3 Retail Trends Transforming the Industry in 2024
The retail industry, continuously adapting to new technologies and evolving consumer habits, is, once again, at the crossroads of transformation. New technologies, especially the integration of artificial intelligence, are central to this moment, compelling retailers to adjust to changing shopping behaviors and to enhance their customer experiences to create value for customers, which drives loyalty.
Many retailers are already adapting: A recent study shows that 90 percent of retailers are investing in AI solutions to improve the shopping experience by advancing their personalization efforts and executing against their omnichannel strategies.
As we begin 2024, which three key trends will further shape the retail landscape?
1. AI Will Power Personalization at a Scale Not Seen Before
As retailers move full steam toward true one-to-one personalization, mass-produced offers and a one-size-fits-approach will become a thing of the past. Market leaders are already driving this change, and the impact of it is evident, with 86 percent of retailers that have embraced this approach reporting a measurable increase in business results — including a revenue lift of 25 percent or more, per Boston Consulting Group — after implementing advanced personalization strategies.
Central to this shift is the advanced capability of AI, which will continue to develop at pace. It already excels in utilizing real-time and interactive digital content to engage customers. This also extends to tailoring offers to shoppers on the fly, leveraging a mix of historical data, contextual understanding and real-time actions to determine what customers want “now” with a high degree of accuracy. In this way, AI is advancing “Marketing in the Moment,” the practice of targeting customers with specific, bespoke messages triggered by various contextual factors (e.g., time, location) that can supercharge offer redemption and drive incremental spending.
An informed “Marketing in the Moment" strategy that leverages authentic personalization will bring the omnichannel experience to the fore.
2. Shopping Will Become a 'Phone Out' Activity
In the journey towards a true omnichannel experience, shopping is transitioning from a "phone-in-pocket" activity to a more engaged "phone-out" interaction. We envision that smartphones will become customer companions that augment the in-store experience. Retailers will develop intuitive apps — increasingly powered by AI — that will act as personal shopping assistants, supporting customers throughout their journeys pre-, during and post-transaction.
With 81 percent of shoppers starting their buying journeys online, the distinction between online and in-store experiences is fading. Retailers can no longer afford to separate the two. A new study by Grocery Doppio found that customers use digital tools extensively before even entering a store. They are making shopping lists (77 percent), confirming item availability (76 percent), and researching an item's location within the store (69 percent). Retailers will and should focus their efforts on embracing unified digital content, conducting “mobile makeovers” in favor of more capital-intensive store refits as they increasingly acknowledge the mobile phone’s role in delivering engaging, helpful and personalized customer experiences at every stage of the shopping journey.
Nike is one brand that has made its mobile app an integral part of in-store shopping and, in doing so, has created a truly “phone-out” experience. App users inside Nike stores can scan a QR code to summon shoes — in their size — to try on. They can “shop the look” using their smartphone’s camera or check out instantly using integrated payment options within the app. This is all in addition to the exclusive digital content, recommendations and community connection offered through Nike's app, all of which augments the brand relationship and the in-store experience.
3. The End of Silos and Channels
Achieving personalization at scale and delivering individualized customer experiences at every phase of the buying journey can only happen by breaking down data silos to create a holistic understanding of each shopper, their interactions, and the stream of information being shared with them. We predict that barriers between sales and marketing channels will continue to blur and dissolve, allowing for a more consistent flow of data to deliver more detailed and accurate customer insights. Once you have a deep and consistent understanding of customers, retailers should look to better integrate all customer marketing activity (e.g., trade marketing, shopper marketing, loyalty marketing), optimizing personalized communications to each customer rather than optimizing for specific departmental objectives.
Retailers can look to the UK coffee chain Pret a Manger's success with its Pret Perks loyalty program and Club Pret subscription service; it’s an excellent example of how to integrate data across disparate programs and channels to create a holistic view of the customer and drive business results. Sarah Venning, Pret’s chief information and transformation officer, was recently quoted on this topic, saying, “Our broader strategy is to make sure that our customers can have a really joined-up experience across all of Pret’s propositions, in-store and digital, so we become a truly omnichannel organization and people can buy and engage with Pret however they want.”
In the last three years since launching its market-leading subscription program, Pret has worked to effectively leverage the data generated by on- and offline customer touchpoints (including the point-of-sale system, a critical capability for retailers and foodservice providers alike), demonstrating the benefits of removing silos and strategically connecting information. The company's H1 2023 results revealed that 42 percent of transactions in that period were digital, something that would have been unimaginable for a purely brick-and-mortar business just a couple of years earlier.
Each customer’s interactions with Pret-branded digital assets — the loyalty program and the subscription service — can be tracked, enabling the business to use that insight to continually enhance its omnichannel personalization efforts. And because subscription rewards and loyalty perks are redeemed inside Pret locations, the brand can also collect data on in-store behavior through this channel. Seamlessly combining this digital data with POS system data reveals a complete picture of each Pret member and customer and enables a variety of personalization techniques that would be impossible in a more siloed environment.
This approach to channel-merging and silo-ending translates to improved consumer experiences, with insights being leveraged to provide precise predictive recommendations and dynamic content customization that boost engagement. In the year ahead, businesses will be focused on delivering marketing content that adapts to each individual, providing a personalized and "Instragram-eqsue" experience where every interaction is unique.
Key Takeaways for 2024
2024 will be the year when retail experiences move from generic or segmented to highly individualized. The idea of separate retail channels will become a thing of the past — and the change will come much faster than many retailers anticipate. Customers will enjoy dynamic shopping experiences powered by the technology they carry in their pockets every day. Brands that successfully implement these dynamic, personalized experiences using the technology that’s available right now will see significant growth.
Tim Mason is CEO of Eagle Eye Solutions, a SaaS technology company transforming marketing by creating digital connections that enable personalized performance marketing in real time through coupons, loyalty, apps, subscriptions and gift services.
Related story: Meeting Loyalty Members in the Moment
Tim has been CEO of Eagle Eye since September 2016, joining as Chairman in January 2016. He has over 30 years’ experience within the grocery and retail industries, with a strong background in strategic marketing and customer loyalty.
Previously, Tim was a managing director at Sun Capital Partners and Chairman of Bonmarché Holdings plc from 2013 to 2015. Prior to that he was Deputy CEO at Tesco from January 2010 to December 2012. He held a number of other roles within the Tesco Group between 1982 and 2012 including CMO for Tesco and CEO of Fresh & Easy LLC. Tim spearheaded Tesco’s bid to crack America, and was responsible for the expansion and operations of 150 stores US wide.
Throughout his career at Tesco, he was renowned for being in touch with the customer, and instrumental in the creation of some of Tesco’s most successful marketing initiatives (Clubcard, Express, Personal Finance and Tesco.com). He is also a Director of It's Fresh Ltd and Purple.