By Head of Client Services, Anthony Abou-Zeid
The sentiment from the retail sector seems to be one of optimism ahead of 2024. Retail leaders are encouraged so far in 2023, with 74% of retail top brass surveyed by Retail Week for their Retail 2024 report announcing they will finish slightly higher / much higher than forecasted vs 2022. This is set to continue into 2024.
The industry has learned lessons on how to thrive under rising cost pressures and supply chain issues since the pandemic, but more recently, the war in Ukraine, political instability, and a declining consumer economy. Not to mention the word rhyming with exit…
Retailers have been able to take stock, reset their ambition and strengthen their fundamentals to fight fit going into 2024. There have also been seismic levels of disruption in 2023 with, you guessed it, AI and the world becoming more shoppable thanks to innovations from big social players like TikTok & Meta. Just this month, Campaign announced that Amazon and Meta are collaborating to allow users to make Amazon purchases directly via ads on their social media without leaving the app.
Some of the measures outlined by Jeremy Hunt in the Autumn Statement will be welcomed with open arms by the sector. Investing £500m in AI development, as well as setting up a taskforce to help SMEs in their digital transformation journeys, will continue to drive retail and e-commerce. Might there be an effect on consumer confidence following the 2% reduction in National Insurance and an increase in the living wage?
For me, it comes down to three areas which will impact 2024:
1. AI in media & beyond
Further personalisation driven by the media supply chain coupled with a step up in optimisation of content and customer journeys will be a significant driver next year. Retailers will have a more robust customer view, which will improve the customer experience across brand touchpoints. The other side to this for retailers will be the increases in profitability driven by operational efficiencies, which will create value that can ultimately be passed back to the consumer.
2. Buying less, buying better
If the pandemic era taught us anything, people will always buy stuff. Despite economic conditions, from self-treating and wellness to splurging on luxury and travel, the appetite will always be there. According to Bain & Company, luxury retail is expected to grow by 3% to 8% in 2023. International Airlines Group announced record profits earlier this year, with travel set to bounce back to pre-pandemic levels by the end of 2023. However, it’ll be a fight for attention. According to Ernst & Young, multiple drivers of change are shaping new consumption patterns as people buy less, buy better and buy in different ways.
3. The fight for attention
With more focus on consumer attention, creativity in advertising will be critical to winning the hearts of discerning consumers. An article in Media Week outlines how Asos are investing in brand building as it eyes a move away from ‘seductive’ performance marketing. In an article written by Nick Manning for MediaLeader, he describes the importance of impact and the renaissance of ‘Big Media’, which continues to prove profitable. Robust measurement capabilities and a focus on nuanced measures of success will give advertisers the confidence to go for impact and not just impacts, galvanising consumers into action.
Recent results from the GfK Consumer Confidence report showed a 6-point jump in overall confidence measures in November versus the previous month. Although there is still a long way to go, there’s plenty to be cheerful about heading into the new year.