Retailers in the UK are gearing up for a year of challenges and opportunities as they navigate through continued uncertainty in 2024. A recent poll by Boston Consulting Group (BCG) highlights the concerns of UK consumers, with more than 75% expressing worries about inflation and recession. Jessica Frame, BCG’s managing partner for the UK, predicts that consumers will tighten their belts, particularly for non-essential items, in response to these economic concerns.
1. AI Revolution in Retail: Personalisation Takes Centre Stage
The integration of Artificial Intelligence (AI) in retail is expected to soar, reaching $24.1 billion by 2028. This transformative technology, including machine learning, chatbots, swarm intelligence, natural-language processing, and image and video analytics, is set to redefine the retail landscape in 2024. Vicky Bullen, CEO of Coley Porter Bell, anticipates that AI will enhance personalisation, offering more seamless customer journeys and boosting the overall brand experience and earning loyalty from consumers.
AI bots will play a crucial role in directing customers to new brands, products, and even ingredients based on their dietary preferences, budget, and lifestyle. Some retailers are already experimenting with AI in stockrooms and apps throughout stores, providing features like booking fitting rooms and tapping phones for additional in-store information.
However, to do this successfully, retailers will need to continuously collect data on consumers behaviour and habits and consumers will need to show willingness to exchange personal data for improved shopping experiences.
2. Humanising AI: Balancing Efficiency and Empathy
Furthermore, as AI continues its growth, maintaining a balance between efficiency and human touch becomes crucial. David Crosbie, Foresight Factory consumer trends editor, emphasises the importance of natural and empathetic interactions across all channels, which is an important consumer expectation. Retailers are expected to delegate routine inquiries to AI while reserving more complex tasks for human employees to ensure a harmonious shopping experience.
3. In-Store Experience: Making Every Space Count
Customer loyalty is becoming increasingly rare, making the in-store experience essential for retailers in 2024. Even as retailers reduce their physical store portfolios, brands are urged to maximize the impact of their limited spaces. Technology is set to play a key role, with spatial computing allowing for interactive and fully shoppable flagship stores in consumers’ living rooms.
4. Recommerce: A Shift in Consumer Habits
A notable trend in 2024 is the rise of recommerce, where cash strapped and ethical consumers turn to pre-loved alternatives and opt for repairing instead of replacing goods. Major retailers, including Selfridges, are aiming for a significant portion of their sales to come from resale, repair, rental, or refills by 2030.
Barclaycard Payments’ recent study shows that recommerce already contributes nearly £7bn to the UK economy through marketplaces such as Vinted, Vestaie, Depop, as well as high street retail. More than four in 10 (44%) consumers buy more second-hand items than they did a year ago. Thus, Leon Bailey-Greenv, founder of Upper Clash and Retsre, predicts recommerce to be a profit-driver, not just a supplementary sustainability initiative in 2024.
5. Value focus: Impact of Cost of Living Crisis
Data suggests a decline in DIY and furniture retail spend in 2024, with the slow housing market and the pandemic-driven surge in home-related items contributing to the downturn. Retailers like Topps Tiles are facing challenges, emphasizing the need for strategic adjustments and pricing initiatives to stimulate sales.
Conversely, with the rate of inflation expected to fall, experts predict a return to growth for food retailers after two years of subdued figures. Analysts anticipate a 4-5% growth in the sector in 2024, with a focus on value messaging by big grocers to win over customers.
As consumers express concerns about their financial prospects, value and price will be at the forefront of their minds. Discounters like Aldi and Lidl are expected to continue their success, while deep discounters from China, including Shein and Temu, could also benefit.
In conclusion, the retail landscape in the UK for 2024 is marked by a blend of technological innovation, shifting consumer behaviours, and economic uncertainties. Retailers who embrace AI, prioritise in-store experiences, and adapt to changing consumer habits are likely to navigate these challenges successfully. As the industry continues to evolve, staying attuned to emerging trends will be key for retailers looking to thrive in the dynamic marketplace.