Put Our 2024 Retail Predictions to Work

Retailers breathed a tempered sigh of relief as the results of the 2023 holiday shopping season rolled in. U.S. and global online retail sales were up 1% and 3%, respectively, due in part to increased demand. So how does that impact our retail predictions for 2024? 

Inflation is expected to stabilize with some categories possibly experiencing deflation, and consumer sentiment seems to be on the rise. Given that, retail execs are thinking about growth in three areas: building new revenue streams, retaining loyal shoppers, and improving profitability. Our retail predictions focus on using your data to personalize and remove friction from the shopping journey to grow both revenue and relationships. 

Prediction 1: Retailers will prioritize AI in service 

Last year was chock full of buzz around generative artificial intelligence’s (AI) potential to increase productivity. This year, retailers will focus their AI initiatives on enhancing the customer experience. A big part of that drive will be around improving customer service. This isn’t surprising, as our research found that shoppers rate service as the worst aspect of their retail experience.

In fact, 32% of retailers told us generating personalized responses for agents to send to customers is their number one use case for AI. They also plan to use it to create summaries of customer service cases (25%) and power chatbots for self-service (23%), which will help resolve cases faster and lower case volume. This lets retailers offer empathetic engagement and speedy resolutions while maintaining a connected, consistent experience across every service channel, increasing customer satisfaction and loyalty. 

What you can do today: As you unify and clean up your data and prepare channels for generative AI, be sure to include your customer service agents throughout the process. This allows you to collect and incorporate their feedback, build in training data, and keep them in the loop.

Prediction 2: Messaging apps take the wheel in the shopping journey 

Messaging apps are becoming an important part of the shopping journey, especially for younger generations and emerging markets like Brazil and India. Users open WhatsApp 23 – 25 times a day, and Meta reports more than 600 million conversations between people and businesses daily on its platforms. 

Why? Because messaging apps are where consumers are hanging out, so it makes sense to embed intuitive shopping experiences on them. What’s more, messaging apps let you send conversational, hyper-personalized, and rich multimedia offers and support services in real time, when and where a customer wants to engage.

It’s also considerably cheaper to market at scale via messaging apps. We expect to see retailers using customizable message templates that include brand and product videos and images with interactive messages that allow consumers to review and purchase items in messaging apps. 

What you can do today: Remember that each channel is different. You’ll want to do more than just copy your email program over to a messaging app. Understand the “personality” of each app and study best practices. Then use the interactivity of mobile to adapt your marketing program to the kind of experience users expect there.   

Prediction 3: Personalization at scale cuts through the marketing noise 

This could be a breakout year for savvy retailers who prioritize AI-driven personalization capabilities to deliver compelling and relevant messages. This means making the most of email send times, predictive segmentation, and product recommendations that make shoppers feel like one of a kind. Why? Marketing sends via email and SMS messages are up 68% from 2020, making it more challenging to break through the noise. 

Luckily, our research found 93% of retail decision-makers were investing in personalization throughout the customer journey. Marketing organizations generally focus on generating engagement, traffic, and sales with their marketing messages. This approach is less successful when everyone is doing it. 

Instead, try a mix of volume promotional campaigns (like daily offers) and personalized messaging (like product recommendations or content) to be more effective. AI can make data-driven recommendations around messaging, volume, and send times and automate your outreach (at scale) to improve conversion rates. 

What you can do today: Choose one marketing tactic to pilot AI personalization and test, looking at how this and your results fit into the full customer experience. To succeed, put your customer first and choose a function that addresses a pain point in your existing customer journey.

Prediction 4: Apps become the gateway to customer loyalty

Retailers will up their app game this year, so say goodbye to loyalty cards or key fobs. They’ll focus on building new mobile apps or enhancing existing ones to seamlessly integrate loyalty programs and customer profiles to deliver connected and personalized shopping experiences. 

The most valuable feature of these apps will be push notifications for promotions and discounts (45%), app-only deals (40%), and loyalty redemption (37%) — actions that are much more difficult to carry out via traditional mobile or desktop websites. Done right, your app makes it easier to gather first-party data that helps you better personalize the shopping experience. Knowing your loyal shoppers’ preferences also lets you create new revenue streams by developing products and services in response to their evolving needs and expectations.

What you can do today: Apps aren’t the right fit for every retail vertical or customer segment. To market your app, research which customer segment will be the most prolific for your app, and what features they engage with, and build the app around their needs. Then, continually test and refine the mobile app experience — including implementing user feedback. 

Prediction 5: Immersive shopping reimagines reality 

Even as brands get their footing under generative AI, tech leaders are already looking at what could be next. Meta, Apple, Google, Open AI, and others are racing to deliver wearable devices that use multimodal AI, which understands drawings, charts, and hand gestures. These will combine AI with virtual and augmented reality to deliver spatial computing.

Spatial computing requires a wearable device and blends our physical and virtual worlds so we can interact and communicate in new ways with each other and machines. What could this mean for retail? Spatial computing could help retailers create rich experiential interactions that grow brand love and build shopper loyalty. It would transform the concept of “immersive” shopping, by allowing life-size products to appear wherever you are and even let you share the experience with someone across the globe from you. 

What you can do today: While it’s shiny and cool, spatial computing might not make sense for every brand. Visual categories, such as fashion, beauty, and home furnishings, are likely to see better ROI unless it’s brand activation, like a game for a pet brand. So first, determine if spatial computing is worth the investment for your product lines. If it is, be willing to put the time and resources toward creating an unbelievable experience that makes the most of the app and device capabilities. This is not the time to cut corners.

What these retail predictions mean for you

Each of these retail predictions relies on your data. Essential for training AI, data is also foundational to understanding your customers so you get the most out of marketing tactics and channels, whether that’s messaging, brand apps, or spatial computing to drive revenue. 

To make the most of the year ahead, retailers should first assess their data strategy and be sure it aligns with their business objectives. Once your data is in order, it’s time to move forward with AI and automation to accelerate business initiatives that both enhance and simplify the shopper experience.