Top 5 Strategies for Successful Retail 2024: Part 1 Optimistic Outlook

In today's ever-evolving retail landscape, it's increasingly evident that managing a business requires a fine balance between addressing immediate challenges and paving the path to long-term success.

With inflation reaching its highest point over the last three decades, combined with the after-effects of the global pandemic and the ongoing conflict in Ukraine, retailers across all sectors grapple with escalating expenses, while consumers face difficulties in managing their daily expenses and basic needs.

Yet, despite these challenges, there are retailers who have not only survived but thrived in these tough conditions. Their success is attributed to adaptability, a clear understanding of their consumer base, and strategic investments in key areas. But what factors have helped them develop a winning retail strategy? And how do they plan to leverage this into 2024? In the latest Retail Report for 2024, 44 leaders from UK and international companies share details on their retail strategies for the year ahead, which is heavily underlined by a sense of positive momentum. Here, we share part one of five main takeaways for retailers looking to fine-tune their strategies for 2024.

#1 Remain (cautiously) optimistic about 2024

Although the economic situation is set to improve in 2024, inflation is still a main concern for retailers. In 2023, the Federal Reserve made clear progress in decreasing inflation while maintaining growth. However, even though inflation is lower, interest rates remain historically high. With inflation expected to remain over 2 percent through 2024, the Federal Reserve anticipates a 1.5 percent growth in GDP in the US over the year. Despite this however, US consumers seem to be optimistic about the Federal Reserve's ability to smoothly stabilize the economy in 2024.

The positive outlook on the macroeconomic landscape is reflected by most of the 41 retailers surveyed in the Retail 2024 report. 54 percent anticipate a slight increase in year-on-year sales compared to 2022, while another 20 percent predict a significant rise. Approximately 74 percent of respondents anticipate sales growth in 2024, suggesting increased confidence in the sector compared to the previous year.

Leading lifestyle retailers like Swarovski, who persistently invest in their brand development and stores, remain optimistic amidst economic challenges. Swarovski's UK and Ireland managing director, Craig Ash, credits their 'Lux Ignite' strategy for brand enhancement and resilience, which includes store renovations, new openings, and improved customer experiences across various channels to mitigate the tough economic climate. Similarly, other leading retailers attribute their 2024 sales growth projections to factors like increased tourism, loyalty programs, market expansion, and new sales channels.

In addition, the retailers interviewed acknowledged the value of justly compensating their employees, despite a potential increase in minimum wages. Molton Brown's General Manager for Europe, the Middle East, and Africa, Simon James, said in the report: “A year ago, we committed to the Real Living Wage for our factory and store employees. This decision is making a positive impact. In line with our Diversity, Equity, and Inclusion (DE&I) initiatives, we've introduced a short-term incentive bonus scheme for all head office staff this year. Previously, bonuses were limited to store and factory workers, and mainly middle management and above. Now, it's extended to everyone.”

Value fashion retailer Primark's CEO, Paul Marchant, points to reduced freight costs and declining energy prices as additional reasons for a positive outlook for the coming year, despite rising labor rates.

Overall, retailers are recommended to refine their strategies to effectively navigate inflation. As there's a limit to how much consumers will accept price increases, retailers are advised to focus on technological investments to optimize in-store processes and value chains instead of transferring elevated operational costs to customers, who are already facing increasing costs and decreasing discretionary income.

Click here for part 2, which looks at rethinking retail channels.