Predicting the future sometimes feels like a fool’s game. Given the turbulent times we live in – from geopolitics to uncertain economic headwinds – what tomorrow holds isn’t an easy thing to guess. However, certain key retail trends become evident as we dig into consumer data, product and design fashions, and the most up-to-date retail reports.
Just knowing upcoming trends is one thing. But the big question is: what does it mean for you as a small business owner? How should you change your practices? And what actions do you need to take to avoid any pitfalls in the coming year?
Let’s get started!
Retail Trends 2024: Background Factors
What a strange few years it’s been in the retail industry! Back in the foothills of 2023, the Consumer Confidence Index (CCI) was at a record low. It’s a survey asking consumers once a month how they feel about spending and retail. Questions cover things like:
- To what extent will the economy improve in the next six months?
- How confident do you feel in your finances?
Based on these answers, the researchers aggregate responses into a number – the Consumer Confidence Index.
Small business owners often ignore this metric. They shouldn’t! As a small business owner, you usually have higher overheads and lower efficiency compared to the big brand stores and major retailers. That means you’re less competitive in economic downturns.
So, as the CCI plummets, it’s small businesses that bear the brunt of consumers tightening their spending. If consumers think the coming six months will be tough, they’re less likely to spend on gifts, experiences, meal outs, and more.
In short, people buy more when they’re feeling buoyant.
It’s not hard to see why consumers were increasingly cautious. As the aftershocks of the pandemic and the Ukrainian War rippled through the economy, inflation spiked and retail sales volume fell by 1.2% in the three months to July 2022.
Since then, inflation has steadily decreased, and British consumers have a slightly more optimistic outlook. A Goldman Sachs report on the UK economic forecast for 2024 suggested economic headwinds are easing. And, while 2024 is unlikely to be a cakewalk, it’s certainly an improvement on previous years. The UK economy is expected to grow by 0.7%. But with high-interest rates ramping up mortgage payments and inflation still above the Bank of England’s target of 2%, discretionary household incomes will be slow to recover.
(As I write this) Black Friday spending is slightly up – a good sign for Christmas overall. So again, we can be cautiously optimistic. That’s the economic situation – but 2023 was a landmark year in new retail technologies and trends, from AI to personalised communication.
How will these Retail Trends and factors come together in 2024? Let’s find out.
4 Biggest Retail Trends in 2024 and Beyond
- Sustainability and Greenwashing
- Continued Rise of Artificial Intelligence (AI)
- Growth of Social Commerce
- Shift Toward Personalised Communication
Retail Trend 1: Sustainability and Greenwashing
First up: sustainability, the environment, and so-called “greenwashing.” You’d imagine that as consumers find their purse strings tightening, they would neglect long-term issues like sustainability and the environment.
That’s proven true and false.
According to the Euromonitor 2024 Consumer Trends report, consumers have made considerable efforts to be more sustainable over the past few years. However, there’s still a demand for organisations to step up, be counted, and showcase their eco-pledges.
But that’s not a blank check to make any old promise and get away with it. Consumers care about the environment and sustainability, but as they feel the pinch, they want solid, reliable proof that any added expenditure is genuinely producing results. Greenwashing and stretching eco-truths are for the heady days of an economic boom.
Ogilvy, for example, produced a white paper on the future of influencers. In it, they hit on “green fatigue” as consumers scrutinise both brands and influencers more thoroughly. Consumers aren’t tired of sustainability – they’re tired of companies being all talk and no action.
Turns out, it’s not easy being green. As a Mintel report laid out, 60% of consumers believe that companies fabricate their green claims – big companies, in particular. There’s a deep-seated scepticism overall.
That’s also reflected in the rise of “de-influencers” who advocate for less consumption and highlight problematic products. Powered by social media, it can wither brands under the scrutiny of the spotlight.
Small businesses, therefore, should transparently communicate their sustainability efforts. Showcase your proofs, highlight your successes, and demonstrate real value. Consumers see sustainability as a survival mechanism given the pressing climate crisis. Don’t just say you’ll plant trees; show off your new forest.
If you fail to do this, you could risk the ire of an increasingly frustrated and vigilant consumer base. The eye of a social media store is not a fun place to be!
Retail Trend 2: Continue Rise of Artificial Intelligence (AI)
Unless you spent 2023 under the proverbial rock, you’ll have witnessed the AI revolution unfold. First, OpenAI (the brand behind ChatGPT) set records for the fastest-growing user base, gaining 100 million monthly users just two months after launch!
Next, almost every platform launched its own generative AI tools and automation features – think Shopify’s Magic.
But for the more eagle-eyed trendspotters, this has been a long time coming. I first spoke on the issue in 2018/2019. What is surprising is the rapidity with which consumers adopt new technologies. Sure, the ability to create a newsletter in seconds or brainstorm new product ideas is phenomenal. However, 72% of customers already use AI daily, and 42% would be happy with it to help assist with product suggestions. Almost overnight, AI became an embedded – almost blase – part of the retail landscape.
Just consider that it took TikTok nine months to get to 100 million users, Instagram did it in two and half years, and ChatGPT achieved it in January (in two months). That’s the demand for AI.
Expect AI to trickle into almost every aspect of the online experience. All copy, photos, promotional images, emails, illustrations, and basically everything else will be AI-influenced. But there’s also a warning – AI is impressive but not yet better than the best humans.
Small businesses marketing human copywriters, artists, etc., can charge a premium. Just as the word “hand-crafted” came from the Industrial Revolution, we can expect a similar market to develop in other creative industries.
Remember, AI is here to save you time and money. But as anyone who’s used it can attest, it’s still a machine, not a person. Used wisely and judiciously, it’s a powerful efficiency saver; used wantonly, and you’ll have poor-quality copy and bad marketing ideas. Think about where you can save time, effort, and energy, improve processes in your business, and maximise efficiency.
Retail Trend 3: Growth of Social Commerce
Let’s define our terms: social commerce is where your exploration, your decision-making, and your purchasing happen on the same platform.
Several social media platforms launched stores to compete with Amazon in the past couple of years. Instagram, for example, lets you scroll along, and if you see a lovely pair of earrings or a jacket you want, you click on them and check out through the Instagram store. TikTok runs a similar feature.
It’s the culmination of a long-term trend combining commerce and entertainment. People increasingly want more entertainment and content – they want to browse stunning pictures and curated photos as they travel or kill time. The next logical step is allowing users to click and purchase the product in the picture.
Here are a few stats: 98% of customers plan to utilise social purchasing at least once this year compared to the previous year. Moreover, 68% of customers claim they made at least one social media purchase over the previous year.
Again, it’s startling how quickly these technologies, once developed, become mainstream. And there’s no sign of this trend slowing down. As legendary advertising firm Saatchi and Saatchi put it, “Brands now focus on telling stories and concluding with a commerce moment.”
Social commerce will continue its meteoric rise in 2024. In fact, while global eCommerce is forecast to grow by 8.9% in 2024, social commerce is expected to grow by 28.4% – truly staggering.
There’s another aspect to this retail trend – live shopping. Pioneered on social media and based on live streaming, it gives a brand a chance to interact with customers and target audiences. Sometimes, that’s the brand itself; other times, it’s influencers running the show on behalf of the brand.
Coresight’s CEO Deborah Weinswig estimated that live shopping will be worth $50 billion by the end of 2023, expecting it to account for 5% of total eCommerce sales in the US by 2026. We can expect similar trends in the UK.
Indeed, it’s all part of a larger phenomenon. There’s a feeling of “permacrisis” and global fatigue at the moment – as if everything that could go wrong is doing so. It’s exhausting! Consumers want “delightful distractions” – aka pure, unadulterated escapism – to get away from the doom and gloom for a little while.
For small businesses, there’s a choice: to be a content creator or not to be. There’s a major potential here. Sixty per cent of marketers claim that influencer-generated content creates more engagement than brand content. Duh! Consumers crave connection.
So, consider reaching out to applicable content creators to build relationships and expand your brand’s reach. Recognise that customers seek entertainment and think about how to alter your marketing strategy accordingly.
Retail Trend 4: Shift Toward Personalised Communication
Last but not least, linking together AI, social commerce, and even sustainability, personalised communication asks how customers want you to talk to them. Like the previous retail trend, it’s been a long time coming.
In the era of mass media and broadcasting, brands developed a particular way of talking to consumers. Mass media meant mass appeal. That flipped as social media took over. We’ve gone from targeting millions of people to tailoring a message person by person.
Part of this isn’t just the message but the medium. Email marketing is unlikely to disappear, but expect SMS and WhatsApp marketing to become increasingly popular – the UK is probably lagging behind in adoption.
Ninety-one percent of customers say they’re happy to receive SMS from a brand they like – and with open rates of 98% and 99% for SMS and WhatsApp, respectively, brands are unlikely to ignore this medium for long.
Combined with AI options like Chatbot marketing and automated workflows, it’s a major marketing growth area in 2024. That’s especially true when audiences are segmented for specific, targeted deals and offers.
So, those are the key retail trends for 2024. Keep your eyes peeled and stay ahead of the curve – it will be a game-changing year for small businesses.
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