Retailers Should Prepare for Another Year of Marketplace Disruption
Acosta Group has released its 2024 retail predictions, identifying how brands and retailers can win shopper loyalty, drive sales and achieve efficiencies in another year of anticipated marketplace disruption.
“While we expect 2024 to remain as complex as 2023, brands and retailers will have opportunities to better understand and meet the evolving demands of their customers, securing meaningful growth for their businesses,” said Colin Stewart, EVP, business intelligence at Jacksonville, Fla.-based Acosta.
[Read more: "2024 Grocery Innovation Outlook"]
Acosta formulates its predictions based on the insights of its retail experts and industry thought leaders, as well as proprietary Acosta studies conducted throughout the year with shoppers, brand owners and retailers.
Acosta’s Top 5 Predictions for 2024
1. Driving Growth Will Take Standout Creative Measures
According to Acosta’s recent “Retailer Confidential Report,” 90% of top U.S. retail leaders are prioritizing unit growth in 2024. Strong promotions will be key in another year of cautious spending, channel shifting, private label purchasing and value messaging.
“Consumers will respond to bold, creative promotions that provide them enriched value,” said Kathy Risch, SVP, thought leadership and shopper insights at Acosta. “Smart retailers, brands, delivery services and restaurants are stepping up to create promotions that resonate. Whether dollars-off purchases, cross-marketing partnerships, or other value-based offerings, 71% of top retailers say that they are increasing promotions in 2024.”
Acosta points out that retail media networks delivering measurable ROI are increasingly key to an effective promotional strategy.
[Read more: “How Grocers Can Maximize the Retail Media Opportunity”]
When developing a promotion strategy, Acosta advises companies to:
- Create promotions that don’t erode margins for retailers, brands or shoppers.
- Deploy/evolve revenue growth management programs.
- Practice disciplined post-promotion analytics.
2. Seamless Retail Redefines Shopper Delight
The consumer shopping experience isn’t linear. Retailers and brands are enabling seamless shopping in the moment – anywhere, anytime, for anything – and dialing in to reach consumers with innovative tactics and disruptive technology.
According to Acosta, 63% of shoppers use an app on their phone inside a store while grocery shopping – that number jumps to 80% for Gen Z and 81% for Millennials.
[Read more: “Younger Shoppers Opening Up Omnichannel Experimentation”]
The company recommends that retailers continue investing in both store and digital upgrades to meet shopper demands. Opportunities for 2024 include:
- Taking a new approach: Integrate trade, marketing and retail media spend, targeting specific shoppers and need-states with both in-store and online merchandising to maximize budget, grow sales and improve margin.
- Digital shelf: Strengthen product detail page searchable words, hero images, infographics and videos; understand ratings and reviews; and continuously monitor results.
- Physical shelf: Place a sharper focus on share of shelf and assortment optimization to meet shopper demand and keep shelves stocked.
3. AI Propels Retail Efficiency and Shopper Experience
The most successful applications of artificial intelligence (AI) will drive efficiencies that improve productivity as they benefit shoppers with an enhanced, more customized shopping experience.
“The strategic use of AI helps retail operate smarter and faster,” said Stewart.
Gen Z is the most comfortable with retailers using AI to improve their shopping experience via personalized rewards/recommendations.
Growth opportunities for retailers include prioritizing use cases for supply chain and logistics efficiencies, implementing localized assortment and price/promotion optimization, dietary/nutrition recommendations, workforce efficiency to streamline operations, personalization/targeted deals, and product development.
4. Shoppers Prioritize What’s NOT in Their Products
The acceleration of the clean-label trend in U.S. food was sparked by the passing of The California Food Safety Act of 2023, which takes effect in January 2027.
The act bans four harmful chemicals, affecting up to 12,000 primarily food products among the processed foods sold or processed in California. Companies will be required to switch to ingredients now used in the European Union and elsewhere, and several large brands have already pulled the additives.
According to Acosta, natural and organic shoppers’ values will become more mainstream with this regulatory move.
The company added that retailers and brands will benefit from:
- Understanding that analytics segmenting key label attributes will be important.
- Actively communicating what’s NOT in the product.
- Leveraging AI for customized shopper lists.
- Using promotion and digital/social media to educate shoppers and demonstrate value.
5. Retailers Turn Up the Heat to Attract Diners
There will be competition for shopper share of stomach among retailers, c-stores and restaurants in 2024, further blurring the lines between foodservice and retail as it also drives new opportunities for channel growth and meets changing shopper demands.
Retailers see the opportunity to expand made-to-order meals to attract cost-conscious shoppers who want restaurant-quality solutions anytime, anywhere. Acosta’s “Retailer Confidential Report” reflects that 71% of retail executives are doubling down on fresh foods.
A push by retailers to replicate the restaurant experience with food halls and local restaurant partnerships will also surely increase.
[Read more: "EXCLUSIVE: Entertainment, Enjoyable Experiences on Tap at In-Store Bars"]
Acosta recommends that retailers:
- Enrich the in-store experience and create reasons to linger, sample and dine.
- Create cross-promotions to provide shoppers with meal solutions across all meal occasions.
- Elevate digital integration.
