Looking Back To Prepare For The Year Ahead

As the dust settles on year-end sales results and we shift our focus to the year ahead, there are several significant learnings from 2023 and interpretations to ponder as we navigate further into 2024.  

Last year showed us that the consumer is resilient but also changing. 

Consumers prioritized spending on more practical items to make their lives easier, safer, and healthier. Their sense of indulgence shifted to focus more on what they do, and less on what they get. Travel returned, but as the worldwide political scene grew more tumultuous, the emphasis turned toward more domestic trips. 

Premiumization took supremacy as prestige beauty products fueled general merchandise growth despite the availability of more affordable mass-market beauty products. Brands took on more important roles in selling, both direct to consumers and through retailers. But the spending pie didn’t get bigger: The same volume just got sliced up into more pieces across more outlets. The lack of new and innovative product offerings came back to haunt retail sales as bored consumers tired of seeing only more of the same. They saw no reason to shop until it was time for replenishment purchases.  

Instead of luring the consumer through price discounts, retail offered modest discounts almost all year long. The lack of deep price discounts and the seemingly endless extension or repetition of modest price discounts did little to convince consumers to “Buy now or lose out.”  Moreover, few products presented any concern of a limited supply or realistic fear of missing out if a purchase was postponed — so on this front, too, consumers felt no sense of urgency to shop. And with so many retail outlets selling the same or similar products, there was nothing to drive the usual holiday-time panic purchasing. In short, inflation-battered, debt-conscious, and unusually price-sensitive consumers felt no impetus to extend already strained budgets beyond planned purchases and minimal gifts this holiday season — creating a noticeable absence of self-gifting and impulse purchasing. 

The year ahead presents plenty of opportunities, but exploiting them will take progressive thinking.

Consumers need an incentive to purchase. The creation of new and exciting products is the first component that has to return to the retail picture. New messaging that entices consumers to widen their horizons will be critical as retail competes with a broader spending base across higher costs for essentials. 

Out of the gate, convenience is going to be key to getting the consumer’s attention and breaking newly created conservative spending habits. It is the benefit with more influence than uniqueness — and the greatest power to prevail over pricing concerns and bypass existing brand loyalties.

Economic challenges, political distractions, job market adjustments, and mounting consumer debt will make 2024 a tricky year to navigate. Each will present obstacles for retail in trying to engage consumers and shift their thinking to once again prioritize spending.