Top 5 Strategies for Successful Retail 2024: Part 2, Reforming retail channels

In today's ever-evolving retail landscape, balancing immediate hurdles with future growth is crucial for success. High inflation, the lingering effects of the pandemic, and geopolitical tensions present retailers with soaring costs and consumers with financial strains.

However, some retailers have flourished amidst these adversities thanks to their agility, deep consumer insights, and strategic investments. The question is, how have these factors contributed to their success, and what are their plans for 2024? The latest Retail Report for 2024, featuring insights from 44 leaders of UK and international firms, reveals their strategies for the coming year, marked by an overarching optimism.

Here, we share part two of five main takeaways for retailers looking to fine-tune their strategies for 2024.

#2 Reshaping your retail channels for 2024

As consumers continue to return to in-store shopping, retailers should look to invest in logistics and technical advancements for a seamless shopping experience. Following the pandemic, there has been a significant return to in-store shopping as well as online shopping. According to recent insights from Mastercard SpendingPulseTM, US retail sales, excluding automotive, grew 3.1 percent year-on-year. Online retail sales saw a significant boost, with a 6.3 percent increase compared to the previous year, with a 2.2 percent growth for in-store retail sales. While online spending is growing more rapidly, capturing an increasing share of the market, in-store sales will continue to dominate a larger portion of overall retail expenditure. As a result, retailers are constantly refining their multi-channel sales strategies. The dynamic nature of this sector demands flexibility and innovation from businesses, necessitating a sophisticated integration of various sales channels.

Looking at the analysis of the sales channel data from the interviewed retailers, it's evident that online platforms will increasingly shape the retail landscape over the next year and even more so in the next three years. However, this shift is more gradual and evolutionary than a sudden, revolutionary transformation. 75 percent of the retailers surveyed stated they expected that online sales would either be the same or up year on year in 2024, while 66 percent stated store sales would either be the same or down as a proportion of the overall mix.

Nevertheless, many of the survey participants emphasized that this trend doesn't imply a decline in store sales; on the contrary, in-store revenues are actually on the rise. Several retailers surveyed revealed they aim to open more stores in 2024, with many favoring high streets in key locations and regional cities. About 34 percent of the respondents intend to keep their store presence consistent in these regions, while 27 percent aim to expand their retail footprint there.

Several retailers are currently experimenting with their retail channels, with some opening larger, more flexible stores in major cities over several smaller locations in several towns, where there is capacity to test out technological advancements and offer new in-store experiences. In addition, one-fifth of the retailers surveyed noted they were keen to open stores in retail parks or strip malls, underscoring the interest in these spaces.

Digitizing your physical stores

For many of the retailers interviewed, digitizing their stores to increase operational efficiency, offer better, more seamless customer experiences, and empower their sales staff to offer better services is a key component of their retail strategies for 2024. Enhancing communications between departments is also important for retailers going into 2024. 92 percent of the retailers questioned stated they currently work with platforms like Microsoft Teams, Zoom, and Slack to enhance communication with store teams, while 78 percent noted they use mobile devices for operations in the store environment, and 70 percent make use of intranets to support interdepartmental communication. Some retailers, such as Pandora, use a dedicated internal app to help streamline better communication across all its staff.

Focus on online

Unsurprisingly, investing in online was high on the priority list for many retailers, but for those who are digital-first, it is especially important to keep up to date with the latest trends and technologies to retain and engage with customers.

Many retailers noted they were investing in online marketing through social platforms, newsletters, and search, creating unique content for Instagram and TikTok via paid ads and product ads. As online channels continue to grow and offer a bigger return on investment, several retailers are investing in it accordingly. However, traditional marketing was still the main focus for most retailers, especially in terms of investment.

Tech Support

Another segment that retailers are ready to invest in is tech support, with some investing over one million USD in the area each year. A key area for retailers to improve operations across their businesses is ensuring all operation systems are up to date and able to connect and integrate data seamlessly, improving internal workings. Overarching view into stock and customers This year's retail survey found that 59 percent of the respondents possess a real-time unified stock view, while 27 percent have a unified stock view that isn't real-time, and 10 percent lack both.

Regarding customer insights, 51 percent report having a real-time comprehensive view of their customers, 27 percent have this view but not in real-time, and 22 percent don't have it at all, highlighting the need for retailers to have a single view into their stock and customers. Retailers that had invested in stock management systems noted it was essential to retain a clear view of inventory in order to better manage margins and sell-through rates of products at a category level.

Managing deliveries

Delivery was another area of focus for retailers, with 32 percent of retailers surveyed noting they predicted bigger demand for more environmentally friendly deliveries in 2024. 29 percent and 27 percent added that they foresee increasing demand for next-day and same-day deliveries as well.

With many noting growing demand for more convenient deliveries, increasing interest in personalization shopping experiences is expected to go hand in hand.

Based on those surveyed, it is evident that physical retail is still very much a core component of the retail strategy. With many retailers investing in building a strong retail footprint as memories of the pandemic fade, ensuring investments are made in the right areas is key. Having a digital presence that seamlessly matches the in-store experience is also important to ensure consumers are engaged and willing to make a return purchase.

Stay tuned for part three next week, which looks at rethinking retail channels.