Retail is arguably changing faster than ever before. Every market I visit is changing in many ways, and while each country is different, there are a number of unifying trends that are hitting almost everywhere. Yes, the balance between the trends might vary, but each of these is hitting pretty much everywhere to some degree. But if retail is changing, then manufacturers and suppliers (as well as retailers) need to adjust their strategies and plans to address each of the trends, to realize the huge opportunities that each offers, and to ensure that the (equally huge) threats they pose are understood and mitigated. So what are the six key retail trends for 2024 – and crucially – what do you need to do about them now?
Six key retail trends for 2024
Before we go much further, its time to come clean. As I was considering exactly which trends to include here, I came across an excellent article about the UK market. It’s well worth a read, even if you don’t operate in the UK. In this article, by chance, they identified six trends which came pretty close to my list: so I have used their list as a starting point. So why read my article? Because I go a step further. I’m not here to explain the trends (the article does that well, and although you do need to subscribe to access it, the subscription is free), the article does not explain what to do. That’s where I come in. I’m here to share six key retail trends for 2024 for sure, but more importantly (and hopefully, more valuably) to share what it means to you and what you need to do about it.
So what are the six trends that I’ve ‘borrowed’?
Six key retail trends for 2024
- Focus on value – supporting squeezed customers
- Next-level loyalty – focus on ecosystems
- Saving to invest – the efficiency drivers
- Food innovation – healthy, sustainable, inspirational
- Convenience and rapid fulfilment – the new rules
- Monetising the channel – retail media and advertising
Retail Trends 2024 – Focus on value – supporting squeezed customers
Yes shoppers are squeezed in many parts of the world. But what can we do about it? Clearly more attention to pricing, and pack/price architecture but beyond that, how do we adapt our strategies?
The starting point is to recognise that consumers’ and shoppers’ priorities will change as the economic climate shifts. But that shift isn’t universal. Not all shoppers will trade down or cut back. And each individual will make different sacrifices to help make ends meet. We all have our own definitions of ‘essential’ after all. So if different shoppers will react differently to the situation, how do we cut through the noise to create the clarity needed to create powerful strategies?
Focus on the consumers and shoppers that will deliver most value
The starting point is to understand which shoppers are important, and which are not (or less). Focus on which consumers, and which shoppers are important to you, your brand, your business, is critical to understanding where to focus (which channels and retailers) and which activities to focus on too. You can’t do Pack/Price Architecture, or anything else in the store, without clarity on who is your target shopper. (and if you don’t know how to build shopper segmentation and shopper missions into your pack/price work, drop me a line and I’ll gladly help).
Be prepared to lose shoppers
In addition (and this might at first sound perverse but bear with me), it is important to consider which shoppers you are prepared to lose. We have to acknowledge that as conditions change, shoppers will change their behavior and attitudes. Some of them will become more price sensitive. The only way to keep them all is to drop prices, which is probably not your best strategy. So, if we can’t keep them all, which are we prepared to lose, and which are we going to gain to compensate? Check out this article for more on this topic, and get in touch if you’d like to understand more.
And of course, while shoppers are being more price focused, there is opportunity as well as threat. Shoppers’ normal behavior is disrupted. That creates a huge opportunity to appeal to shoppers (as long as we can get our shopper messaging right!)
Get to grips with discounters and why shoppers love them
And while we’re on the topic of squeezed shoppers, we’d probably best talk about discounters. Firstly, they are growing and going to grow, so if you don’t have a clear discounter strategy, then please get in touch and let us help you build one.
But secondly, remember that discounters don’t thrive only on their prices. They have developed a very powerful shopper proposition which revolves around quality, price and convenience. Shopping at a discounter is both quicker and less energy-sapping than shopping at a supermarket or superstore. The vast majority of shoppers do not shop only on price. If you want to understand better what drives shopper decisions check out our Shopper Economics™ model (you can find a brief description here). Its intuitive, simple, but incredibly powerful. Apply this to different shopper segments for each of your brands, and you’ll have a really powerful foundation for your shopper strategy, channel strategy and customer strategy.
And a last point on cash-strapped shoppers: private label. It is growing everywhere. Check out this article for six strategies to compete with private label
Retail Trends 2024 – Next-level loyalty – focus on ecosystems
Not much to add here, and if you are in the UK you’ll definitely know all about this. But it is interesting to note the evolution of loyalty cards over the years. Once an option for shoppers, the only way to shop at a sensible price in Tesco and Sainsbury is to carry their loyalty card. If you don’t have a card, your shop will be significantly more expensive.
This dynamic will change shopper patterns. Those that refuse to have a store card will be driven to discounters as the only place where I can pay a fair price for product without relinquishing my data. It also leads to a huge crowding of the shelves with even more labels that all look the same and all offer discounts. What impact does that have on shopping behavior?
As stores change in 2024, so will shoppers
It is likely that all this extra value messaging will create more sensory overload for shoppers, meaning that your other messaging will have to work harder to cut through. It also means that increasingly this universal ‘value symbol’ becomes a tool for shoppers to navigate busy fixtures, further subverting the way shoppers shop. The store is changing in so many ways, and shoppers will consciously and subconsciously adapt. If your team isn’t thinking shopper and shopper psychology as you prepare your in-store activities, it is likely that everything you do in the store will be less effective than before. To make sure your shopper communication cuts through, consider our shopper communication training as a great place to start!
In more prosaic terms, retailers will be doubling down on pushing suppliers to buy their loyalty card data. If you aren’t buying it now, expect a call any day soon. And if you are buying it (or if you aren’t but are considering it) make sure you are clear about how you are going to use the loyalty data, how you will blend it with all of the other data and information you have, and create powerful, actionable shopper insight. Most clients we see struggle to get value out of loyalty card data. Make sure you maximize it.
Retail Trends 2024 – Saving to invest – the efficiency drivers
There is a good analysis here but remember that this isn’t anything new. Retailers operate on slim margins. Efficiency rules! Of all the new retail tech that I see implemented, the vast majority is efficiency-based. And when it comes to efficiency, remember that is about cutting costs. And suppliers, and their inventory, are one of the biggest costs. So yes, expect retailers to look at supply chain, and property (stores) but expect them to look at suppliers, in terms of days of supply, range rationalization, supplier rationalization and supply prices.
Retail Trends 2024 – Food innovation – healthy, sustainable, inspirational
At the same time retailers need to innovate, with fresh, ready to go and ready to eat being key sectors for this. This will further squeeze the space and inventory being offered to more traditional categories. Think about it. The food to go area. The gluten-free aisle. All that space (and inventory cost) has to come from somewhere! Ensure that your category strategy encompasses the bigger challenges and opportunities to the category and not just a narrow definition bound by what is on the shelf today. And if you think your category might be in line for a range review, then plan for it proactively!
Retail Trends 2024 – Convenience and rapid fulfilment – the new rules
Convenience is one of the biggest drivers of shopping behavior and its growing. It is one of the key dimensions of the Shopper Economics™ model. It will drive fragmentation in shopping modes, and drive growth in convenience and small store formats. And (as mentioned earlier) it is, and will be, a key driver in the growth of discounters. Shopper Economics™ analysis shows that their success is driven by convenience as much as price. In fact, they are masters at delivering value in three of the four dimensions of the Shopper Economics™ model – no wonder they are so successful
Retail Trends 2024 – Monetising the channel – retail media and advertising
Last but by no means least: retail media. This is less ‘monetising the channel’ and more ‘monetising the shopper’. Retailers are rapidly crossing the Rubicon from ‘selling to shoppers’ to ‘selling shoppers as an audience’. This shift is an imperative for retailers’ future success. And as yet, many suppliers really haven’t worked out how to handle retail media.
The impact on manufacturers will be huge. Retail media success impacts how we buy media for sure. It also fundamentally changes our relationship with retail customers. They become suppliers. As well as still being customers. It forces brands to finally become genuinely omnichannel in the way they plan their communications, which means that consumer goods businesses need to get a lot better at integrating their consumer and shopper marketing strategies and plans.
Retail is going to change in 2024: are you ready to ride these trends to success in 2024?
The original article focuses on the UK market, but the UK market is not unique. These broad trends are visible globally, and if you aren’t already building new strategies and new team capabilities to address these changes, then you are in danger of being left behind. Don’t let that happen. If you want to know more about any of these trends, or want to understand how to move your strategies, plans and capabilities to the next level, please get in touch now.
