Acosta Group has announced its 2024 retail predictions, identifying how brands and retailers can win shopper loyalty, drive sales and achieve efficiencies in another year of anticipated marketplace disruption.
“While we expect 2024 to remain as complex as 2023, brands and retailers will have opportunities to better understand and meet the evolving demands of their customers, securing meaningful growth for their businesses,” said Colin Stewart, EVP of business intelligence at Acosta Group.
“We formulate our predictions based on the insights of our retail experts and industry thought leaders, as well as proprietary Acosta Group studies conducted throughout the year with shoppers, brand owners and retailers.”
Acosta Group’s predictions
- Driving growth will take standout creative measures;
- Seamless retail redefines shopper delight;
- AI propels retail efficiency and shopper experience;
- Shoppers prioritize what’s not in their products; and
- Retailers turn up the heat to attract diners.
Driving growth will take standout creative measures
According to Acosta Group’s recent Retailer Confidential Report, 90 percent of top U.S. retail leaders are prioritizing unit growth in 2024. Strong promotions will be key in another year of cautious spending, channel shifting, private label purchasing and value messaging.
“Consumers will respond to bold, creative promotions that provide them enriched value,” said Kathy Risch, SVP of thought leadership and shopper insights of Acosta Group. “Smart retailers, brands, delivery services and restaurants are stepping up to create promotions that resonate.”
Whether dollars-off purchases, cross-marketing partnerships or other value-based offerings, 71 percent of top retailers say that they are increasing promotions in 2024.
Retail media networks that deliver measurable ROI are increasingly key to an effective promotional strategy. U.S. retail media ad spend will reach $60 billion in 2024, according to Insider Intelligence, delivering 70-90 percent margins versus the 3-4 percent seen in traditional retail profits, per Boston Consulting Group.
When developing a promotion strategy, Acosta Group advises:
- Create promotions that don’t erode margins for retailers, brands or shoppers;
- Deploy/evolve revenue growth management programs; and
- Practice disciplined post-promotion analytics.
Seamless retail redefines shopper delight
The consumer shopping experience is not linear. Retailers and brands are enabling seamless shopping in the moment – anywhere, anytime, for anything – and dialing in to reach consumers with innovative tactics and disruptive technology. Retailers will continue investing in both store and digital upgrades to meet shopper demands.
Key findings:
- Fifty-six percent of omnichannel shoppers prefer shopping in-store for groceries and household items, and 69 percent of grocery sales in 2023 were digitally influenced (Grocery Doppio);
- Sixty-three percent of shoppers use an app on their phone inside a store while grocery shopping – that number jumps to 80 percent for Gen Z and 81 percent for Millennials (Acosta Group); and
- Omnichannel shoppers spend two to four times more than single-channel shoppers (Groceryshop, 2023).
Based on this shopper data, a few opportunities include:
- Take a new approach: integrate trade, marketing and retail media spend, targeting specific shoppers and need-states with both in-store and online merchandising to maximize budget, grow sales and improve margin;
- Digital shelf: strengthen product detail page searchable words, hero images, infographics and videos; understand ratings and reviews; continuously monitor results; and
- Physical shelf: place a sharper focus on share of shelf and assortment optimization to meet shopper demand and keep shelves stocked.
AI propels retail efficiency and shopper experience
The most successful applications of AI will drive efficiencies that improve productivity as they benefit shoppers with an enhanced, more customized shopping experience. Gen Z is the most comfortable with retailers using AI to improve their shopping experience via personalized rewards/recommendations. Increased investment in AI is expected to drive $113 billion in value by 2025, according to Grocery Doppio.
“The strategic use of AI helps retail operate smarter and faster,” Stewart said. Three quarters of retail executives surveyed believe they could go out of business if they don’t adopt AI in the next five years, according to Grocery Doppio.
Growth opportunities for retailers include prioritizing use cases for supply chain and logistics efficiencies, implementing localized assortment and price/promotion optimization, dietary/nutrition recommendations, workforce efficiency to streamline operations, personalization/targeted deals and product development.
Shoppers prioritize what’s not in their products
The acceleration of the clean label trend in U.S. food was sparked by the passing of The California Food Safety Act of 2023, which takes effect in January 2027.
- The act bans four harmful chemicals, impacting up to 12,000 primarily food products from processed foods sold or processed in California;
- Companies will be required to switch to ingredients now used in the EU and elsewhere, and several large brands have already pulled the additives;
- Forty-one percent of consumers have heard of clean label, relating it to natural and healthy, and 78 percent find it appealing when provided a definition, per FMCG Gurus; and
- Natural and organic shoppers’ values will go more mainstream.
Retailers and brands will benefit from:
- Understanding that analytics segmenting key label attributes will be important;
- Actively communicating what’s not in the product;
- Leveraging AI for customized shopper lists; and
- Using promotion and digital/social media to educate shoppers and demonstrate value.
Retailers turn up the heat to attract diners
There will be competition for shopper share of stomach between retailers, c-stores and restaurants in 2024, further blurring the lines between foodservice and retail as it also drives new opportunities for channel growth and meets changing shopper demands.
Retailers see the opportunity to expand made-to-order meals to attract cost-conscious shoppers who want restaurant quality solutions anytime, anywhere. Acosta Group’s Retailer Confidential Report reflects that 71 percent of retail executives are doubling down with fresh foods.
Activity across all channels:
- Retailers: replicating the restaurant experience with food halls and local restaurant partnerships;
- C-stores: responding to requests for hot foods and new, globally inspired flavors for breakfast; and
- Restaurants: bringing diners back for the benefits and convenience amidst continued high grocery costs and the return to in-office work.
Some food for thought for retailers:
- Enrich the in-store experience and create reasons to linger, sample and dine;
- Create cross-promotions to provide shoppers with meal solutions across all meal occasions; and
- Elevate digital integration.
“We are excited about the opportunities to connect with consumers in more customized ways in 2024, building brand and retailer growth with the right mix of services and solutions,” Stewart said. “Insights-based innovation and the ability to stay nimble remains critical in meeting changing shopper behaviors and market needs.”
Read more technology news from The Shelby Report.
Well said. Great summary of trends for retailers to capitalize on going into 2024. If I could add a sixth, I’d say “All retail is retail to consumers.” Gone are the days of separation by channel. If a retailer has what a consumer wants, they’ll buy it regardless of how the industry classifies that store format.