5 Top Retail Trends to Watch in 2023 and 2024

The retail industry has always been dynamic, constantly evolving to meet the ever-changing demands of consumers.

The global retail market encompasses a variety of segments that offer both staples and more discretionary items to consumers ranging from food and beverage products to motor vehicles to cosmetics.

Today, retail includes a complex array of interrelated channels including physical stores, mobile apps, social commerce, catalogs, television home shopping, door-to-door sales, kiosks, and more.

The exponential growth of e-commerce sales in recent years has been widely acknowledged, yet there are several other interrelated trends not to be overlooked that are reshaping the retail landscape and driving innovation. In this article, we will delve into the prevailing trends that are revolutionizing the global retail industry.

1. E-commerce Boom Transforms Retail

The rise of e-commerce is one of the biggest growth stories of our time, and the allure of convenience and instant gratification has become a powerful differentiator for retailers. The global e-commerce market is projected to grow by $12.951 trillion between 2022 and 2027, driven by the benefits of e-commerce platforms, sophisticated targeting options, and an increase in smartphone penetration and online spending, according to data from Technavio.

Amazon, the global e-commerce giant, is an obvious example of the online shopping trend. With its vast product selection, speedy delivery, and personalized recommendations, Amazon has disrupted traditional retail and set new standards for customer expectations. As the largest online retailer in the U.S., Amazon has always been a formidable competitor, but recent global events heightened its performance even more. “The pandemic-induced shift to online boosted Amazon’s fortunes,” GlobalData explains in a company profile report.

As the economy changes and new headwinds arise, e-commerce will remain a powerful force. In the report Retailer Corporate Strategies in Marketplaces, Euromonitor International predicts: “Pandemic-induced digitalization of merchants, continuing consumer engagement in the digital realm, and sticky purchasing habits are expected to provide the foundation for sustained growth in marketplace e-commerce ahead, even as factors such as rising interest rates and increased regulatory scrutiny act as checks on growth.”

By 2025, e-commerce will generate more than half of the absolute value growth in the global retail industry, per Euromonitor’s analysis.

2. Omnichannel Retailing an Increasing Necessity

While some digital-first companies offer their products for sale purely online (such as Etsy or eBay), many retailers today leverage multiple touchpoints to engage consumers, whether that’s through a brick-and-mortar store, website, mobile app, or social media channels.

“Offering a compelling omnichannel experience used to be the bleeding edge of retail. Now it’s a requirement for survival,” explains McKinsey & Company. “More than one-third of Americans have made omnichannel features such as buying online for in-store pickup part of their regular shopping routine since the pandemic, and nearly two-thirds of those individuals plan to continue.”

Some companies go beyond a digital/physical blend to create an entire ecosystem of content, promotions, and interactions to encourage an “always-on” relationship embedded in their customer’s daily routines. McKinsey & Company cites Nike as a prime example, with its SNKRS and Run Club apps that foster in-person meetups and running groups and its Training Club app that delivers workouts and fitness programs, in addition to its website and 1,000+ retail stores operating around the world.

3. Retailers Lean into Digitalization and Personalization

Consumers want more than ease and convenience; they are also hungry for personalized shopping experiences that cater to their unique preferences. Retailers are leveraging customer data, artificial intelligence, and machine learning to offer tailored recommendations, product suggestions, and personalized marketing campaigns. Stitch Fix, an online personal styling service, offers a model of personalization in action. By analyzing customer preferences and using data-driven algorithms, Stitch Fix curates personalized clothing selections and sends them directly to customers' doorsteps.

“Stitch Fix has been using artificial intelligence since before it was cool—years before the onset of the AI fever dream sweeping retail today,” an article in Retail Brew notes.

In the future, retail will be increasingly shaped by advanced technologies and digitalization. In Re-imagining the Retail Customer Experience, Frost & Sullivan details specific examples, including adding AI to maturing channels such as chat and email; incorporating conversational AI into self-service channels, such as bots, interactive voice response, and intelligent virtual assistants; and using advanced analytics for improved personalization.

The significance of digitalization for the retail industry cannot be emphasized enough. IDC explains it this way: "Retailers are not investing in small step changes to their portfolios—they are digitally transforming and investing in the massive scale and speed of digital, cloud-based, connected, AI-driven, and sensor-driven automation. We are in the middle of a customer-led, technology-enabled revolution in retail."

4. Opportunities for AR and VR in Retail

Other game-changing technologies include augmented reality (AR) and virtual reality (VR), which can transform the way consumers interact with products and make purchasing decisions. Retailers are utilizing these immersive technologies to enhance the shopping experience by allowing customers to virtually try on clothing, visualize furniture in their homes, or experience products in a virtual environment. One notable example is IKEA's "IKEA Place" app, which enables customers to place virtual furniture in their homes to see how it fits and looks before making a purchase.

Analysts do not expect the AR and VR retail market to slow down anytime soon. The global virtual reality in retail market is forecast to reach $23.69 billion by 2030, growing at a CAGR of 28.0% from 2023 to 2030, according to a report by Grand View Research. Meanwhile, the research firm Global Industry Analysts predicts the global augmented reality in retail market will hit $57.1 billion by 2030, rising at a CAGR of 26.7% during this time period.

5. Sustainability and Ethical Practices in Retail

Many of the top trends shaping the future of the retail industry are driven by new technologies, but sustainability is another important issue to watch. Consumers are demanding greater accountability and desire more eco-friendly and socially responsible products and practices from retailers. Companies like Patagonia have taken the lead in this area, incorporating sustainable materials, fair trade practices, and environmental initiatives into their business models.

Due to ongoing pressure from consumers, investors, and governments, “more retailers are expected to take on greater responsibility for promoting sustainability, with many adopting a more comprehensive approach by re-evaluating their entire operations,” according to the report Retailer Corporate Strategies in Sustainability by Euromonitor International.

Higher inflation is also driving growing interest in second-hand products, which are increasingly available through online resell platforms. Second-hand retail contributes to a more circular economy and helps reduce waste.

Access Additional Retail Industry Statistics

To get more detailed retail market data, explore our collection of retail industry research reports from leading market research firms such as Euromonitor International, GlobalData, Packaged Facts, Freedonia Focus Reports, IBISWorld, Global Industry Analysts, and hundreds more. These reports provide authoritative and up-to-date information on retail market opportunities, retail trends, retail sales research, retail trade statistics, retail innovation, and competitor analysis.

About the Author: Sarah Schmidt is a Managing Editor at MarketResearch.com, a leading provider of global market intelligence products and services.

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