact consumer decision-making and squeeze buying power.
The labor market shows signs of shifting
Throughout 2022 and 2023, retailers struggled to hire and retain their workers. The quit rate among retail workers reached 4.1% in January of 2023, topping the pre-pandemic highs seen in April 2022. Nevertheless, cracks in the labor market could be emerging. Job openings unexpectedly slowed to 8.7 million in October, the lowest since March 2021, and continued to slide in December. This and other economic factors suggest a labor market slowing down in the face of potential headwinds.
Geopolitical conflicts threaten the global economy
The Russo-Ukrainian War caused soaring food and energy prices and spiked inflation, which still impacts today's global economy. Time will tell how the Israel-Hamas War and piracy challenges in the Gulf of Aden will impact energy prices, but adverse effects may be dire for the US economy and its retailers.
These challenges will impact every business and your response will be critical in determining your success.
While consumers are weary from years of conflict and economic uncertainty, they remain hungry for better retail experiences.
They want connectivity between in-store and online purchasing platforms, better in-person experiences, and values-driven brands willing to advocate for the causes they care about.
Below, we'll share details about the growth opportunities we're seeing for retailers in 2024 and a few ideas to help you take advantage of them.
Go Beyond Omnichannel
The rapid adoption of online ordering, delivery, and store pick-up during the pandemic forever changed customer expectations. Retailers were forced to hyper-scale these efforts almost overnight, often leaving significant room for improvement across technologies and processes. This presents retailers with a major growth opportunity to refine their solutions to deliver the seamless, personalized, and convenient experiences consumers crave.
Whether online or in-store, today's consumers expect ease, cross-channel connectivity, and customization. They are also looking for more than just a transaction—86% of shoppers say they're willing to pay more for a better shopping experience. The rise of brands like Glossier is evidence of consumer's commitment to show up in droves for brands that invest in bespoke buying experiences.
Retailer Opportunities
- The showroom experience. We're seeing popups and flexible retail models expand across brands with enormous success. Retailers like Birchbox and H&M use them to experiment, test insights gleaned from online shopping patterns, and create differentiated experiences designed to create buzz. Consider what this model might look like and its impact on your retail brand.
- Capturing future wallet-share. In 2024 and beyond, consider how the market may explore new pathways for growth and revenue. As an example, the electrification of vehicles will likely create new and exciting opportunities for retailers. Brands like Walmart have already planned to have their network of electric vehicle charging stations by 2030. How might they engage consumer attention during 20-minute vehicle charging intervals? This is where the retailer's creativity in developing innovative store-front concepts will be crucial to maximizing consumer's time and attention.
Focus on Data to Enable AI
Seismic shifts in AI, machine learning, and related technologies make timely access to quality data imperative. Retailers are increasing technology spending to keep up with the competition, better understand their customers' buying patterns, and predict future actions.
Retailers like Starbucks have begun ideating about using visual identification technologies to recognize repeat customers, show them a custom menu centering around their unique tastes, and store payment details for easy access.
In the coming years, retail brands will continue using data and AI to get to know their customers and respond with experience and product improvements that keep them returning for more.
For many, the volume and pace of innovation can feel overwhelming. The question of where to invest in technology is essential. But it isn't the first conversation we encourage retailers to have. Start with your broader business strategy instead of jumping right to technology applications or solutions. What are your goals? What are your customers' needs? How and where are you going to be data-driven? Answer these questions first and then decide on new investments.
Retailer Opportunities
- Move from data strategy to AI investment. A solid foundation in data management and access is crucial to reap the benefits of rapidly advancing, cutting-edge technologies. With a robust data strategy, you can effectively evaluate and implement AI-based solutions that drive meaningful business outcomes.
- Applying AI to achieve business goals. Once your broader strategy and data management frameworks are in place, it's time to talk AI applications. The sky is truly the limit, from supply chain and cost optimizations to personalization, automation, and numerous process efficiencies. Use it to improve demand planning, create better mobile app experiences, improve product quality, and more, but align every dollar spent with real business goals and customer needs.
Build Trust Through Authenticity
Customers increasingly want to buy from values-aligned brands. Edelman's Trust Barometer reports that 63% of consumers buy or advocate for brands based on their beliefs and values. Yet it can be challenging for brands to thread the needle if they are looking to appeal to broad demographics and avoid political hazards.
As one of our Senior Principals, Julie Smith, shared in a recent Forbes article, Gen Z and millennials are focused on authenticity, so your organization's statements and actions must be aligned.
Geopolitical challenges, global gatherings like the upcoming Olympics, elections, and other attention-grabbing events can be a distraction—or an opportunity. How you prepare your brand strategy in response to these events will determine the result.
Retailer Opportunities
- Beat the competition by being yourself. In the spirit of authenticity, don't try to overtake your competitors by mimicking their tactics. You'll stand out to consumers by knowing what matters to them and doing what you do best. Think about your differentiators as strengths that will bring the right customers to your doorstep when operationalized to their fullest potential.
- Audience clarity. Some of the pitfalls we've seen in the past year happen when brands feel caught between audience groups. Get too generic, and you won't win hearts or minds. The best brands are unapologetic about who they are and what they stand for, giving belief-driven consumers the confidence to buy from a company that aligns with their values.
Success Starts From a Strong Foundation
Despite the challenges ahead, growth for your retail business doesn't have to be put on hold. Your customers are more than just hoping; they expect to buy from brands that modernize to meet their needs as we enter the new year.
Our retail clients are empowered to build and invest from a place of internal alignment and clarity. Remember that any transformation you pursue—brand, CX, or technology-related—must evolve from your core goals and objectives.
When you build from a strong foundation, you'll set your business and customers up for success.
Get in touch with us here.
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