Retail Trends 2024

Looking back at 2023, the majority of retailers across the globe will reflect on the headwinds they faced with soaring inflation rates, subdued consumer confidence and spending. However, for some, the tailwinds caused by advances in the exponential growth of technology far outweigh any of the challenges they have faced.

In a decade from now, we may look back at 2023 as a defining year in the history of our industry as retailers took their first steps towards deploying Generative AI and other technologies at scale.

As we move into 2024, substantial advances in technology – which will reduce costs, improve productivity and enhance the customer experience – will see retailers approach the year ahead with renewed confidence. However, it is not just advances in technology which are cause for optimism. With the global economy showing signs of recovery, retailers are beginning to see new opportunities for growth and expansion. Indeed, at the start of the year, Deloitte’s Consumer Signals platform – which tracks the sentiment of tens of thousands of shoppers across the globe – showed a decline in concern about inflation, an increase in spending intention and modest improvement in consumers’ financial wellbeing.

An improvement in trading conditions for 2024 will free up retailers to make longer term strategic decisions and investments for their future. As a result, the decisions made today by retailers will have a significant impact on their long-term performance, as the industry continues to evolve and adapt to changing market conditions. This makes the trends we are seeing across the industry feel more significant than ever. They are not just trends which will define the year ahead, but trends which will define the future of retail.

Navigating complexity

The ever-changing landscape of the retail industry means that retailers face increasing levels of complexity in the year ahead. To cut through this complexity and make sense of what we are witnessing emerge in our industry, this year we have chosen to define our trends in the context of Markets, Models, and Mechanics.

Markets, Models, Mechanics: Our retail trends for the year ahead

• Demand-driven retail: The retail industry becomes ever more demand-driven in a direct response to the changing consumer. This year, we will see the development of products specifically designed for and targeted at previously under-represented consumer groups including ethnic minorities, an ageing population and disabled households.
• Hybrid retail: Traditional products and channels merge with the digital world and real-life to open up new consumer experiences. In the year ahead, retailers will increasingly rely on blends of digital and physical, to appeal to consumers who prioritise quality, value, choice and convenience differently. This approach will see retailers create new revenue streams for their business. In particular, the world of gaming will be an increasingly attractive channel for retailers and brands looking to create digital products.
• Responsibility as a requisite: We continue to see retailers needing to focus on ethics and sustainability. The European Corporate Sustainability Reporting Directive (CSRD) will be front and centre of a new regulatory environment for retailers, forcing them to put responsibility to the top of the agenda. Regulations will add complexity and costs to doing business, but there are also growth opportunities linked to being a more responsible business. We predict that 2024 will see massive growth in the resale market, with the luxury market in particular poised to capitalise on this. Elsewhere, we predict that ultra processed foods will be brought into the spotlight, with an abundance of new product development helping meet consumer demand for healthier foods.
  

• When industries collide: This trend looks at where retail models are poised to adapt and ultimately benefit when industries collide. Two industries we see on a collision course with retail this year are info-tech and bio-tech. We predict that social commerce will finally offer a seamless shopping experience to consumers, increasing competition for traditional retailers by disintermediating the relationship between brands and retailers as social sites develop the capabilities to operate a retail ecosystem within their own four walls. Elsewhere, personalised nutrition and weight loss drugs will see the relationship between retail and healthcare become even closer as brands and retailers focus on how to serve changing consumer attitudes and requirements towards their diets.
• Seismic supply shift: The retail supply chain will undergo substantial changes in the coming decade, becoming more diversified, increasing in complexity, moving closer to the consumer, with increased last-mile expectations. In addition, safety, responsibility, ecological impact and transparency will all be thrust to the forefront. But we don’t need to wait a decade to see innovation and change; 2024 will see plenty of that. At the very least, we foresee greater collaboration between competitors and a focus on sustainability and emissions across the food chain.
• Radical industry reconfiguration: A complete overhaul of how retail businesses operate and what they expect of their partners and suppliers. For example, an increasing number of retailers will look to consolidate all of their cloud, cyber security, e-commerce and retail media propositions under one-roof with a view to selling them as a service.

• The age of algorithms: A massive transition of the operating model is underway. Data, algorithms, and automation are driving new, highly efficient, agile business models designed to respond to granular signs of changing consumer demand. At the forefront of this in 2024 will be the deployment of AI both as a consumer application and as a co-pilot for retail workers to improve performance and productivity.
• Workforce extremes: Retailers will need to come to terms with how the dynamics between employee and employer are changing and how technology is both augmenting and, at the same time, displacing some workers. We will also see retailers do more to protect and support their workers by focusing on reducing retail theft and continuing to prioritise the mental health and wellbeing of retail workers.
• New financial reality: The year ahead will be a defining moment in how organisations position themselves to capital markets, create new sources of revenue and create improved margin positions. Uncertainty over interest rates and the wider economic environment means a number of businesses will be looking at ways to restructure their debt, improve their working capital, and access new funds. Alongside financing, new revenue and profit streams remain a priority. In a trend that carries over from last year, we will continue to see retailers find ways to monetise their valuable customer data and maximise revenue from retail media. Additionally, international growth will be a priority for some, with 2024 seeing a particular focus on growth opportunities and partnerships in India and the Middle East as population growth and domestic investment offer established western retailers and brands the chance to explore new markets.