Source Fashion and Source Home & Gift reveal top retail predictions for 2024

Europe’s fastest-growing sourcing shows, Source Fashion and Source Home & Gift, have revealed their Top 10 Retail Predictions created in collaboration with retail trends consultancy Insider Trends.

The Top 10 explores the key issues that will be affecting the industry, the customer, and the way brands do business in 2024. From large shifts to smaller and quieter trends that will have a big impact, all of which should be on the radar of brands for the coming year. The report focuses on consumer behaviour in light of the economic outlook and the role of artificial intelligence in product development and customer experience, as well as physical retail including retail media networks and medium-term pop-ups, sustainability, transparency, operational supply chain resilience and inventory management.

Consumer Behaviour

Calculated Spending

With the economic outlook for 2024 not looking any brighter, shoppers will remain conscious about what they are spending over the coming year. Value for money is key, but the definition of value will be different for individual shoppers and may change depending on the product category. Discounts and deals will still be a priority for many while for some consumers value for money will lie in product longevity and durability.

Product story is another way brands will prove value to the consumer. With shoppers being more calculated with their spending, retailers may need to make a strong emotional case for non-essential purchases. The economic environment will also fuel the ongoing growth of re-commerce – not only consumers buying second-hand but also more and more moving into selling unwanted items to make money.

Unconscious Shopping Takes Over

Shopping used to be a conscious action. The consumer was deliberately looking for something they wanted or needed – whether shopping in store or online. Now consumers are increasingly buying and discovering products while doing other things, such as browsing social media, playing games, and streaming content. This shift towards unconscious shopping will continue to grow in 2024.

Although a lot of unconscious shopping happens digitally, it also includes in-person events where the store is a stage. Instead of ‘experiential’ retail stores that function like a traditional store with a small experience added on, retailers embracing unconscious shopping will increasingly flip this model and put the experience first.

 AI

AI as a Co-Creator

Artificial Intelligence is set to continue to dominate conversations next year with one area where AI’s role looks likely to grow is in product development.  With more brands looking at applications for AI in their retail businesses, AI-designed products will start appearing everywhere.

We won’t see AI taking over product development and design jobs entirely, at least not in the near future. The technology is best as a co-creator and a way to generate lots of ideas quickly.

AI & Consumer Data

Another way that brands are using AI is to help customers find what they are looking for more effectively. This includes a shopping assistant that customers can get personalised product recommendations from or ask questions – similar to the experience of visiting a physical store and talking to a member of staff. As more retailers introduce these tools, we are likely to see concerns around consumer data.

Physical Retail

Retail Media Comes to the Store

Retail media networks – where retailers sell ad space on their digital channels to third parties are a growing part of many retailers’ income. This is spilling over into the physical store as retailers look to monetise these spaces. From shelf edges to checkouts and even cooler doors, ad space opportunities are everywhere within the store and 2024 will see more and more retailers take advantage of these.

Increase in Medium Term Pop-ups

The pop-up store has become a permanent fixture within retail as we’re increasingly seeing a trend towards medium-term pop-ups. Instead of just a few days or a week or a month, pop-up spaces are opening for 2-3 months or even a whole year.

Brands know the value of physical retail but in a changeable world, a long-term commitment to a fixed store can be a risk. A medium-term pop-up offers the benefits of physical retail without the pressure.

A longer-term pop-up also allows brands to invest a bit more in the quality of the space, making it a better experience for the consumer. A medium-term pop-up offers enough time for them to gather enough insights into customer behaviour to make an informed decision, compared to just a handful of days.

Sustainability

Radical Transparency

Brands are going to be more transparent than ever over the next 12 months in a bid to build better customer relationships. With consumers still watching their spending, customer perception will be a crucial factor in which retailers get their business. This means brands need to be honest.

Sustainability is an area that brands are happy to shout about when they’re making an improvement, but many aren’t very good at sharing the details of their journey. This radical transparency will also extend to calling out other brands and even government policy where necessary.

Brand-led Positive Change

Brand-led positive change will include helping customers to deal with the challenges they face through a brand’s products, services, or initiatives. Consumers expect brands to help them to be more sustainable without huge price rises, which puts pressure on brands to make their products more environmentally friendly at the same cost.

Operations

Supply Chain Resilience

If the last few years have shown the retail industry anything, it’s that supply chain is everything. Not only can supply chain issues cause a business to grind to a halt, but a good supply chain is also crucial to fulfilling growth ambitions.

Although the specific issues change, the global situation continues to be volatile and the next 12 months aren’t likely to be any different. Retailers need to build agility into their supply chains and make them more resilient so they can deal with whatever comes next.

Investment into supply chain automation will form part of many retailers’ strategy for 2024 as they look to reduce costs, increase efficiency, and manage inventory better. Brands will continue to explore local sources of raw materials over the coming year to reduce reliance on overseas suppliers, but we may also see more and more explore non-traditional sources as well. This could include other companies’ waste.

Inventory Management will be Under Scrutiny

Shifts in consumer behaviour mean inventory management will need to be closely monitored in 2024. Customers are causing buying seasons to become longer around big holidays and key buying events as they look to spread out their spend. This could see deals becoming polarised with the best prices for those who buy very early or very last minute.

Longer buying seasons are also causing many retailers to extend their return periods, so that consumers have the confidence to buy.

Retailers will continue to invest in inventory management technology and real-time stock data to better manage these issues. This includes the potential to dynamically price items, reducing those where it looks like there will be excess stock.

Businesses are also adopting a little and often buying behaviour to help manage inventory and cash flow. Some of this is driven by excess stock in the market due to consumers buying less and delaying larger ticket purchases.