Retail in 2024: Polarization & Social Influence

In this article, we delve into 6 key trends shaping consumer behaviour and retail in 2024.

1. Social Discovery

Gen Z Moves from Search to Social for Product Discovery

For Gen Z, the traditional search engine has taken a backseat to social platforms as the primary avenue for product discovery and research. This transition has compelled brands to bolster their social media presence and develop robust social storefronts to cater to this demographic's preferences. The surge in online shopping initiation on platforms like TikTok underscores the evolving relationship between retailers and social media platforms, with tensions occasionally arising as both vie for consumer attention and engagement.

2. MIND THE GAP

**Polarization in consumer spending**

The economic landscape has given rise to a notable dichotomy in consumer spending habits. Luxury retail thrives as affluent consumers remain relatively insulated from economic instability and are invigorated by the return of international tourism. Conversely, there's a surge in demand for value-oriented essential goods and budget-friendly items as households prioritize necessities over discretionary spending. This "bifurcation of consumer spending" presents challenges for mid-range retailers caught between these extremes, requiring strategic adaptations to navigate the evolving retail landscape effectively.

3. Private Label Preferred

**Owned Brands Reshape Consumer Loyalty**

Amid economic uncertainty, consumers are increasingly turning to cost-effective private label brands, seeking value without compromising on quality. Once viewed as alternatives to established brands, private labels have undergone a transformation, offering distinct and differentiated products poised to capture a larger market share. The momentum behind private label brands gained traction in 2023 and continues to shape consumer preferences in 2024.

4. Dupe Culture

Buy cheap, buy lots

Also mentioned in our previous insight article, the emergence of dupe culture challenges traditional notions of brand loyalty, emphasizing affordability and accessibility over prestige. In this culture, wearing affordable "dupes" of designer labels is celebrated rather than stigmatized, with consumers proudly proclaiming the savings achieved by eschewing high-end brands. This phenomenon disrupts traditional market dynamics and commoditizes various product categories, posing both challenges and opportunities for established retailers.

5. AI Powered

**AI’s personal guidance**

AI-driven personalization, achieving a 66% positive ROI in 2023, is set to be a key element in digital commerce. Companies will leverage advanced recommendation engines and virtual shopping assistants to deliver tailored shopping experiences, anticipating consumer needs and driving conversions.
The evolution of AI in 2024 will witness increased adoption of Generative AI, focusing on creating new content and data, with a heightened emphasis on industry regulations. Generative AI is poised to revolutionize customer service, as showcased by IKEA's "Billie" handling complex queries and humanizing chatbots. AI's impact extends to beauty consultations to immersive experiences, offering personalized guidance in areas like jewelry selection, furniture choices, and skincare routines based on facial analysis.

6. Solid Green

Investing in Sustainability

Two opposing trends, dupe culture, and sustainability, emerge as influential forces shaping consumer behaviour.

Sustainability has gained traction as a counter trend to dupe culture, challenging the disposable nature of fast fashion. Industry leaders such as Patagonia, H&M, The North Face, Eileen Fisher, and REI champion sustainability, prioritizing ethical sourcing, waste reduction, and a commitment to eco-conscious choices. This trend extends beyond fashion, influencing diverse sectors, from technology to grocery retail.

The retail landscape of 2024 is characterized by dynamic shifts in consumer behavior and technological advancements. Brands that adapt to these trends and embrace innovation are well-positioned to thrive in an increasingly competitive marketplace, catering to the evolving needs and preferences of today's discerning consumers.

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