While the UK dances with the prospect of a 2024 evolution, the mood amongst retailers remains optimistic, with many predicting an uplift at the end of 2023 which continues into the new year.(1) As we move into 2024, several key trends are expected to shape the future of retail, presenting both challenges and opportunities for businesses across the sector.
- 1.Value Reigns Supreme: A Focus on Smart Spending
Following the Chancellors efforts to boost business enterprise, and with the general sense of optimism for 2024, still retailers will need to focus on offering competitive pricing, emphasising quality and durability, and highlighting the value proposition of their products and services.
This means offering tiered pricing structures, strategically deployed discounts, and loyalty programmes that reward savvy spending. Tesco's ‘Aldi Price Match’ scheme directly tackles the perceived value gap between discount supermarkets, emphasising affordability and quality for budget-conscious consumers.
- 2.In-Person Experiences: Coming to a location near you
As high streets see the decline of traditional big department stores, out-of-town retailers are moving to the city. Ikea's recent purchase of Churchill Square in Brighton highlights this shift. This marks Ikea's second inner-city location in the UK, following the Livat Hammersmith store, launched in 2022.(2) The move is a strategic pivot from Ikea's traditional out-of-town model towards convenient, local shopping experiences.
Beyond retail, Ikea's sustainability and community focus could catalyse wider Brighton regeneration, attracting businesses and revitalising the area. If successful, Ikea's city strategy may prompt other large retailers to follow, significantly reshaping the UK retail landscape.
- 3.Loyalty Reinvented: From Points to Ecosystems
2023 has seen a clash between supermarket loyalty schemes, with Tesco facing backlash over poor value Clubcard deals.(3) Sainsbury's Nectar strategically upped promotions for its members, directly competing with Tesco's offerings.(4) The battle lines have been drawn, as Sainsbury's uses enhanced perks to woo customers, while Tesco rushes to appease disappointed Clubcard users. This loyalty scheme showdown has created turmoil in the supermarket niche, as the two giants vie for customer loyalty.
Meanwhile, traditional loyalty programmes are morphing into holistic ecosystems, offering benefits beyond mere points. This includes exclusive experiences, early access to products, and personalised services. The MyJohnLewis programme exemplifies this shift, offering home consultations, styling sessions, and bespoke events alongside point-based rewards, with the goal of cultivating a sense of belonging and fostering long-term loyalty through deeper engagement.(5)
- 4.AI-powered Efficiency: Optimising Operations
Achieving operational efficiency in business is key for retailer profitability. Retailers will increasingly use AI to streamline supply chains, automate workflows and curb waste. With solutions for optimised inventory, demand forecasting, delivery and logistics and personalised marketing, AI will be pivotal in driving efficiency gains, controlled costs and generally increasing productivity. However, some thought must be given to how much AI is valuable. Extreme increases may not be viable to maintain, plus there is an need for human-engagement, and reality on all levels in business.
- 5.Rapid Fulfilment: The New Normalyes
Today’s consumers expect swift and seamless order fulfilment, regardless of whether they are shopping online or in store. This calls for efficient delivery and click-and-collect options, using real-time data for optimised fulfilment.
The rise of hyperlocal delivery services like Zapp and Getir illustrate the growing demand for instant gratification. Retailers collaborating with these services can offer customers near-instant access to their desired products, satisfying the need for speed and convenience.
- 6.Retail Media: Unlocking a New Revenue Stream
Retailers are recognising the power of their platforms as advertising channels, leading to the expansion of retail media networks. Sainsbury's, for example, has partnered with Criteo to offer brands targeted advertising opportunities within its ecosystem.(7) This allows retailers to create an additional income stream while delivering personalised offers and content to customers, enhancing their shopping experience.
- 7.Ethical and Sustainable Practices: A Growing Consumer Demand
Consumers continue to demand greater transparency and ethical practices from retailers, prioritising brands that align with their values. This includes responsible sourcing, sustainable production methods, and ethical labour practices.
Retailers like Patagonia, with its commitment to Fair Trade and recycled materials, are leading the way. By clearly communicating their sustainability initiatives and demonstrating social responsibility, retailers are earning the trust and loyalty of conscious consumers.
- 8.Bricks-and-Mortar Reimagined: The Experience Imperative
While online shopping continues to grow, physical stores remain vital touchpoints for customer engagement and brand experience. Retailers will continue to reimagine the role of physical stores within their omnichannel strategy, creating immersive and engaging environments that blend seamlessly with their online presence. This includes using technology to enhance in-store experiences, offering personalised services, and creating community spaces for events and workshops.
In recent news, the Booths supermarket chain has announced the removal of self-service checkouts in the majority of its stores.(8) This bold decision comes as a response to customer feedback, with shoppers expressing a preference for the personal touch and familiar conversation with their friendly local cashier. While other supermarkets invest in robotics and self-scanning technology, Booths is doubling down on human interaction, signalling a possible wider future shift in the UK retail landscape, with a renewed focus on quality customer service.
- 9.The Power of Personalisation and Data-driven Insights
Personalisation will continue to be key to creating relevant and engaging experiences for customers across all touchpoints. This means using data to understand customer preferences, tailor product recommendations, and deliver targeted marketing messages.
AI and machine learning technologies will be critical for retailers to effectively analyse customer data and generate actionable insights that drive personal experiences.
- 2024 Retail Outlook:
These are just examples of a wider network of UK retail trends poised to shape the industry in 2024. While nobody can predict what is ahead, and with the prospect of a General Election in 2024, retailers must be prepared for anything, by meeting the needs of their customers and exceeding their expectations. Embracing innovation, prioritising customer experience, and focusing on value and sustainability will help retailers to remain relevant and successful in 2024.