NRF Retail's Big Show: 4 Consumer Trends Driving Retail in 2024

As the dust slowly begins to settle following the latest NRF 2024 Retail's Big Show and the last out-of-town visitors leave, we pause to reflect on some of the lessons gleaned from the annual industry gathering. Throughout the event, leading retailers from various sectors convened to explore the industry's newest innovations, solutions, and challenges, focusing on what's most important to modern consumers today. From increasing concerns surrounding the cost of living to generative AI, augmented reality, the Metaverse, and social media shopping, countless external factors were found to be shaping consumers' expectations of retailers in 2024. To help retailers redefine their strategies, we're highlighting four of the main consumer trends driving retail in 2024.

# 1 Affordability of Essential Items

Although consumer confidence is rebounding, many consumers still rely on assistance from their favorite retailers. Concerns surrounding the increasing cost of living have stabilized over the last year, as inflation rates dropped at the end of 2023, according to Capgemini. Coinciding with NRF 2024, the multinational information technology services and consulting company released its annual consumer trend report, ‘What Matters to Today’s Consumer'. The report revealed a significant shift in consumer sentiment: only 43 percent of US consumers were concerned about a decline in their personal finances over the coming months, a stark contrast to the 80 percent who felt this way just a year ago. However, despite this shift, consumers' expectations of retailers in terms of the affordability of essential items have only increased. The report found that over two-thirds, or 70 percent, of consumers wanted these items to be discounted even more.

However, retailers who are ready to meet these expectations will be rewarded, as 73 percent of consumers said they would be loyal to retailers that support them during these challenging times, with a comparable percentage expressing their intention to increase purchases from such supportive retailers in the future. “Though consumer concerns have eased this year, they remain prudent about spending and are either unwilling or unable to spend more," said Lindsey Mazza, global retail lead at Capgemini Group. "It is crucial for retailers to transform their operations in order to pass on cost benefits to consumers, who are increasingly selective in their choice of products and brands.” In addition, consumers demand transparency from retailers regarding product changes. A significant 65 percent expect to be informed when there's a reduction in a product's weight or quality without a corresponding price drop, a phenomenon known as shrinkflation and skimpflation, respectively.

#2 Tapping in Generative AI

Generative artificial intelligence has been all the buzz the past few years and, unsurprisingly, is being increasingly used by consumers while shopping. According to the report, 72 percent of consumers are aware of the use of generative AI in shopping experiences, and currently, one-fifth of them have used it while shopping. Of those consumers who have already used AI while shopping, over half have already acted on product recommendations made by these tools and stated it notably enhanced their experience. Not just limited to Generation Z, 57 percent of millennials and 50 percent of boomer consumers used generative AI to recommend products.

The report found that generative AI is poised to significantly boost operational efficiency for retailers, with eight out of ten retail organizations noting that employing generative AI can streamline internal processes and bolster facility upkeep. Retail organizations aim to leverage generative AI in their logistics to help optimize deliveries, operations management, and supply chain management to ensure they can better adapt to shifting consumer preferences.

However, consumers are still wary of the pitfalls of this new technology, as the report highlights concerns surrounding generative AI's potential misuse. 65 percent of consumers said they were worried about the technology creating deceptive or inaccurate testimonials and reviews. Therefore, retailers should keep transparency, honesty, and customer validation in mind when leveraging generative AI.

#3 Social Media Shopping Trends

Social media continues to play an increasingly important role for retailers. Not just for product discovery and consumer engagement, these platforms are increasingly emerging as the preferred platform of choice for shopping, especially among younger generations. According to the report, more than half of the consumers who purchased a product on social media also sought out advice or guidance from influencers claiming they give a clear breakdown of factors to consider before making the purchase. Additionally, a comparable number of these social media shoppers also stated they turn to influencers for access to exclusive discounts and offers.

#4 Sustainability is Key for Purchasing Impact

While sustainability has always been important to both retailers and consumers, the report found a growing demand from consumers for greater transparency in retailers' sustainability practices. Consumers are increasingly seeking out more detailed information concerning a product's sustainability aspects, including its effects on biodiversity, air, and water resources, before deciding to purchase. Currently, more than half of the consumers questioned were skeptical of corporate sustainability claims. However, if provided with thorough details on a product's environmental footprint, the majority of those questioned were willing to switch their choice to more eco-friendly options.

At the same time, 63 percent of consumers expect brands to actively educate them about sustainable products. To enhance their understanding of product sustainability, nearly half of the report's participants advocated for the addition of comprehensive labels and QR codes on packaging. Many noted that these would offer vital information on the product's carbon footprint, water usage, and recyclability features in an easy-to-access and clear manner.

"Retailers need to rethink operational strategies and adopt innovative solutions, such as AI, automation, Internet of Things (IoT) to enable smarter demand sensing, touchless forecasting, efficient fulfillment options and offer improved consumer interactivity," added Mazza. "All of these provide opportunities to reduce the cost of goods sold and unlock cross-channel growth.”