Retail trends 2024

Identifying the most significant factors presenting challenges and opportunities related to retail success throughout the coming year // By Sean Tarry

The retail industry has certainly faced some difficult times over recent years, battling through a pandemic, massive supply chain disruptions, and monstrous inflation, to name just a few of the obstacles to growth that have been at play. However, as merchants across the country, large and small, have now adjusted to the post-pandemic environment relatively well, many are beginning to look toward opportunities to grow their businesses, keeping an eye on the factors and influences that pose the greatest potential to facilitate or prevent desired growth. With this in mind, Retail Insider the magazine sat down with three industry experts – Bruce Winder, Founder, Bruce Winder Group; Lia Grimberg, Founder Radicle Loyalty; and Lisa Hutcheson, Managing Partner, J.C. Williams Group – to gain their insights and prognostications concerning the next 12 months of retailing in Canada.

Bankruptcies, mergers and acquisitions

High interest rates combined with extremely turbulent and uncertain times across the country over the course of the past few years have put a real strain on consumer confidence, resulting in a hesitancy to spend. And, these difficult times have also taken their roll of retail businesses – a toll that may come to a head in 2024.

“Issues around interest rates have paused consumer spending to a degree. Hopefully at some point this year the Bank of Canada will lower rates, carefully bringing them down a little bit to help alleviate some of the strain on the economy. However, as a result of a number of years of struggles since the onset of the pandemic, I believe we’re going to see some carnage in the form of bankruptcies. Those who don’t survive were the brands that weren’t strong enough to weather the storms that we’ve gone through over recent years. Over the next number of months, many will quietly close down business. Others will need to sell, resulting in quite a bit of merger and acquisition activity across the industry.” - Winder

Consumers’ search for value

As a result of the most recent difficult economic period, consumers have placed constraints on their spending., leading them to seek brands that are offering them something meaningful in return for their patronage.

“At the moment within retail, particularly from a loyalty program perspective, there’s a lot of sameness being offered. Consumers are craving value from their engagement with brands. It presents retailers with a great opportunity to build and offer programs that offer value, both from a dividend perspective as well as from a soft benefit point-of-view. As consumers continue to go through difficult financial times, retailers need to be thinking of the ways by which they can help save them time and money, offering them something meaningful. To do this properly, brands need to understand their consumers at an extremely deep level and the things that make their relationship with them unique.” – Grimberg

“Value is absolutely the name of the game in retail at the moment. Consumers are constantly wondering how they can get the most for their money. And so, the retailers that can provide the most value to the consumer – value being what you get divided by what you pay – is going to win within this environment. Whether it’s through pricing, promotions, discounts, special offers, enhanced loyalty benefits, or anything else, the brands that understand what their consumers are looking for, and are able to deliver that to them, will have a hug competitive advantage going forward.” - Winder

Experience

In addition to value, and perhaps playing a part in creating it, experiences are being increasingly sought after by consumers. With the consistently increasing price of goods, many consumers across the country are opting to spend their money in different ways, providing retailers with an opportunity to give them what they’re looking for.

“In addition to value, today’s consumer is really looking for an experience. Pandemic-related restrictions have long lifted. But the social impacts that resulted still linger for many. A lot of people have remained cooped up inside their homes for more than a couple of years. But I think that many are finally beginning to get out and are now starting to crave the experiences that they remember prior to restrictions, and they want those experiences to be exciting and special. Some brands are recognizing this, implementing social elements in to their retail offering, providing the engagement that consumers are looking for. You see this happening within a lot of the major urban shopping centres across the country. Many are putting on events and offering forms of entertainment that draws a crowd and excites visitors, bringing some joy back to the retail experience.” – Hutcheson

Digitization

In order to remain relevant to today’s consumer, many brands are realizing that they need to invest in technology and digitize their businesses in ways that make them more accessible and convenient to shop with.

“Many recent studies and surveys indicate strongly that one of the top priorities identified by retail leaders as we head into 2024 is investing in and enhancing current technology infrastructures, further digitizing the retail experience. Through the digitization of the retail business, brands provide themselves with the opportunity to strengthen their supply chains; improve their understanding of their customers, hence improving their relationships with them; improve customer service; create greater convenience and efficiency within their processes; and ultimately lower operating costs. It’s a digitization that’s been occurring for quite some time, and which was accelerated by the onset of the pandemic. But I think that business leaders across the country are realizing in full the tremendous opportunities that a strong digital retail ecosystem presents.” –Hutcheson

Personalization

A potential byproduct of a retailer’s digital strategy is enhanced personalization. And, given the increasing penchant for customization and personalization displayed by today’s consumer, it only make sense for retailers to focus their attention on delivering it.

“Personalization is likely going to be one of the biggest differentiators within the industry in 2024. We’ve arrived at a point in time when consumers are armed with technologies and the information that they need to make informed purchasing choices and decisions. As a result, they’re increasingly expecting the brands that they shop with to create personalized experiences for them. That means everything from their activity on a brand’s website, to digital communication to the service that they receive when in the retailer’s physical store. And so, it’s up to those operating within the industry to leverage available technologies and invest in the systems that will help them achieve these goals, enhancing the experiences that they offer their customers while strengthening the relationships that they enjoy with them.” - Grimberg

Data

Supporting any digital strategy that involves a personalized customer experience is data. With it, retailers enable themselves to understand their customers and the business far better than ever before.

“The greatest advantage that any brand can gain today is through the use of meaningful data. Clean, organized datasets can provide retailers with a comprehensive, 360-degree view of their customers, and a deep understanding of their behaviours, tendencies, wants and needs. It provides insights that allow brands to really personalize the consumer’s shopping experiences and engagement. Going forward, data is going to be more critical to retail success than anyone has ever been able to imagine before, unlocking the ‘wow’ factor that everyone within the industry has been talking about for years.” – Grimberg

As we continue to head further into 2024, it’s clear that there a number of different factors and influences with the potential to impact retailer operations, for good or ill. From the pervading uncertainty that continues to surround the economy, resulting in a cautious consumer, to the digitization of the traditional retail experience, challenges and opportunities will be abound throughout 2024. Armed with this understanding, however, and an awareness of their ever-changing environments, retail brands across the country can position themselves well to achieve the growth and success that they are so ardently striving to achieve.