What factors shape 2024 retail strategy the most?
So far this year, certain market factors have had a greater impact on retail strategy, as denoted in this document.
Let’s look closer at certain key trends from my 2024 Retail PEST Analysis from January.
POLITICAL
⭐ Wars affect access: The Red Sea crisis, and ongoing wars in Ukraine and the Middle East affect global supply chains. CPG brands face risk and complexity as they try to optimize trade routes, procure raw materials and maintain trade relationships.
⭐ Geo-political tensions: The US passed a ban on TikTok unless the social media platform is sold by its Chinese parent company ByteDance. Meanwhile, brands still continue to invest in TikTok Shop ads to reach younger consumers where they spend time.
ECONOMIC
🛍 Mixed signals: While some industry analysts say consumers are resilient and still spending, McKinsey reports that US consumer optimism dipped slightly in Q2 and sales of non-essential goods declined.
🛍Inflation’s ongoing impact: Many retailers (like Amazon, Target, Walgreens and Walmart) are cutting prices to entice shoppers and compete against low-cost rivals like Temu and Shein.
SOCIAL
⭐ Retail theft: More retailers (including Walmart, Dollar General and Target) support loss prevention by reducing access to self-checkout at certain stores. Security workers at TJ Maxx and Marshalls wear body cameras for security personnel and store associates.
⭐ Return to the office: More employees are back at work in the office more often, which fuels demand for food, transportation, apparel and beauty. Workers spend an average of $51 per day when they go to the office vs. $15 per day when they work from home.
TECH
🛍 AI: This innovation is growing as a priority for retail leaders, as it helps to improve process efficiencies, time savings and the customer experience.
🛍 In-store retail media: More digital screens and digital endcaps are moving into brick-and-mortar as retailers sell ad space to brands. Physical stores still account for ~80% of total retail sales and buying ads along the store journey can help brands connect with customers.
Overall, this year the global retail sector is focusing on adapting to consumer behavior and opportunities to improve margins, productivity and resilience.
What market factors would you add?
Sources:
BBC News, BNY Mellon Wealth Management, Business Insider, Chain Store Age, CNN, eMarketer, Forbes, McKinsey & Company, PYMNTS.com, Retail Dive, Retail TouchPoints, RetailWire, The Wall Street Journal
Related:
AI in Retail
Stores Evolve With Retail Media
Retail Theft on the Rise
