Retail Trends & Predictions to Look Out For in 2024

With the global economic outlook promising some stormy weather over the next year, the retail industry will likely be one of the first to have to brace against the gusts. Still recovering from the disruptions caused by the pandemic, retailers must arm themselves against the effects of across-the-board inflation, jeopardized supply chains, inventory woes, climate change fears and limited disposable income. 

Understanding the retail landscape and what to expect in the year ahead is essential to getting your 2024 strategy right. At Pricefx, we’ve been helping companies define and refine their pricing strategies for the past decade, ensuring they have the insight, ability, and agility to twist and pivot with changes in order to avoid risk and capitalize on opportunities.  

In this article, we scrutinize the retail industry trends and predictions we made ahead for 2023 and lay out our forecast for the year ahead. We then list the key things retailers should be getting ready for in 2024. 

So, let’s dive in. 

How Did Our 2023 Retail Trends and Predictions Fare? 

Without a crystal ball, there is no way to accurately predict what will happen in the future (and a crystal ball probably wouldn’t improve those odds any), but we did our best to predict the retail industry trends for 2023, and here’s what we said: 

 So, what did we get right?  

• Numbers 1 and 2 were partially right: the offsetting of supply chain bottlenecks and higher labor costs did increase prices; however, these were only two of many components driving up price in 2023. 

• Number 3 was mostly correct.  We say mostly as those with excellent e-commerce operations and were multi-product really seemed to do well and meet the customers’ needs.  Those with a low-price focus should continue thriving in 2024 (see more on that below). 

• Consumers did enjoy outdoor sports in 2023 and there are still a lot of outdoor goods around, so number 4 was accurate. However, we expect a different category to replace it in 2023. As to which, is impossible to predict. 

• Malls did bounce back in 2023 as shoppers who had been cooped up for two years began venturing out into public again. (More on this trend later.) 

• More organizations recognize the power of watching their competitors by feeding real-time competitive data through their pricing platforms not to miss an opportunity., now and beyond

What Retail Trends Surprised Us In 2023?

There were major events in 2023 that we didn’t (and couldn’t) foresee, like the continuation of the war in Ukraine, which has impacted global prices in exceptional ways. 

With arable land accounting for 55% of Ukraine’s land area, it is one of the world’s top agricultural producers and exporters of oilseeds and grains to the global market, accounting for 10% of the world wheat market, 15% of the corn market, 13% of the barley market, and nearly 50% of the sunflower oil market. The sudden removal of Ukraine as a world supplier sent the grain and oilseeds market into a spin. 

Dozens of countries reacted to the war with unprecedented and expansive economic sanctions on Russia, further impacting global supply chains. Many Western companies unwound investments, closed stores and scaled back operations (like Apple, SAP, Unilever, Danone, IKEA, H&M, to name very few). 

Russia responded by at first halting hundreds of exports and later announcing long-term restrictions on fertilizer exports. It accounts for around 16% of global urea exports and 12% of DAP and MAP exports, and together with Belarus, makes up two-fifths of global MOP exports. As a result, global prices of fertilizer surged to record levels in March 2022, rising another 30% after the 80% hike in 2021 which was driven by high demand and higher input costs. 

Furthermore, the war disrupted the flow of natural gas (a key resource for fertilizer), which Russia halted to Bulgaria, Poland, Finland, Netherlands and Latvia and reduced to the rest of Europe. This caused spikes in European natural gas prices (leading to multiple European fertilizer plants having to close or cut output). Besides which, the sanctions on importing Russian gas and oil combined with the damaged Nord Stream pipelines could result in many European countries significantly squeezed this winter. Lithuania and Finland, for example, imported about 80% of their oil from Russia in November 2021. 

The Black Sea Grain Initiative agreed between Russia and Ukraine to allow vital food and fertilizer exports from Ukraine to the rest of the world, shows promise, but lacks stability stoking fears of a global food shortage. According to the African Development Bank Group, “The price of wheat has soared in Africa by over 45% since the war in Ukraine began. Fertilizer prices have gone up by 300%, and the continent faces a fertilizer shortage of 2 million metric tons.” 

The ripple effect is in full swing. 

Top 6 Predictions and Trends for Retailers In 2024 

Understanding the latest trends in the retail industry helps you get a strategy in place for navigating the expected changes in consumer behavior, to meet shifting demand, and to identify and seize new opportunities as they appear.  

So here are the top six trends we think retailers should be looking out for in 2024:

1. Tighter Purse Strings

The prices on everything from cars to electronics, from toys to Christmas trees have gone up this year due to the global shortage of shipping containers, the labor crisis, and the supply chain being impacted by ongoing shortages of raw materials and the effects of climate change. 

According the Bureau of Labor Statistics, food costs have jumped 11.4% over the past year—the largest annual increase since 1979, with egg prices leaping nearly 40%, flour increasing 23% and milk rising by 17%. And it’s little wonder, because when a price increase hits one link in the food chain, each subsequent link has to follow suit in order to protect its margin. 

Millions of households around the world only have a set number of dollars coming in each month, and those dollars are going to be spent on the essentials first: food and gas. Other categories are going to get pinched. Buying decisions will be driven by price over convenience and shoppers will be more inclined to shop around for the best deals. 

2. E-Commerce Will Still Be Going Strong Through 2024

While the explosion of e-commerce during the pandemic has relaxed somewhat, there’s still plenty of space for more volume through 2024. With an estimated 12 to 24 million e-commerce stores globally selling to over 2.14 billion global online shoppers, eMarketer predicts that “worldwide e-commerce sales will continue their upward trajectory, reaching $7.385 trillion by 2025 and making up a 24.5% share of all retail sales.” 

We expect to see strong growth for long-standing as well as new-on-the-scene online retailers through 2024.

3. Retail Will Have to Compete with Experiences

Remember how consumers have been returning to malls ever since 2022? Well, while this is great news for retailers, it is tempered by the fact that all experiences are making a return.  

Cinemas may be struggling to reach pre-pandemic levels, but movies like Maverick (grossing nearly 1.5 billion at the box office) give operators hope for a post-pandemic comeback. The 2022 Wimbledon Championships reported record figures and the NBA Finals were completely sold out. At the time of writing, travel is at 74% of pre-pandemic levels. 

The experience is coming back and retail is going to have to compete for customers’ dwindling dollars.

4. Expect to See More Acquisitions and Mergers

A lot of companies have a lot of cash right now. If the economy does take a dip, then we predict that stronger companies are going to go on a buying spree; aggressively looking to acquire struggling competitors or synergistic companies so as to build a stronger foundation. We therefore expect to see more acquisition, mergers and consolidations in the year ahead.

5. The Ethical Voice of the Customer

The degradation of the climate is becoming more of a hot topic (excuse the pun) for retailers and customers alike and it’s impacting not just what’s available, but how it’s packaged.   

US farmers are having to cull young cattle because they can’t feed them (due to the lack of grain resulting from a lack of fertilizer) or water them (due to record droughts). Meanwhile, the Alaskan snow crab population has seen an 90% decline due to increasing water temperatures. Climate change will impact what is available in 2024. 

Customers care about the global warming. E-commerce is greener in many ways compared to in-store shopping, but its packaging is its largest source of emissions, producing six times that of products bought in-store. Conscientious shoppers want more recyclable and sustainable packaging. When a whopping 86% of customers say they are more likely to purchase from retailers with sustainable packaging and 77% expect more retailers to offer 100% sustainable packaging in the near future, the 2024 retailer is going to have to adapt to the fact that buying decisions are being increasingly driven by ethics.

6. Customer Service Is Being Automated

With store rents and more-expensive staff forcing retailers to find new ways of saving money and increasing efficiency, it’s little wonder that so many are turning to the self-checkout. But do customers benefit? One survey found that 60% consumers prefer self-checkouts over store associates if given the option and nearly 50% say they use them all the time. 

Meanwhile, online shoppers are encountering more chatbots on their online customer journeys that are ready to answer FAQs, deliver post-sales customer support, gather feedback, and provide multilingual help. The global chatbot market size is expected to grow at a compound annual growth rate (CAGR) of 25.7 per cent from 2022 to 2030 and Gartner predicts that they will be the main customer service tool for 25% of companies by 2027.  

Enabling more personalized customer experiences, delivering enhanced internal efficiencies, and generating actionable insights, self-checkouts are the perfect addition to the retail team and we expect to see the automated customer experience continue through 2024. 

How Should Retailers Prepare for 2024? 

With so many changes in the market, contributions from the climate, and demands from the customer, what are the best ways to prepare for what comes next?  

1. Know All Your ‘What-ifs’

No matter how many trends-for-retailers blogs you read, you will never really know what next year holds. Who’d have imagined the events of 2020, or 2022, for that matter? Retailers need to spend time on what-if planning—mentally preparing for any given circumstance. And we’re not just talking about the big events, we’re talking about the smaller stuff too. You need a clearly communicated pricing strategy that deals with all the nitty gritty. 

If costs increase by less than 3%, what are you going to do? What if they increase by 7%? You’ve got to go into the new year with at least a communication policy around what you’ll do in the face of certain changes. And, as much as we try to avoid talking about the value of pricing software in articles like this, there is just no way around it: you need a way to automate and measure your strategy. If you don’t, you won’t be able to execute on them all and those you can execute will be based on little more than guesswork and you’ll either get lucky… or end up with negative revenue. 

With the number of changes happening and the volume of factors rippling through those changes (there is more than just cost impacting price), being able to react to them and truly understanding the impact of how you’re reacting is all but impossible with Excel. Technology really is the answer here.  

2. Lean in to Omnichannel Pricing

We talked earlier about how e-commerce is still booming. Not only does it offer customers incredible convenience, but it brings retailers fantastic insights into who their customer is and what drives them. The more channels the e-commerce experience encompasses, the more convenient the engagement for the customer and the more valuable the data for the retailer.

We expect to see omnichannel shopping become even more important over the coming year and therefore recommend retailers really lean into omnichannel pricing. Work out your omnichannel strategy. What do you want the end-customer result to be? What’s an acceptable price floor? Should you offer the lowest price? Should your website price match your store price or is it OK/ better if it doesn’t?  

It’s important to have this planned out ahead so you don’t find yourself following a competitor into omnichannel no-man’s land. 

3. Keep A Close Eye on Inventory

Managing appropriate inventory has been a predicament for the past couple of years and we’re sorry to say this will continue for a variety of reasons. We saw stronger-than-expected customer bounce-back from the pandemic which sent consumer demand through the roof and suppliers into a frenzy trying to keep up. We’re still seeing massive city-wide lockdowns in China thanks to the country’s zero-COVID policy which will have a ripple effect impacting every corner the global economy. Economists are already predicting shortages in electronics, home appliances, and apparel. And then, of course, the Russia-Ukraine war is forcing companies to find alternative material and labor sources to keep up with demand. 

Due to late arrivals, retailers are likely to be dealing with heavy inventories, like Halloween paraphernalia getting in too late for Halloween…. What are you going to do with it? Mark it down? Bundle it up? And yet, while selling all your inventory may seem like a good problem for retailers to have, what will you do then? How many loyal customers will you frustrate? How many will head to the competition? It’s a delicate balance and one we recommend retailers pay close attention to in 2023. 

And on a more general note; think carefully about what you get in stock—remember, traditional basket-fillers are not necessities and your customers are thinking twice about parting with their hard-earned cash. 

2024: A Year with Many Moving Parts 

Retailers have a lot to consider as we head in to 2024. Supply chain disruption, war, sanctions climate change and the rising cost of living are all going to impact what customers want and how much they are willing to pay for it. 

It’s important that retailers have a strong and clearly communicated pricing strategy and that all what-ifs are examined. They should think closely about their omnichannel pricing, what their inventories should look like, and work out how they are going to meet demand should supply chains get cut off completely. They’ll have to find ways to entice customers to spend money on non-essentials and will have to compete with experiences for what little disposable income there is. Climate change should be on their minds too, and not just because the customer demands it. 

Learn more about how you can get prepared to face an uncertain year ahead, with the great article below on the ways pricing software can assist your business to profit during recessionary times;