7 retail industry predictions for 2024
By Saqib Saleem Qureshi
Artificial intelligence’s influence continues to grow, consumers demand sustainable actions, and the customer experience remains more important than ever
This annual predictions process — collecting tons of information from various sources to arrive at projections for how the retail industry is likely to fare in the year ahead — could be upended if artificial intelligence keeps improving.
Prognosticators could use OpenAI to determine how shoppers intend to shift their spending, which categories are a sure winner and whether adding square footage is a wise move. Some might argue that AI is already capable of that. It’s already being used for demand forecasting and customer sentiment analysis.
But when it comes to making industry-wide predictions, AI remains an outlier. When the data set comprises global policies, cultural swings, demographic shifts and various industries, a human touch is needed.
Looking ahead to 2024, the geopolitical challenges on the horizon are profound. Here at home, economic headwinds persist thanks to uneven inflation and still-elevated interest rates. And our nation is facing what is likely to be a watershed moment in politics with the presidential election next November.
‘Guarded positivity
How will these factors and myriad others affect the retail industry in 2024? Overall sentiment could best be described as guarded positivity.
The bullish spending retailers experienced during the holidays between Thanksgiving and Cyber Monday suggests that consumers’ commitment to gift-giving, despite inflationary pressure, is undeniable.
More than 200 million people shopped online and in stores, according to NRF, spending an average of $321.41 on holiday-related purchases during the 5-day holiday weekend. And it carried over through December as shoppers kept the registers beeping
But will that spirited spending carry over into the first half of 2024?
The word most pundits have used to describe the consumer landscape is “uncertain.” While inflation has begun to ebb, and the hope is that it will lead the Federal Reserve to walk back interest rates and loosen the strings when it comes to borrowing costs, many consumers are still feeling cash-strapped. They are quick to call out higher grocery bills and loftier rents; buying a car or a house are pieces of the American dream that remain out of reach for many.
Where does that leave retail businesses? The short answer: Hard at work looking for ways to identify new opportunities, redesigning physical stores to be more coordinated with shoppers’ desire for experiences alongside efficiency, and investing in tech projects that deliver personalization and optimization.
Here are some predictions about what could be in store for retailers over the next 12 months.
AI is blowing the lid off constraints businesses once had and making faster and more precise decision-making a reality.
Does anyone remember life before AI? Of course, the answer is “yes,” but it’s hardly an overstatement to say that artificial intelligence is everywhere. It has sparked a fundamental transformation of the retail business model and continues to drive changes to the customer experience.
Market research firm IDC reports that the retail sector ranks second among all industries globally in its spending on AI technologies. And a new study conducted by IHL Group reveals that retailers that have already embraced artificial intelligence and machine learning technologies are experiencing noteworthy success, achieving 2.3 times growth in sales and 2.5 times growth in profits for the year 2023 when compared with their competitors. Projections for 2024 indicate a similar trend for those embracing AI/ML solutions.
Companies that are not integrating artificial intelligence into their strategies and business operations risk being left behind by their competitors and by new market entrants. Using AI, retailers can swiftly analyze huge and disparate amounts of data in real time, enabling faster decision-making, a reduction in human errors, increased efficiency and the automation of routine monotonous tasks.
Indeed, the benefits of AI are far-flung — from product designs influenced by AI-enabled trendspotting and relying on AI to optimize product sourcing, to tapping into the technology for inventory forecasting and personalization along the shopper journey. Physical retailers can use AI to analyze data collected by stores cameras and make appropriate changes to store size and layout. Among supply chain executives, AI is reshaping inventory management and demand planning.