Mid-Year Retail Trends 2024: From Sustainability to Personalization

Olufemi Adeyemi 

Mike Smollan, Chief Growth Officer, Smollan

The current economic climate, consumers are exercising prudence in their resource allocation. A significant portion of the global population is actively seeking advantageous offers and price reductions to maintain financial equilibrium within their households.

Midpoint assessments, whether taken during an ultramarathon to prepare for the next leg or by a project team to evaluate progress and make adjustments, are crucial for positioning for success. Similarly, a mid-year retail review provides valuable insights into recent developments that shape how retailers engage with consumers and drive innovation in the latter half of the year.

Overview | Global & Local

The exponential growth of e-commerce, the seamless integration of online and offline channels, the prioritization of sustainability, the implementation of contactless and convenient payment options, the adoption of price-sensitive pricing strategies, and the cultivation of customer loyalty have been the key trends shaping the retail landscape over the past six months.

Indeed, the consumer landscape is undergoing yet another transformation. While 2023 was characterized by the resilience of consumers, 2024 appears to be ushering in the era of the empowered consumer. Mastercard Data & Services [May 2024] revealed that despite economic challenges such as rising interest rates, inflation, and the looming threat of a recession, consumers maintained their spending confidence throughout 2023. However, this year, consumers are adopting a more prudent approach, prioritizing resource allocation and actively seeking out deals and discounts to strike a balance in their household budgets. Furthermore, technology is emerging as a key driver of innovation and efficiency for both retailers and consumers, signaling a concerted shift towards a customer-centric and digitally driven retail environment.

“Don’t blink was my pennies worth at our trends check in November 2023,” said Mike Smollan, Chief Growth Officer, Smollan. “We’ve seen the rapid changes this year, from powerful tactical retail that has global brands amping up the flavour and integration experience for consumers. To local shifts in South Africa for example, with 61% of Gen Zs finding their feet and telling us via a recent Trade Intelligence report, that social media influencers are their best source of information when it comes to shopping. It’s about meeting consumers wherever, whenever, and however they prefer to shop, and being cognisant of and embracing the shift to empowered consumerism.”

Global retail case studies offer valuable insights into the evolving landscape. For instance, Walmart, despite limited physical store expansion, has retained its top position by developing a robust online marketplace and introducing innovative financial services for customers. Costco has expanded its warehouse format internationally, while Ikea is transforming its business model by opening smaller stores globally.

The e-commerce industry continues to astound with its rapid growth and evolving landscape. Notably, Temu, a relatively new player in the market, achieved remarkable success by surpassing $5 billion in sales within just a year of its launch in 2023. This remarkable feat is further underscored by the impressive statistic reported by Statista, indicating that Temu's app has been downloaded over 52 million times as of May this year.

An intricate and dynamic narrative unfolds as we witness the transformative impact on this industry.

In the South African market, Shoprite SA has effectively adapted to changing consumer preferences in 2024. They have recognized the growing demand for promotions, combo deals, and collective buying, and have responded by implementing strategies to cater to these needs. Additionally, they have observed a shift in customer behavior towards private label products. In response, Shoprite SA has expanded its premium store offerings and on-demand delivery services, while also exploring new ventures in mobile services and financial offerings.

In the e-commerce sector, the entry of Amazon into South Africa in May of this year has garnered significant attention. Tech Safari, a reputable industry publication, has suggested the possibility of a pricing war that could benefit consumers by providing faster deliveries, a wider product selection, and improved support. This competitive landscape is expected to remain in focus throughout the remainder of the year and beyond, as major players like Takealot have responded to Amazon's entry by launching a free delivery service with a monthly subscription.

At A Glance | Four Trends

The key to success for retailers in the second half of the year will be to develop and implement strategies that enable them to anticipate, experiment, adapt, and satisfy consumer demands, even before those demands become apparent. According to Forbes, there are four key trends that retailers should focus on in order to achieve this goal:

Sustainability

Customers expect organizations to demonstrate their commitment to environmental sustainability. However, they are also wary of "greenwashing," where companies make exaggerated or misleading claims about their environmental practices.

AI

The retail industry is in a constant state of flux, and retailers must leverage AI to optimize efficiency and processes while maintaining a human-centric approach.

Personalised Communication

Consumers are increasingly expecting personalized and relevant messaging that resonates with their individual preferences and behaviors. They are less receptive to generic marketing messages and prefer empathetic and tailored communications. Businesses are shifting their strategies to focus on building emotional connections and understanding customer needs, rather than solely relying on transactional interactions.

Social Commerce

A recent study conducted by CRM Essentials revealed that a significant 37% of consumers place a higher level of trust in influencers compared to brands. In light of this finding, the convergence of social commerce and creator economies presents a mutually beneficial opportunity. Brands are now prioritizing the art of storytelling on social platforms, culminating in a seamless transition to a commercial transaction.

July 01, 2024