5 Retail Trends to Watch for 2024

1/3/2024
Trends 2024

When it comes to trends to watch, it never fails — there are many buzzwords that seem to pop up year after year. However, as a retailer, if you’re not setting your sights on things such as supply chain, customer experience, or omnichannel, then your business will not withstand the ebb and flow that is retail. 

Undoubtedly, the retail industry is more dynamic than ever, and does much more than drive the economy. It is one of the most critical ways that the population as a whole has begun to interact, consume, and exchange value. From the very beginning — with the invention of the cash register in 1883 — retail has been a visionary of change, adapting to consumer behaviors with technology. World events, including the COVID-19 pandemic, have permanently modified the retail industry, but despite growth post-COVID, recession rumors remain. 

Although many share the sentiment that retail is forever changed, the truth is shoppers both demand and react to the “new normal.” The industry will continue to adapt, and forward-thinking retailers will be focused on the next normal. Those that prepare for the challenges ahead and embrace these new behaviors and attitudes will be best equipped to weather the storm and, ultimately, will reap the benefits of their efforts. 

The top five trends to watch in 2024 will explore technologies and opportunities that will continue to transform the retail industry. These are noteworthy items that have been hot topics among industry experts and could have a significant impact on 2024. 

DTC Shifts to Brick-and-Mortar

DTC brands

While investment is generally put toward digital experiences and ramping up e-commerce or omnichannel presence, some retailers are recognizing the importance of bolstering in-person exposure and are bringing it back to the basics. Each year, direct-to-consumer (DTC) retailers make the bold decision to bring their brands into their own-brand store footprint.

The reason for this shift may vary by company, but there are several benefits to having a physical retail store or flagship, including strengthening customer loyalty and trust, and providing a place for online pickup, returns, and local distribution. 

According to “The Halo Effect III,” an extensive report by ICSC, which spans in-store and online sales of 69 retailers and 2,103 individual stores, “opening a store boosts online sales in the trade area surrounding that store by an average of 6.9% in the immediate weeks following the store’s opening. For emerging DTC brands, the benefits are even higher — the correlating halo effect for online sales is 13.9% when opening a new store. Conversely, closing stores has an even greater negative impact on retailer performance, resulting in an 11.5% drop in sales. 

Brands such as Melissa & Doug, Kizik, Radio Flyer, Princess Polly, and thirteen lune have opened up brick-and-mortar shops to provide new consumer experiences that stand out from the digital realm. Making the switch from a digital-only to a physical presence could prove impactful as nine of the top 10 e-commerce websites are run by retailers that also operate brick-and-mortar stores. Additionally, a mere 68% of U.S. Gen Zers claim to trust online-only brands.  While that number may seem high, keep in mind that more than 20% of sales take place online, according to Forbes, with that number reaching 25% of sales by 2026. Therefore, gaining trust and loyalty via physical space will drive the bottomline. 

Advanced Payment Methods 

Amazon palm payment

The payments industry is changing the relationship between merchants and consumers, providing more advanced technology and flexibility. Offering a variety of payment methods, including soft POS, mobile POS, buy now pay later, installments, and peer-to-peer apps, has become table stakes. The goal of additional payment methods isn’t purely to offer customers flexibility and options, but also for in-store employees to be able to facilitate a better customer experience and drive loyalty. 

“In 2024, look for the contactless payment trend to advance to the next level of accessibility and adoption. Soft POS, also known as tap-to-mobile or tap-to-phone, allows merchants to use their smartphones to accept contactless payments. This technology is poised to disrupt the industry, enabling merchants of all sizes to use mobile devices to complement existing systems or to accept contactless payments at roadside stands, food truck counters, after rideshares, pop-up shops, event concessions, and more. It can also benefit ISVs with increased transaction volume and residuals,” according to Ingenico.

One retailer staying on the cutting edge is Amazon, which expanded its proprietary palm-based payment system across its network of more than 500 U.S. Whole Foods stores, enabling customers to make purchases using their hands. In August 2022, Whole Foods Markets launched the Amazon One-enabled contactless checkout solution across all 65 of its California stores. 

Transitioning to contactless payments, Sephora partnered with J.P. Morgan Payments to enable Tap to Pay on iPhone across all its U.S. stores, eliminating the need for card readers or physical terminals. 

“Sephora operates with a customer-first mindset, and our goal is to provide an elevated shopping experience in all of the ways that our beauty community chooses to shop with us,” said Stefan Jensen, vice president, treasurer with Sephora. “Tap to Pay on iPhone allows our Beauty Advisors to complete contactless transactions easily with only an iPhone — anywhere in the store. It’s a win-win: our customers get a transparent and secure transaction without waiting in a long queue, and our Beauty Advisors have more freedom to build meaningful connections with our shoppers.”

AI Takes Center Stage 

Generative AI prompts

Data is the epicenter of all things fueling retail. Those that leverage AI to focus on niche strategic areas — such as optimizing supply chain and fulfillment — with the right plan in place will see progress and revenue impact. Leveraging customer data is all about having the right product at the right place at the right time to drive customer experience, revenue growth, and operational efficiency. If a retailer isn’t looking at the full picture of the shopper experience, they are going to get left behind this year. 

Some digital innovations transform the operational side of business, with benefits then trickling down to the end consumer. Now, advertisers are blending the data processing capabilities of backend AI with the creative jolt of generative AI to serve as a copilot, with both technology and humans working symbiotically to achieve better results that drive ROI. 

“While not as impactful on retail as barcodes, generative AI has, by far, the most potential to change the industry. Companies... are providing large language models (LLMs) that help retailers, With them, retailers can create more compelling product copy, optimize website images, summarize product review, respond to customer inquiries, accelerate marketing content, and recommend products,” notes David Dorf, worldwide retail solutions, AWS. 

Ulta is using generative AI behind-the-scenes in the supply chain, as well as to streamline and automate tasks such as writing product descriptions. Stitch Fix also tapped an artificial intelligence-powered buying tool for its supply chain efforts, helping to drive informed decisions and keep assortment up to date with changing consumer demands. 

“We already see improved keep rates in the initial phase, and we expect this tool to be utilized in more than 50% of all units ordered by the end of fiscal year 2024,” said Stitch Fix CEO Matt Baer.

Additionally, Stitch Fix is using AI to support its stylists, tapping generative AI to personalize notes clients receive with their fixes. This creates a more customized experience for consumers, referencing prior purchase history and allowing stylists to spend more time doing a deeper analysis of buyer profiles to curate more accurate style fixes.

Immersive Digital Experiences 

Roblox adidas

With technology remaining the driving force, 2024’s consumers require an extraordinary customer experience, which is seamless, consistent, and memorable. To create immersive digital shopping experiences, retailers are upping the ante with AR and VR. 

“For retailers, digital is no longer enough. Shoppers are diving into highly curated in-store experiences and fully expecting the online connection. Retailers will need to unify the digital and in-store experiences to ensure in-store is as seamless as the online experience,” said Tara Kelly, CEO and founder of SPLICE Software. 

While the future of the metaverse is unknown and some may deem it overrated, online experiences are becoming more and more immersive, and will ultimately become the key to success in the metaverse. Truthfully, success in the metaverse will therefore begin to influence physical retail with the use of augmented reality in-store. It becomes a full circle moment, and we’re beginning to see it today.

“To stay competitive, retailers must be constantly renewing and rethinking their customer experience, and in the next twelve months, we will see the digital increasingly merge with the physical, to create new content and ways of shopping to keep buyers engaged,” noted Sushant Warikoo, SVP and business unit head of retail for Cognizant. “The technology in physical stores will range from using AI and virtual and augmented reality to offer events, classes, and demonstrations, to continuing to equip employees with tablets and devices to provide more accurate assistance — i.e., on where an item is located or stock availability — and tailored recommendations based on customers’ previous purchases.”

To get ahead of the competition, retailers are exploring AR and VR solutions to create a realm where customers can shop in simulated environments, whether that be placing furniture in your space or trying on clothes. Retailers such as Hugo Boss, Walmart, and Amazon allow customers to virtually try-on clothing using digital representations of themselves. IKEA’s app was one of the first to leverage Apple’s augmented reality technology. 

“Make no mistake, the metaverse is where brands will connect with their audiences. We’re already seeing this happen, with brands like Nike and Vans setting up their own virtual worlds. Vans, for instance, set up a virtual skatepark on the Roblox gaming platform. McDonald's is, according to patents filed, preparing to create virtual restaurants where people can hang out and order food to be delivered to their (real-world) home. Clearly, the metaverse offers a lot of potential for brands to connect with their audience, increase brand engagement, sell products, and find new advertising opportunities. We will even see more brands create digital-only products that exist purely in the metaverse (think digital cars, homes, clothes, and designer furniture),” noted Bernard Marr, Forbes.

Sustainability & Re-commerce

Recommerce retail

Gen-Zers may have graduated onto successful jobs and disposable incomes; however, their values and preferences remain unwavering. This generation has driven the trend of selling previously-owned items through online marketplaces to buyers who reuse, recycle, or resell them. This trend will see a boost this year due to a perfect storm of sustainability, the embrace of the “sharing economy,” and mobile-first, tech-savvy solutions. Retailers that can catch onto this trend and add re-commerce to their empire will win big before competitors get a chance to make them disappear. 

Capitalizing on the re-commerce movement, Carhartt is partnering with re-commerce platform Trove to boost sustainability efforts with its new resale program. The goal is to help reduce clothing waste and keep apparel out of landfills. The Carhartt Reworked program features its own e-commerce presence via a branded resale site. 

"As the first workwear brand to offer a resale program, Carhartt is setting the industry standard and investing in efforts to build a fully circular product lifecycle — and we're proud to be part of that," said Gayle Tait, CEO of Trove.

Lululemon has also teamed up with an enviro-tech startup, Samsara Eco, to reduce waste across its value chain by leveraging lower-impact alternatives into essential materials. Yogendra Dandapure, VP, raw materials innovation at Lululemon, said that the technology’s enzymatic process will allow the brand to transform apparel waste into nylon and polyester, boosting end-to-end circularity — a longtime vision of the company.

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