As I look back at Christmas photos of my family grinning ear to ear, holding up their gifts for the camera, I can’t help but ponder the parallels between presents I received and the unfolding trends in the retail realm. Some trends, like the trusty pair of socks, are necessities, while others, akin to my coveted air fryer or a bottle of exquisite perfume, add that extra flair to the retail experience.
The trends happening in retail is a bit like unwrapping Christmas presents. There’s a mix of necessary services that customers now require (in particular, selling online and offering a seamless customer experience) and then there are the bonus gifts such as buy now pay later (BNPL) and delivery that offer that little extra to customers and keep them coming back for more.
Before I jump into some of the trends that have been growing over the past years and those that will develop over the next few years, there is something, although very obvious, that I feel needs to be stated. Two words captures this fundamental truth: “Retail Matters”.
Beyond the statistics—nearly half a million jobs and 35,000 businesses in Virginia according to Data Axle and ESRI data—retail forms the economic bedrock of our communities. It's a conduit for passions and entrepreneurial dreams, where individuals can be their own bosses and bring their aspirations to life.
For me, the heart of why retail matters lies in human connections. Beyond transactions, local shops and eateries serve as hubs where neighbors gather, friendships blossom, and communities forge bonds. In our fast-paced, digitally dominated world, the personal touch of retail creates a sense of place, belonging, and irreplaceable community spirit.
The retail landscape has metamorphosed over recent years, shaped by COVID-induced norms, technological leaps, shifting consumer behaviors, and global economic dynamics. Retail Alliance, through initiatives like the groundbreaking Virginia Retail Matters survey and ongoing Retail Pulse surveys, has been at the forefront, unraveling the fabric of trends that define this sector.
In this comprehensive wrap-up, we delve into 12 key trends that have woven themselves into the retail narrative, shedding light on how these developments are poised to mold the landscape in 2024.
- Try Before You Buy: Elevating the Shopping Experience
The desire to "try before you buy" has gained momentum, with augmented reality and virtual experiences enhancing customer engagement. Physical stores, offering hands-on encounters, remain competitive, pushing e-commerce to integrate technologies that replicate this immersive experience.
- “Alexa, Buy That Coat”: Voice-Activated Shopping
Voice-activated shopping, with capabilities spanning product exploration to purchase, is reshaping the consumer journey. The anticipated growth of voice retail, from $4.6 billion in 2021 to a projected $19.4 billion in 2023, underscores its increasing significance (Source: Juniper).
- Buy Now, Pay Later Surges Ahead
BNPL is not just a financial tool but a generational preference, particularly for Millennials and Gen Z. Its appeal lies in avoiding credit card interest and providing access to purchases that might otherwise be out of reach. The trend is set to continue, with these demographics driving its adoption.
- Hyper-Local, Redefined: Intentional and Convenient
Local shopping, now more intentional, involves meticulous research and convenience-centric services like pick-up options. The rise of "hyper-local delivery" presents a new paradigm, emphasizing delivery of goods from close proximity. This typically involves a physical retailer that also offers delivery or omnichannel services to local consumers.
- Reviews Reign Supreme in Consumers Decisions
Online reviews wield considerable influence, with 89% of global consumers consulting them before making a purchase. And amazingly, more than half actually read at least six reviews before purchasing a product. Local retailers, fostering genuine relationships, can leverage this trend to enhance their reputation and attract customers.
- Omnichannel Retailing: Bridging the Physical-Digital Divide
The convergence of online and offline retail continues through omnichannel and brick-and-clicks strategies. Physical stores are increasingly incorporating online transactions into their revenue streams, and online-only establishments are exploring ventures in real estate. Seamless shopping experiences, integrating inventory systems and click-and-collect options, redefine how consumers interact with brands across various channels.
- Digital Wallets: A Secure and Preferred Mode of Payment
Digital wallets, including Apple Pay, Google Pay, CashApp, PayPal, Venmo and more, facilitate secure and convenient transactions. Acceptance of digital wallets has soared, with roughly two-thirds of consumers favoring them over traditional methods.
- Generational Marketing Complexity
Marketing to diverse generations, each with distinct habits, necessitates a nuanced approach. Social media platforms like TikTok, Snapchat, and Facebook cater to different age groups, making personalized content and direct-to-consumer strategies crucial. Email continues to be a versatile and popular channel for every generation.
- Second Hand and Recommerce Gain Ground
The resale (also termed “recommerce”) market, driven by reasons ranging from cost savings to sustainability, is poised for growth. A shift towards recommerce is evident, with half of consumers participating in buying or selling secondhand products in the last two years according to Euromonitor International.
- SMS to Grow in Scale for Retail Marketing
Amid the clutter of messages, SMS marketing boasts a remarkable open rate of 98% and a response rate of 45% (Source: Gartner). It offers real-time engagement, making it a high-performing strategy for retailers seeking instant customer feedback and increased sales. So, while retailers are collecting email addresses and asking for an “opt-in” the greater retail value-add will also mean requesting to text to consumers’ cell phones.
- E-Commerce Growth and Technological Integration
Technology remains central to retail operations, with AI and AR evolving for personalized experiences and predictive analytics, especially in e-commerce. Advancements in technology, especially robotics used in warehouse management and last-mile delivery, contributes to efficiency and cost-effectiveness and sustained growth of online retail.
- Rise of New Retail Models: Innovations Unleashed
The retail landscape may witness the emergence of new and innovative retail models. Concepts such as subscription-based services, small-scale production, rental and resale markets, pop-ups or shared spaces with other retailers, creating a third space (such as a coffee bar inside a retail store or a parklet), line extensions and complementary product mixes/adjacent market opportunities (e.g. a coffee shop introducing travel mugs), and experiential retail (e.g. offering classes in-store using your store merchandise) are expected to gain traction.
Let me just say that I love the fact there are 12 trends, just like the 12 Days of Christmas, bringing my analogy of unwrapping Christmas gifts full circle! Wrapping it all up (see what I did there!), 2023 was transformative, marked by technological innovations and evolving consumer expectations amid continuing post-COVID challenges.
The journey into 2024 holds its own challenges, including economic uncertainties and a changing political climate. Successful retailers will be those who seamlessly blend physical and digital realms, providing a cohesive omnichannel, bricks and clicks experience. In this dynamic world, adaptability and a customer-centric approach will remain the guiding stars for success in the ever-evolving landscape of retail.
Article also published in Boulevard Magazine.