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Navigating the Future: 7 Retail Trends Shaping 2024 and Beyond

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Published: Reading time: 4 min
Santiago Garcia-Poveda Retail Digital Transformation Leader
Santiago Garcia-PovedaRetail Digital Transformation Leader
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Introduction

The 2024 retail landscape is undergoing a profound transformation fuelled by technology, shifting consumer behaviors, and a renewed focus on sustainability. Here, we'll explore the top 7 trends shaping the retail sector currently, emphasizing the significant impact of Generative AI, strategies for handling decreased consumer expenditure and limited supply availability, enhancing sustainability at scale, and the critical need for improved planning and optimization of supply chains.

  • 1.

    Gen AI: the catalyst for change
    Generative AI is emerging as a significant force shaping retail trends. This nifty technology with the ability to create new content from data is revolutionizing the way retailers plan their products, enrich their data, support their customers, and help their employees in day-to-day tasks. This, in turn, is expected to boost sales, margins, and efficiency, as well as improve customer experience, innovation, and sustainability. 
  • 2.

    Slowing consumer spending
    Consumer spending was sluggish in 2023 due to various economic factors like inflationary pressure, high interest rates, energy prices, and low income and confidence. The US and Europe faced a slowdown, while Asia led the global growth. It’s uncertain how this trend may evolve in 2024, but consumer spending will likely continue to pose a challenge. The result? Retailers must improve their demand, assortment, and pricing strategies, and optimize their supply chains and operations to match the climate.
  • 3.

    Managing scarcity in a hyperconnected world
    Since the onset of the pandemic, supply chain disruptions and uncertainty have become increasingly common and have persisted as significant challenges throughout 2023. AI-powered predictive analytics will continue to play a pivotal role in anticipating demand fluctuations, optimizing inventory levels, and mitigating the impact of unforeseen disruptions. As a result, effective management of scarcity requires a resilient and agile approach, including leveraging evolving tech to stay competitive.
  • 4.

    Scaling sustainability for a greener tomorrow
    As retailers struggle with their substantial environmental and social impact, sustainability has become a strategic imperative. The rising expectations from consumers, investors, regulators, and other stakeholders require a proactive approach that involves leveraging technology to collect, harmonize, analyze, and report on sustainability data - as well as to enhance responsible planning via optimized demand forecasting to manage inventory more efficiently to reduce excess and obsolete stock. Balancing sustainability targets with the service level and cost objectives will also be increasingly necessary.
  • 5.

    Tech-infused brick-and-mortar experiences
    This year, the retail landscape is continuing towards dual transformation. As e-commerce flourishes, brick-and-mortar stores continue evolving into tech-infused hubs, integrating technologies like AI-driven interactive displays and augmented reality fitting rooms. This shift aims to create a seamless online and offline customer experience, driving foot traffic and enhancing engagement. Achieving this omnichannel customer journey will be enabled by developing real-time omnichannel stock visibility, in-store online ordering and fulfillment capabilities, as well as next-gen planning technology allowing to consider sales channel and fulfillment methods in forecasting and demand prioritization of constrained supply.
  • 6.

    Rise of hyper-personalization and localization
    The conventional approach of offering the same selection to all customers is becoming increasingly impractical and will continue to fade. This is due to the inability to effectively cater to diverse customer groups without considering factors like urban versus rural settings, varying climates (hot or cold), and demographic differences. Adapting to this change necessitates a data-centric strategy in planning product assortments and managing inventory. Central to this strategy is the analysis of consumer behavior and trends, which is essential for improving customer satisfaction and loyalty.
  • 7.

    Better planning and supply chain optimization
    Given past trends such as deglobalization, supply disruptions, scarcity of raw materials, significant growth in e-commerce, and the emergence of the circular economy, it is highly likely that the complexity of the retail landscape will keep escalating in 2024. In this evolving context, superior planning and optimizing supply chains are essential for success. Improving planning capabilities will be crucial in enhancing forecast accuracy, optimizing inventory management, and developing a supply chain that is both responsive and resilient.

Conclusion

In 2024, the retail sector is being transformed by several concurrent challenges: managing scarce resources, attaining sustainability objectives, adapting to changing consumer spending habits, and tackling supply chain interruptions. Thriving in this dynamic setting depends on focusing on improved planning, supply chain optimization, and leveraging technology. This highlights the need for more accurate forecasting, efficient inventory management, and the creation of a supply chain that is both adaptable and robust. As a result, retailers who adapt to these trends are well-positioned for success in the evolving landscape of retail.

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About the author

Santiago Garcia-Poveda Retail Digital Transformation Leader

Santiago Garcia-Poveda

Retail Digital Transformation Leader

Santiago holds a Master in Civil Engineering from Universidad Politécnica de Madrid and Ecole des Ponts, and an MBA from Haas - University of California, Berkeley. In o9 Solutions, Santiago leads our strategy for the retail industry, bringing his expertise on the industry needs, guiding the product development efforts, and engaging with industry executives to advise on their digital transformation. Before o9 Solutions, Santiago worked for McKinsey & Company for 8+ years serving. Business to Consumer clients (apparel, groceries, hardlines, and CPGs) globally on their Digital and Analytics challenges across multiple areas of their business (supply chain, commercial, procurement, …). Additionally, Santiago also has industry experience from working as Director of Business Transformation in Adidas Outdoor, a corporate strategy for Esprit, focused on accelerating the product delivery process and increasing the collaboration with wholesale partners.

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