Although online penetration in the UK has largely returned to pre-pandemic levels, brick-and-mortar sales volumes have remained below pre pandemic levels throughout 2023 and are anticipated to persist at this level at least until the first half of 2024.
Factors such as soaring inflation rates, a cost-of-living crisis, and political uncertainty are compelling consumers to prioritise saving over spending. KPMG’s economic forecast predicts a sluggish real GDP growth of just 0.3% in 2024, potentially dampening consumer confidence further.
Retail businesses are grappling with challenges such as increasing business rates by 6.7% in April 2024, which offsets the advantages of previously favourable rent deals. Additionally, they are burdened with large inventories necessitating discounting and reducing margins.
While the rise in the National Minimum Wage may boost consumers’ disposable income, it also poses a significant cost to retail businesses, prompting reductions in staff hours and subsequently decreasing disposable income once again.
However, the situation isn’t entirely bleak. Encouraging signs such as falling inflation, drops in interest rates, and improving consumer confidence suggest a potentially brighter second half of 2024. Household finances have already shown slight improvements, with one in three households reporting surplus funds for luxuries and savings, while only 8% indicate financial struggle.
According to Miya Knights, publisher and consultant at Retail Technology Magazine, to effectively target these savvy consumers, retailers must prioritise investment in technology, particularly in business intelligence and data analytics. This strategic focus will distinguish successful retailers from struggling ones throughout 2024. Accurate forecasting, efficient supply chain management, and hyper personalisation will be key to capturing consumer interest and fostering loyalty.
Furthermore, retailers that can cater to the evolving preferences of consumers who increasingly use multiple shopping channels will emerge as winners. The future of retail is likely to revolve around hybrid business models that seamlessly integrate all channels and touchpoints while single-channel retailers may find it challenging to attract customers and generate revenue.
To help retailers navigate the challenges, especially in their optimisation journey of their physical stores, TrackIn Video analytics SaaS offer extensive and precise analysis of the physical store through people count, heat maps, dwell analysis, demographics, changing g room monitoring, queue monitoring, providing valuable insights for retailers while also saving resources over time. Real-time data enables quick decision, reducing costs and increasing revenue.