Retail Trends to Watch in 2024
At DCI Marketing, we're always thinking about how retailers can stay ahead of an ever-evolving marketplace.
To kick off the year in retail, we surveyed predictions from a range of sources in the marketing and retail sales community.
Here are the 5 retail trends we're watching in 2024.
Returns – A Growing Issue??????????
Sources: Optoro , Coresight Research
According to Practical eCommerce , returns have exploded to 16.5% of all online retail purchases, more than doubling from 8.1% in 2019.
Returned goods solutions provider Narvar reports that many large retailers are skipping some returns entirely by allowing shoppers to keep certain items and still receive a refund, avoiding the costs of returning and restocking.
Narvar’s 2023 State of Returns report found that consumers are even willing to pay extra fees to ensure that their returns are processed sustainably – 43% of those surveyed would pay a $3 surcharge for return consolidation, recyclable packaging or other environmentally friendly aspects.
“Bracketing” is also a major headache for retailers. Consumers who “bracket” their purchases – buying a size smaller, a size larger and the size they normally wear and then returning the items that don’t fit – exacerbate the problem. Amazon began flagging items as “frequently returned,” urging consumers to check reviews before they decide to purchase.
Large retailers like L.L.Bean – which is known for taking anything back, no questions asked, even years after purchase – have instituted stricter return policies, with leniency for the most loyal customers. L.L. Bean MasterCard holders, for example, get free shipping on all purchases and the $6.50 return fee waived if the purchase was made with their credit card.
As returns increase, so do the environmental impacts of shipping and managing the items, which often end up in landfills. With environmental consciousness a growing factor in consumer decision-making, especially among Gen Z consumers, retailers are seeking ways to reduce returns to curb these impacts.
Takeaway: Growing returns could plague retailers with reduced revenue and logistics hurdles, as well as add to environmental concerns. Retailers can help curb this through policies that disincentivize returns.
Live Stream Shopping Booms
Source: Coresight Research
Panic is what drove Elizabeth Henry Andrews to start selling on Instagram. Andrews is a partner in Market Square Jewelers with six locations in Massachusetts, New Hampshire and Maine.
“During the pandemic, Boston was being shut down and we have a store in Cambridge,” she says. “I drove down to the Cambridge store on the last day that the city of Boston was open and packed up all of the inventory in the store.”
Since customers couldn’t come into the store, Andrews had to brainstorm new ways to reach them. “Live streaming was something that I had been curious about doing,” she says. “So late one night, I started live streaming on Instagram.”
At the time, Market Square Jewelers had around 30,000 Instagram followers . “For five years, very diligently, I had one person working for me in particular who was passionate about photography, and that led us to have a following on Instagram,” Andrews says.
A community of #gemsters grew around the live stream events. “We have this group of women and they have communication outside of the live events and have built really strong relationships, and that’s something that I love,” Andrews says.
The challenge for Andrews and Market Square Jewelers was that selling on an Instagram live event was – and still is – a labor-intensive approach. There’s no facility for a transaction (Meta removed the Live Shopping function from Instagram and Facebook in March 2023) so one of the #gemsters “claims” a piece of jewelry and then the real work of actually taking money for it begins.
Behind the scenes, store employees would invoice the claimant and make the transaction happen, but the ability to back out of the sale until payment is processed makes the final transaction a delicate balancing act. Shipping is an entirely different process that adds another layer of complexity.
Andrews says that’s what’s led her to explore other platforms that offer both the facility for accepting the transaction and facilitating shipping.
"I’m very excited about a website called Whatnot ,” she says. “It started as a collectible auction site. You have your credit card plugged into the system and if you win the item, after 15 seconds your credit card is charged. You don’t have to chase people for payment.” Shipping is self-contained within the Whatnot environment.
At the same time, Market Square Jewelers is still actively involved in Instagram live events because the community it built has been wildly successful.
Andrews says that her business grew 40% between 2020 and 2021 partly because of the live events, and they now have nearly 75,000 followers.
Andrews already kicked off 2024 with a live selling event and plans to keep them up. “I feel like live streaming is online shopping in collision with the personal experience of walking into a retail store,” she says. “It’s the perfect special sauce that we want.”
Takeaway: Expect North American retailers to continue to grow their revenue and customer connections through live stream selling across multiple channels.
Re-commerce Resurges
Source: ThredUp
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Rising costs are driving consumers to look to the used market and retailers in the “re-commerce” space are succeeding. And affordability isn’t the only issue – used items are more sustainable and avoid thorny supply chain issues.
While sites like eBay and Craigslist have been around since the dawn of the internet, newer re-commerce specialists like Reverb (musical instruments), KEH (photography and videography gear), Kaiyo (furniture) and Poshmark (fashion) are picking up where legacy resellers have left off, providing quick, easy and confidence-inspiring channels for purchase and shipping.
The fashion industry alone is expected to see a 127% increase in re-commerce by 2026, reports Big Commerce .
According to Reverb, “like-new gear” – which includes b-stock and open box items from conventional new instrument retailers – experienced its greatest growth since March of 2021. “As music makers continue to seek out deals, Reverb sellers with competitively-priced inventory are capitalizing on heightened demand,” Reverb says.
These items provide authorized retailers of big brands like Gibson, Fender and Gretsch the opportunity to sell nearly new instruments for significantly less than the manufacturer’s suggested retail price. Customers get a nearly new instrument and retailers can move along some of their returns and b-stock items at a profit.
The National Retail Federation cites the “circular economy ” in major retailers like Amazon and Best Buy selling refurbished electronics and fashion brands like Anthropology and Madewell offering gently used apparel and accessories. Even luxury brands like Coach are getting in on the trend.
Takeaway: Both environmental and financial concerns will continue to drive the re-commerce trend, and big brands are getting into the arena to re-sell their own products.
Plug-in Hybrids Provide a Bridge to Electric Vehicles
Source: Statista
Electric vehicles (EVs) are set to become 9% of the overall U.S. market in 2023, but lingering concerns about charging networks, the cost of installing EV chargers at home, and uncertainty about EV capabilities have dampened enthusiasm.
Plug-in hybrid vehicles (PHEVs) are an appealing bridge to help consumers understand the strengths and limitations of an EV.
Toyota and Lexus saw PHEV sales increase by 136% in Q3 of 2023, and more brands (including Subaru) will launch a PHEV variant in the new year.
Chad Kirchner at EV Pulse says he still considers the PHEV a “crutch,” and theorizes that the increased interest in PHEVs may be because of a leasing loophole in the Inflation Reduction Act of 2022.
According to an explainer in Kiplinger's , under the terms of the Act, leased vehicles are classified as “commercial vehicles,” and therefore the components aren't subject to the same strict sourcing requirements as a personal vehicle.
With this loophole, instead of consumers getting the $7,500 tax credit, the dealer, rather than the consumer, receives the $7,500 tax credit, and whether they pass that on to the consumer as a rebate or a capitalized cost reduction is up to the dealer. However, most have serious incentives from the OE to move those EVs, and commonly pass the savings along to the consumer.
Kirchner notes that once customers take ownership of a PHEV, though, they tend not to take full advantage of the benefit of the plug-in hybrid drivetrain.
Data from the International Council on Clean Transportation backs up that assertion, suggesting that PHEV drivers are consuming 42 to 67% more fuel than the EPA estimates, simply because the vehicles aren’t plugged in nightly the way an EV would be .
Kirchner also points out that the complexity of running an electric propulsion system plus a gas engine introduces more maintenance considerations and costs than you’d have with a pure battery electric vehicle (BEV).
Takeaway: Plug-in hybrids offer wary consumers a bridge to electric vehicles, but the long-term future of mobility is still in Battery Electric Vehicles?.
Deals Rule in Retail, Especially Automotive
Not long after the COVID-19 lockdowns of 2020, supply chain issues became the scapegoat for everything from the availability of toilet paper to the price of 4x8 sheets of plywood. But now that manufacturers have caught up, inventory seems plentiful going into 2024, especially in the automotive space.
A year ago, retailers were easily getting a premium over MSRP on just about every car and truck they could sell, but moving into 2024, big discounts are flooding back into the marketplace.
Chad Kirchner from EV Pulse says that media outlets have pointed at this as an example that EVs simply aren’t popular, but the real story is that a lot of vehicles have been overpriced and we’re seeing a pricing reckoning, especially in light of current interest rates.
“The Nissan Ariya is a good example of what’s going on,” he says. “When the Ariya launched it felt like a good middle-of-the-road crossover EV, but if you asked anyone in the industry about it, they’d have suggested it was priced $10,000 more than it should’ve been.”
The Ariya starts at around $43,000, but at press time there were seven separate deals available on the Ariya. It’s a similar story with the large and expensive Nissan Armada, which had nine separate deals to lower the price.
Across all retail industries, Insider Intelligence suggests that deals are grabbing more eyeballs than any other marketing effort in 2024. The highest percentage of consumer interaction on retail media ads was for products on sale, according to the Integral Ad Science study “Driving ROI in Retail Media Networks.”
Takeaway: Price-conscious consumers expect to find discounts and deals on most purchases, including high-ticket items like vehicles.
DCI Marketing partners with brands and retailers to bring the in-store experience to life. We create custom activation solutions and unique retail environments that drive customer engagement.
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CEO @Sprii | Empowering Businesses to Succeed through Social Commerce and Live Shopping ??
9 个月Thank you, DCI Marketing, for sharing these trends! I particularly like trend number 2. ??