Building agility and resilience in a recovering market – 2024 is the year to create new opportunities, stronger systems, and the ability to react fast to a market liable to change
By Ed Betts, Retail Express
Recent headlines point to market improvement as the rate of inflation declines, but for most retailers the difficult times are not yet over. In many cases, retailers continue to suffer volume decline, with only discounters seeing any appreciable level of volume growth. The supermarket model is built on volume, so any amount of negative growth means a dip in turnover.
The challenge for 2024, as a sluggish market struggles to regain its footing, is to act to drive growth in volume, increase footfall, and expand market share, all while improving the agility and resilience of one’s business. The past few years have proven beyond doubt that anything can happen, and that retailers must ensure they carry the tools to react quickly when it does.
Top 5 retail trends and priorities for 2024:
1: Focus on automation
Retail margins are traditionally tight, and the pressing issue of recovery means 2023 has seen them getting tighter still. There is little wiggle room left to optimise margins under existing operational structures. It is time for change: streamlining processes through restructuring and automation will be a major shift in 2024, both on the shop floor and within head office.
The shift has already begun, and many more retailers will follow suit. 2024 will see new efficiencies found in the realignment of core functions, and a proliferation of automated systems which can adjust pricing, manage promotions, assist in media management, ensure stock assortment and create brand new innovations to improve efficiency and speed.
2: Exploiting AI opportunities
The rapid advancement of AI offers retailers new opportunities to strengthen, support and enhance inefficient processes – allowing staff the head space and breathing room to focus on driving business forward. While there’s pressure on retailers to simplify, they must be equally cognisant of the critical nature of innovation. Adopting the latest technology is the best way to be ahead of the curve and differentiate one’s offerings in a crowded market.
Used responsibly and transparently in line with the guidelines set out in the 2023 UK AI Summit, AI forms the basis for new ways of retailing. AI driven analytics tools offer the security of planning activity far in advance, the agility to work with suppliers quickly to meet sudden market demand, and the ability to respond confidently to rival activity.
AI’s labour-saving benefits support every core function: it frees buyers’ time to develop key relationships by negotiating automatically with regular suppliers; it can be a vital aid in marketing and merchandising, highlighting products which are eligible or suitable for promotion; its predictive models help on the shelf, pinpointing when a product should be launched or promoted.
3: Increased focus on loyalty schemes
Over the course of 2023 loyalty card promotions have become a crucial and successful driver of customer retention. Those retailers with the most established loyalty schemes have seen their customer base stay relatively steady, even against competition from discounters. A key focus of 2024, therefore, will be to build stronger loyalty schemes and foster a customer base which will not stray.
The powerful value of customer data, coupled with the proven retention benefits of such schemes, will make loyalty programmes a strategic essential in 2024. Driven by AI insights, these will spread their net further – retailers will implement deeper offers, linked cross-promotional sales, and a data-driven expansion of bespoke voucher programs targeted directly to individuals based on their buying habits.
4: Improved data mining
Data is king: it has become the most valuable resource any business has at its disposal. Retailers collect a huge amount of data, but to date this tends to have been improperly and inadequately mined. Less than half of retailers benefit from a complete picture of their data inventory. The battle to gain market share cannot be fought for free. Investing in data, however, pays for itself.
In a changing market, strong data management will become even more essential. Deep data knowledge will reveal new ways for mainstream retailers to differentiate themselves from discounters.
Accessing the insights offered and unifying siloed sources into a single body of data intelligence are therefore a vital part of any 2024 improvement plan. The more data is processed, the more insights are discovered, and the more effective a retailer’s offers can be.
5: Targeted media spend
Retailers are not the only ones rebuilding. Cost pressures are showing signs of easing on suppliers, and they are now eager to boost sales by applying the funding to make it happen. Retailers must ensure that every penny of that potential promotional budget works hard, because an ineffective promotion is a waste.
Exploiting these opportunities in the most efficient and valuable way demands the creative application of data. Greater command of their data will see retailers finding new ways to maximise traditional media spend in 2024, providing brands with the ability to advertise in the moment, reaching customers at the point that they are willing and able to make a purchase.