The retail sector typically adopts trends ahead of many other industries. The competitive nature of retail means companies are often quick to try new technologies and strategies and get more creative to meet evolving consumer demands.
Here are the top retail trends to watch for in 2024:
1. Using AI for a more personalized shopping experience
As artificial intelligence evolves, retailers are embracing AI tools that help facilitate a better shopping experience for consumers.
Google launched its Search Generative Experience, which uses generative AI to help consumers choose gifts. When customers describe the type of person they are shopping for, Google recommends products that are aligned with their interests.
Amazon, for example, recently released its customer sentiment analysis feature: using generative AI to summarize customer reviews, highlighting the features consumers most like and dislike about a product. It even includes a feature that allows customers to filter clothing reviews to show only those written for people who are a similar height and weight.
Walmart is using AI technology to enhance inventory management in its brick-and-mortar stores. By affixing cameras to floor scrubbers, the retailer can capture inventory data from store shelves, then transmit it to an AI-driven data center. This innovative system captures over 20 million photographs of merchandise on shelves daily.
Dynamic pricing – adjusting online prices in real time – is another growing trend in the retail industry that has far-reaching implications for competition. Stores use algorithms to factor in variables such as inventory levels and demand. Retailers like Target, Walmart, Best Buy and Kroger are among many that have already adopted this technology.
Meanwhile, Mastercard recently introduced a novel generative AI shopping tool called “Shopping Muse,” designed to offer users personalized product recommendations based on the entire spectrum of their shopping history. It’s one of many companies incorporating personalization into consumers’ shopping journeys. Mastercard is also testing a biometric payment technology at supermarkets in Brazil, the Middle East and Asia that allows customers to check out using their smile, palm or eye. Similarly, Whole Foods has already adopted a palm-scanning option in many of its stores, as well as the “Just Walk Out” combination of computer vision and machine learning technology that allows customers to shop without a checkout.
2. Getting creative with in-store experiences
While AI improves the retail experience, shoppers still enjoy seeing and trying products in person. Research shows that they prefer a balance between technology and human interaction. That’s why retailers will host more in-store experiences in 2024: from sip-and-shop evenings at boutiques to DIY workshops at home improvement stores and batting cages at sporting goods stores like Dick’s Sporting Goods.
Increasingly, stores are “a way for our customers to get inspiration,” H&M chief executive Helena Helmersson said in a recent interview. As such, many retailers are following Zara’s lead by putting QR codes on product tags. This allows consumers to look up an item online if they want to choose a different size or color that is out of stock in the store. Similarly, in Belgium, Ikea stores have digital kiosks that enable customers to browse the Ikea website.
According to The Wall Street Journal, retailers are opting to make stores feel roomier, with more open space between displays so shoppers don’t feel overwhelmed. Some are also thinking big: Nike, for example, is launching Nike Studios, a network of boutique fitness studios opening before the New Year. Zara and H&M are adding beauty salons to physical locations, and in London, H&M now offers a rental section where shoppers can borrow selected items.
By increasing consumers’ sense of community, in-store experiences also drive brand loyalty and amplify marketing as shoppers go online to post photos and opinions about their experiences.
3. Boosting security
Unfortunately, retail crime, violence and theft continue to threaten the industry at unprecedented levels, according to the National Retail Federation’s National Retail Security Survey. Retailers are extremely concerned about these heightened levels of theft and crime in stores. Sadly, these problems are occurring online as well, where owners are seeing increases in e-commerce fraud and phone scams to solicit gift cards or cash.
Companies say their top priority is providing a safe workplace for associates and a safe shopping experience for customers. In a recently published survey, 52 percent of retailers responded that they’re increasing budgets for technology and software security solutions.
To do so, they are incorporating next-generation technology systems, from license-plate and vehicle readers, autonomous security robots, radio-frequency identification (RFID) tags and smart case locks. Many of these tools are intended to decrease crime by turning off potential offenders before they act.
4. Forming Strategic Partnerships
Partnerships will continue to be a major trend in 2024 as retailers look to increase brand awareness and attract new customers.
Claire’s, for example, recently partnered with Kohl’s and Macy’s to sell its jewelry, accessories and cosmetics in department stores nationwide. Peloton and Lululemon announced a five-year strategic partnership this fall, and Adidas launched a partnership with European fashion house Moncler to bring a luxury appeal to the athletic brand.
Amazon partnered in November with Hyundai to sell vehicles in its U.S. stores and on Amazon.com in 2024. Hyundai, in turn, will include Amazon’s Alexa virtual assistants in its cars.
Retailers are also thinking innovatively about delivery. Discount home goods retailer Big Lots is teaming up with Uber Eats to offer delivery services from its more than 1200 stores across the country, while Camping World has become the first camping and RV specialty retailer to partner with Instacart for same-day delivery.
5. Integrating AR/VR in Shopping
Another area that will continue to be developed is augmented and virtual reality. While it’s too early for widespread incorporation of these technologies, 2024 will see testing and early rollouts of AR and VR in the shopping experience.
In 2023, America’s retail sector embraced widespread innovation and vibrant competition. Looking to the New Year, we can expect with these various trends and more that consumers will continue to greatly benefit from the dynamism offered by so many companies in the U.S. marketplace.