Acosta Group announced its 2024 retail predictions, identifying how brands and retailers can win shopper loyalty, drive sales, and achieve efficiencies in another year of anticipated marketplace disruption.
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1. Driving Growth Will Take Standout Creative Measures
2. Seamless Retail Redefines Shopper Delight
3. AI Propels Retail Efficiency and Shopper Experience
4. Shoppers Prioritize What's NOT in Their Products
5. Retailers Turn Up the Heat to Attract Diners
DRIVING GROWTH WILL TAKE STANDOUT CREATIVE MEASURES
According to Acosta Group's recent Retailer Confidential Report, 90% of top US retail leaders are prioritizing unit growth in 2024. Strong promotions will be key in another year of cautious spending, channel shifting, private label purchasing, and value messaging.
Retail media networks that deliver measurable ROI are increasingly key to an effective promotional strategy. US retail media ad spend will reach $60B in 2024 according to Insider Intelligence, delivering 70-90% margins vs. the 3-4% seen in traditional retail profits, per Boston Consulting Group.
When developing a promotion strategy, Acosta Group advises:
- Create promotions that don't erode margins for retailers, brands, or shoppers
- Deploy/evolve revenue growth management (RGM) programs
- Practice disciplined post-promotion analytics
SEAMLESS RETAIL REDEFINES SHOPPER DELIGHT
The consumer shopping experience is not linear. Retailers and brands are enabling seamless shopping in the moment – anywhere, anytime, for anything – and dialing in to reach consumers with innovative tactics and disruptive technology. Retailers will continue investing in both store and digital upgrades to meet shopper demands.
Key findings:
- 56% of omnichannel shoppers prefer shopping in-store for groceries and household items, and 69% of grocery sales in 2023 were digitally influenced (Grocery Doppio)
- 63% of shoppers use an app on their phone inside a store while grocery shopping – that number jumps to 80% for Gen Z and 81% for Millennials (Acosta Group)
- Omnichannel shoppers spend two to four times more than single-channel shoppers (Groceryshop, 2023)
AI PROPELS RETAIL EFFICIENCY AND SHOPPER EXPERIENCE
The most successful applications of AI will drive efficiencies that improve productivity as they benefit shoppers with an enhanced, more customized shopping experience. Gen Z is the most comfortable with retailers using AI to improve their shopping experience via personalized rewards/recommendations. Increased investment in AI is expected to drive $113B in value by 2025, according to Grocery Doppio.
Growth opportunities for retailers include prioritizing use cases for supply chain and logistics efficiencies, implementing localized assortment and price/promotion optimization, dietary/nutrition recommendations, workforce efficiency to streamline operations, personalization/targeted deals, and product development
SHOPPERS PRIORITIZE WHAT'S NOT IN THEIR PRODUCTS
The acceleration of the clean label trend in U.S. food was sparked by the passing of The California Food Safety Act of 2023, which takes effect in January 2027.
- The act bans four harmful chemicals, impacting up to 12,000 primarily food products from processed foods sold or processed in California
- Companies will be required to switch to ingredients now used in the EU and elsewhere, and several large brands have already pulled the additives
- 41% of consumers have heard of clean label, relating it to natural and healthy, and 78% find it appealing when provided a definition, per FMCG Gurus
- Natural and organic shoppers' values will go more mainstream
Retailers and brands will benefit from:
- Understanding that analytics segmenting key label attributes will be important
- Actively communicating what's NOT in the product
- Leveraging AI for customized shopper lists
- Using promotion and digital/social media to educate shoppers and demonstrate value
RETAILERS TURN UP THE HEAT TO ATTRACT DINERS
There will be competition for shopper share of stomach between retailers, c-stores, and restaurants in 2024, further blurring the lines between foodservice and retail as it also drives new opportunities for channel growth and meets changing shopper demands.
Retailers see the opportunity to expand made-to-order meals to attract cost-conscious shoppers who want restaurant quality solutions anytime, anywhere. Acosta Group's Retailer Confidential Report reflects that 71% of retail executives are doubling down with fresh foods.
Activity across all channels:
- Retailers: replicating the restaurant experience with food halls and local restaurant partnerships
- C-stores: responding to requests for hot foods and new, globally inspired flavors for breakfast
- Restaurants: bringing diners back for the benefits and convenience amidst continued high grocery costs and the return to in-office work
Some food for thought for retailers:
- Enrich the in-store experience and create reasons to linger, sample, and dine
- Create cross-promotions to provide shoppers with meal solutions across all meal occasions
- Elevate digital integration
