Top 7 Retail Trends for 2024
Paul Young
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Is cautious consumer spending the new normal?
Consumers continue to spend cautiously on non essentials, which is likely to put distressed retailers in a critical position during the first half of the new year. And if the past year is any indicator, more than a handful of retailers may likely slide further into distress or bankruptcy in 2024.?
By Retail Dive’s count, about 20 retailers of note filed for bankruptcy in 2023. Many of them were in the home, apparel and discretionary sectors. One of the most high-profile bankruptcies was Bed Bath & Beyond.?
Analysts said the company’s weak online presence and a failed attempt at a new private label strategy were contributing factors. It appears the brand name, however, will go on after former rival Overstock bought it and rebranded.
Two furniture retailers, Mitchell Gold and Bob Williams, and Z Gallerie also slipped into bankruptcy. It’s the third bankruptcy for Z Gallerie in about 15 years, according to court documents. And two shoe retailers also met the same fate – Shoe City, which liquidated, and Rockport, which plans to reorganize.
Retail C-suites see lots of new faces
The revolving doors of the C-suite have been turning faster recently, with dozens of retail CEOs exiting their roles in 2023. Boards were quick to cut ties with leadership in the face of disappointing growth trends or after financial restructurings.?
The influx of new leadership is set to continue next year, as Bloomingdale’s veteran Tony Spring takes over the top spot at Macy’s, former Kohl’s exec Michelle Gass takes the helm at Levi’s and Costco’s longtime chief Craig Jelinek steps aside for Ron Vachris.
Layoffs likely to remain in focus as cost-cutting measures persist
Expense cutting has shifted to the forefront for retailers as businesses emphasize profits in a tough macroeconomic environment. As a result, retailers of all sizes have turned to layoffs to trim costs and streamline operations. By October 2023, nearly 50 major retailers had announced layoffs that year, including large companies like Amazon, DICK'S Sporting Goods and Kohl’s, as well as smaller businesses like Everlane , Allbirds and Ruggable
Layoffs in 2023 did not discriminate: They hit relatively successful retailers, as well as businesses facing serious financial difficulties. And they stuck around all year. Even in December, artisan marketplace Etsy announced it would cut 11% of its workforce due to the challenging macroeconomic environment and Nike rolled out a cost-savings plan that includes reducing management layers and “streamlining” the organization.
Retailers increasingly look outside the mall
Physical stores remain a key component of retail. That’s evidenced by data that not all malls are dying. Some – especially top-tier malls – are thriving, according to analysts and industry observers. Others are evolving. Instead of exclusively housing retail, their vast indoor commercial spaces are being transformed into mixed-use properties that incorporate a smaller retail segment.
On the other hand, malls may not offer the flexibility that retailers need in the current business environment. That’s why several retailers have or say they plan to move off-mall. Over the past year, some of the retailers to make that move include Macy’s, which said in October it wants to open up to 30 off-mall stores nationwide in the next year and a half. Bath & Body Works also opened 30 new off-mall stores in North America during Q2.
A new approach to marketing strategies
To attract customers in 2023, many brands integrated tech into their marketing strategies. Virtual experiences gained steam, with J. Crew introducing a holiday version of its virtual store?and Kohl’s launching a number of virtual holiday events?that tapped into social media and augmented reality.
Shoppable content has been gaining steam as well. Walmart this past holiday season announced a 23-part shoppable rom-com commercial series?running across TikTok , Roku , YouTube and the retailer’s own social media channels. The series followed other shoppable content efforts the mass merchant had launched in recent years.
Social media itself is increasingly becoming a shopping destination. TikTok late last year launched TikTok Shop, allowing consumers to purchase recommended products directly in the app.
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What the consumer faces
By and large, as inflation ebbed and wages and employment remained relatively strong, consumers came through for retailers by the end of the year. Black Friday helped push up holiday sales, even though many seasonal promotions had begun the month before.?
One way many shoppers accomplished this level of spending was through credit cards. Balances were already hitting records by October, and retailers including Macy’s, J.C. Penney and Nordstrom reported rising delinquencies. Buy now, pay later plans are providing an option for consumers but add to their debt load. Rules limiting retailers’ ability to charge steep fees on late payments could help consumers but undermine retailers.
The holiday retail sales boom may also come at a price in the New Year, noting Adobe data showing that buy now, pay later usage was up 40% on Black Friday and Cyber Monday, according to Bankrate Senior Industry Analyst Ted Rossman.
Retailers start the year less sure about theft
As the major groups representing the retail industry, the National Retail Federation and Retail Industry Leaders Association have each attempted to quantify the problem of retail crime. In part due to confusing terminology and statistics, that’s long been a struggle. As of November, there is one less number to help them out.
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Blog – Consumer Spending and Retail Sales – United States – November 2023 - https://www.dhirubhai.net/posts/paul-young-055632b_activity-7141087221557657600-AHdL?utm_source=share&utm_medium=member_desktop
Blog – Transportation Sector Analysis and Commentary – November 2023 - https://www.dhirubhai.net/pulse/transportation-sector-analysis-commentary-november-2023-paul-young-vzqvc/
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Paul Young CPA CGA
Senior Data and AI Thought Leader - Financial Planning, Analysis, and Reporting
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Paul Young is a former IBM Customer Success Manager that has deployed over 300 data and AI solutions across geographies and industries for the past 8 years. Paul is also Financial Planning, Analysis and Reporting SME on how best to work with data as part of driving better business outcomes.
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