Robots and AI in retail: 8 things you must know
The stores of the future are closer than you might think: From chatbots to smart mirrors, AI in retail is transforming the future of shopping and commerce.
As customers, on the whole, we’re a picky lot. We want stores and shopping to be frictionless and innovative, but we pine for slow shopping to savor the experience.
We want to be served, cossetted, fussed over – but we’ll hang on tight to the personal information retailers need in order to offer that sort of service. We want things to be inexpensive, but not cheap; convenient yet not mass-produced; sustainably sourced and packaged but on our doorsteps tomorrow…oh and for that last mile? The courier should arrive with our package on an e-bike, while knowing everything about us, but not seem over-familiar or get too close.
Now add that to an incredibly tricky market – inflation, conflict, climate crisis – the doomscrolling list – and suddenly your global house of brands can look more like a house of cards.
Amid all this uncertainty and chaos, what are the retail trends to watch in 2024?
7 retail trends for 2024
Generally, there’s plenty of reasons for retailers to be hopeful, albeit cautiously so. With optimistic predictions for the global economy, we can expect inflation to cool a little in the second half of the year. Supply and demand should continue to balance out more as we put more distance between today and the pandemic. There’s still some margin to be gained from operational cost efficiencies, even as the price of labor rises.
In 2024, global retail sales are expected to grow 6.7% in terms of US dollars, according to a report from the Economist Group’s EIU research division. Slower inflation will help drive growth, but many households will remain price-sensitive, researchers said.
Online sales will return to double-digit growth after contracting the past two years in the wake of the pandemic surge, the EIU report said.
eMarketer’s Insider Intelligence expects e-commerce growth will drive total retail sales in the US for several years. E-commerce sales in the US will grow from $1 trillion in 2022 (14.7% of total US retail sales) to $1.7 trillion in 2027 (20.6% of total sales), analysts said.
Here are 7 key trends retailers can expect this year:
- Growth of AI in retail
- The rise of recommerce
- Retail media networks
- Sustainability standards get tough
- TikTok shopping
- Brick-and-mortar revival
- Cracking down on retail theft
1. AI in retail: here, there, and everywhere
Retail is among the industries leading the way when it comes to using artificial intelligence to streamline and automate operations and boost efficiency. With the explosive growth of generative AI, this retail trend is poised to grow by leaps and bounds in 2024.
The global market for AI in retail is expected to skyrocket to $55.5 billion by 2030, up from $5.5 billion in 2022. Fortune Business Insights says AI-driven chatbots that boost customer experience will likely fuel the market’s growth.
While retailers are already using traditional AI to improve processes such as demand planning and order management, they’re still discovering ways to use generative AI. Personalized shopping experiences, product catalog management, faster customer service, and marketing email content creation are among the emerging use cases.
Amazon says it’s using generative AI in a number of ways, including to improve product listings, provide customers with product review highlights, and help customers shop for apparel.
ALDO Group, a global footwear and accessories retailer, is exploring how AI can help it personalize recommendations based on customer segments and behavior, as well as improve demand forecasting, inventory management, and resource allocation.
2. The rise of recommerce (pre-loved, to you and me)
Consumers are becoming more mindful of the impact of their purchases on the planet, which is driving massive growth in recommerce — buying and selling used or overstocked products.
Recommerce grew 16 times faster than traditional retail in 2023. Thredup estimates used clothing will be worth $64bn in 2024.
It’s not just the preserve of eBay sellers. This is a significant retail trend, with luxury brands also looking to get in on the action and control their own resale channels to ensure authenticity and quality.
Global heavyweights are getting involved: Visa launched Recommerce Behavioral Insights Lab, with the likes of fashion retailer COS, looking at how to bridge the gap between the 92% of people who want a more sustainable life and the 16% who actually change their behavior.
In 2024, expect dynamic pricing models, brand/platform collaborations, and perhaps even a greater emphasis on sustainability at the design phase.
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3. Retail media networks become a top trend in 2024
Late 2024 is when third-party cookies are expected to finally end at Google. This is a big deal for how advertisers can hunt down users across the infoscape – and there will be a lot to figure out in a short time (get ready for meetings about the Google Privacy Sandbox). Retailers will still be allowed to use first-party data gathered by third parties, but it will mean a change in targeting.
In response, we’ll see a surge in retail media networks, in which brands can advertise on a retailer’s channels. These made up the third-fastest growing advertising channel of 2023.
Last year, global ad revenue from retail media channels was forecast to reach $125.7 billion. Analysts expect it to exceed television revenue by 2028.
Retail media planning has been siloed from the rest of media buying, but that will change in 2024, as it becomes more essential for brand building, says Skye Frontier, SVP of growth at Incremental, a retail media measurement specialist.
4. Sustainability targets – and standards – toughen up
In 2024, retailers will have to work harder to prove their commitment to sustainability, but the result will be making it easier for the customer to understand.
The US SEC climate-related disclosure requirements and the European Corporate Sustainability Reporting Directive mean that sustainability gets equal billing with financials in annual reports.
Digital product passports, due to become mandatory in the EU in 2026, also will track an individual product’s journey through the supply chain.
The trend here is one of accountability and authenticity. Done right, it should correct the trend of increasingly hollow greenwashing and virtue signaling.
If they want to attract and keep customers, especially younger Gen Z ones, retailers need to double-down on their sustainability efforts. According to the 2023 Customer Loyalty Index from SAP Emarsys, 32% of US shoppers switched brands due to their sustainability practices.
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5. Retail trend 2024: #tiktokmademebuyit
Being an active member of the TikTok community doesn’t just mean you’ve got a public dance move for any occasion. In fact, 4 in 10 users will buy a product after seeing it on the short-form video platform, according to TikTok’s research.
TikTok has grown into an economic powerhouse, becoming the first non-game app to surpass $10 billion in consumer spending last year.
And along with mid-level influencers, local retailers have caught on to the fact that people are more likely to do something having seen it on TikTok than other social media platforms. For retailers, it’s a trend that’s definitely worth being open to.
One element of this is bringing Gen Z into the community by talking their language. Another is a more grass-roots level acceptance of TikTok as marketing and sales tool, despite US lawmakers threatening to ban it.
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6. In-store is on a roll. Thanks, omnichannel!
The irony is, the thing that pundits said would cause the death of brick and mortar – the internet – has, in fact, helped to revive it.
The Economist Group’s EIU division expects in-store retail to surge in 2024, with the strongest pace of growth since 2021. Increased foot traffic in stores will lead many retailers to expand their physical footprint.
Rather than trying to directly compete with the likes of Amazon, retailers can use their expertise in creating physical experiences – such as a great store visit – to differentiate themselves.
Expect to hear of curated events that converge across physical and digital worlds – with both more carefully choreographed crossover, plus more success as retailers get better at multi-touch attribution and work out where their customers want to be.
With omnichannel shopping more important than ever, retailers need to know where their audience is engaging with them and ensure consistent experiences, analysts at eMarketer Insider Intelligence said.
“Shopping is no longer in-store or online. It’s a fluctuating journey, where consumers may start their search in one place and make their purchase in another,” they noted.
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7. Cracking down on retail theft
While the industry has had a hard time quantifying it, many retailers say they’re struggling with a surge in shoplifting and smash-and-grab theft.
It appears to be massive problem, affecting every kind of retailer from budget supermarkets to high-end luxury stores. Walmart’s boss says it’s got so bad he’ll shut stores that suffer the highest levels of theft.
Some retailers, especially pharmacy chains, have responded to the trend by putting items like batteries, makeup, baby formula and toothpaste in locked plastic cabinets — a draconian measure that damages the customer experience.
In 2024, expect to see more steps taken to combat retail theft, both from the industry and governments. For example, the UK government has launched its own Retail Crime Action Plan. In California, proposed legislation would increase penalties for retail theft.
And a new law in the US aims to make it harder for organized criminals to sell stolen goods online. The Integrity, Notification, and Fairness in Online Retail Marketplaces (INFORM) Consumers Act requires online marketplaces to verify the identities of large third-party sellers.
Meanwhile, retailers are looking into new technologies, including RFID chips, AI, and video analytics to help them combat theft.
The retail revolution
Retail is always a tough business with so many moving parts and pieces to juggle. Buyer habits and preferences change all the time, costs fluctuate, and competition is fierce. Keeping inventories optimized is just one of the other ongoing challenges.
AI and other new technologies promise to help streamline and optimize core retail processes, from supply chain and inventory management to customer engagement. AI-enabled capabilities offer to help retailers to drive innovation, respond quickly to market changes, and grow.
It’s a brave new world for retail. Brands that aren’t afraid to transform and innovate will thrive.