The National Retail Federation (NRF) held its annual “Big Show” January 14-16 in New York City. FashionUnited attended the US retail industry meeting and summarized the four most important findings.
Throughout the event, leading retailers from various sectors met to explore the industry’s latest innovations, solutions and challenges, focusing on what matters most to modern consumers today. From increasing concerns about the cost of living to generative artificial intelligence (AI), augmented reality (AR), the Metaverse and social media shopping, numerous external factors have been found to be driving consumer expectations of retail shape the year 2024. To help retailers redefine their strategies, FashionUnited presents the four most important consumer trends that will define retail in 2024.
#1 Affordability of essential goods
Although consumer confidence is recovering, many of them still rely on the support of their favorite retailers. Concerns about the rising cost of living have stabilized over the past year as inflation rates fell at the end of 2023, according to Capgemini.
Coinciding with NRF 2024, the multinational IT services and consulting company released its annual consumer trends report, “What Matters to Today’s Consumer.” This shows a clear change in sentiment: Only 43 percent of US consumers fear that their personal finances will deteriorate in the coming months – a stark contrast to the 80 percent who held this opinion a year ago. Despite this shift, consumer expectations of retailers regarding the affordability of essential goods have only increased. The report found that more than two-thirds, or 70 percent, of consumers want these items to be reduced even further.
Retailers willing to meet these expectations will be rewarded: 73 percent of consumers said they would remain loyal to retailers who support them during these difficult times, and a similar percentage expressed the intention to buy more from such companies in the future.
“Although consumer concerns have eased this year, they remain cautious about their spending and are either unwilling or unable to spend more,” said Lindsey Mazza, Global Retail Lead, Capgemini Group . “It is critical for retailers to transform their operations to pass cost benefits on to consumers, who are becoming increasingly selective when choosing products and brands.”
In addition, consumers demand transparency from retailers regarding product changes. A whopping 65 percent expect to be informed if a product’s weight or quality decreases without a corresponding decrease in price – a phenomenon known as “shrinkflation” or “skimpflation.”
#2 Use generative AI
Generative artificial intelligence has been on everyone’s lips in recent years and is – unsurprisingly – increasingly being used by consumers when shopping. According to the report, 72 percent of them are aware of the use of generative AI in shopping and a fifth of them have already used it in shopping. Of these, more than half have already responded to product recommendations from these tools and stated that this significantly improved their shopping experience. Not only Generation Z, but also 57 percent of Millennials and 50 percent of Boomer consumers have used generative AI for product recommendations.
80 percent of retailers said the use of generative AI streamlines internal processes and can improve facility maintenance. They want to use generative AI in their logistics to optimize deliveries, operations management and supply chain management and ensure they can better adapt to changing consumer preferences.
However, they are still wary of the pitfalls of this new technology, as the report highlights concerns about the potential misuse of generative AI. 65 percent of consumers said they were worried the technology would produce deceptive or inaccurate testimonials and reviews. Therefore, retailers should keep transparency, honesty and customer validation in mind when using generative AI.
#3 Social Media Shopping Trends
Social media is playing an increasingly important role for retail. Not only are they used for product discovery and consumer engagement, but they are increasingly becoming the preferred platform for purchases, especially among younger generations. According to the report, more than half of consumers who purchased a product on social media also sought advice or guidance from influencers as they gave them a clear breakdown of the factors to consider before purchasing. Additionally, a comparable number of these social media shoppers said they turn to influencers to gain access to exclusive discounts and offers.
#4 Sustainability is key to the impact of purchases
While sustainability has always been important to both retailers and consumers, the report shows that the latter are increasingly demanding more transparency from retailers’ sustainability practices. They are increasingly seeking more detailed information about the sustainability aspects of a product, including its impact on biodiversity, air and water resources, before deciding to purchase. Currently, more than half of the consumers surveyed are skeptical about sustainability claims made by companies. However, when provided with detailed information about a product’s environmental footprint, the majority of respondents are willing to shift their choices to more environmentally friendly products.
At the same time, 63 percent of consumers expect brands to actively educate them about sustainable products. In order to improve understanding of the sustainability of products, almost half of the study participants were in favor of comprehensive labels and QR codes on packaging. Many noted that these would provide important information about a product’s carbon footprint, water usage and recyclability in an easily accessible and clear manner.
“Retailers must rethink their operational strategies and deploy innovative solutions such as AI, automation and the Internet of Things (IoT) to enable smarter demand assessment, touchless forecasting, efficient fulfillment options and improved customer interactivity,” continues Mazza. “All of this presents opportunities to reduce cost of goods sold and enable cross-channel growth.”
This article originally appeared on FashionUnited.uk. Translated and edited by Simone Preuss.