Retail 2024 will be like a roller coaster ride — ups and downs and filled with thrills and adventure.
It also will have lots of challenges and distractions, but plenty of opportunities. For the first quarter of 2024, we have seen pricing stabilize for the most part in general merchandise and even food and beverage, where we had runaway price elevation hovering in the 20% to 30% range in 2022 and 2023. Now, it’s back to a more normal level of 1% to 2% over the previous year. We have seen the reliance on sales diminish as witnessed by the absence of those traditional post-holiday 70% storewide clearance sales — and they, for the most part, only really showed up for holiday seasonal merchandise.
But the big missing piece to the retail puzzle today is impulse and innovation. Consumers have shifted to buying what they want when they want or need it. Price is not the main driver, it is conve- nience — getting what they want from whichever retailer can deliver it quickly, either from online or in the store.
We also have seen the shift from buying ahead of season to buying in season and only when the conditions call for it, such as winter wear when winter hits. Back to School has traditionally been a July/August business. That’s not so going forward. Back to School in 2023 was almost non-existent; it didn’t come until late September and, in some cases and categories, not until October.
Look for seasonal selling to be tied to the weather and needs. This changes the dynamic for retailers and brands. Understanding how much and when to offer seasonal merchandise now has a different calendar and window of opportunity.
The other big retail story is innovation and new products. Fashion has an advantage as many of the products come with new colors and styles built into the DNA of the brands. However, even in fashion we are seeing a shortfall of new and exciting products that reach the consumer’s desire level. Retailers were on a path of minimizing risk and looking to fill stores with the tried and true. Basics played a big role here, but basics only maintain sales. Innovation is what drives growth. We have bored the consumer to death.
New brands are emerging as consumers look to discover new products and in many cases are finding them in new names. Young and old, consumers are seeking out newness and products they not only desire, but need. We are now entering a key period of replenishment for some categories such as activewear, where we saw huge demand amid an increase during the COVID-19 years. Now, consumers need to replenish. This represents a big opportunity as demand will increase once again. The current trend of dressing up will cool off as we build that part of the wardrobe to fill the current needs.
All in all, retail has to adjust to the consumer. We can’t keep to the same old traditions of seasons, merchandise calendars, promotional periods and risk aversion. We need to ignite passion in fashion again. We need to change with the times and grow the business from more than one direction. It’s not about young or mature shoppers or upper or lower incomes — it is about growth from every direction.
This is going to be a crazy fall, with something called an election. It’s a distraction from discretionary spending and it is an emotional roller coaster. But be prepared for the ups and downs. Take advantage of the opportunities and watch the opportunities materialize.
Marshal Cohen
Chief Retail Analyst
Circana
900 West Shore Road
Port Washington, NY 11050
