Retailers Plan for Big Changes to the Way People Shop in 2024 

With a record-breaking peak 2023 season in the books, retailers are taking a hard look at lessons learned and making pivotal changes to the way people shop. In a recent study by Retail Dive, retail executives shared key strategies they’re continuing and those they’re abandoning this year. Much of it is driven by how shoppers responded to last year’s tactics, which revealed the need to walk a more tenuous line between cost containment and customer experience.  

Economists predict that 2024 retail sales will grow by 6.7% USD and overall volume will increase by 2%, bolstered by a decrease in inflation, but countered by dwindling household savings. Online retail is expected to move into double digit growth for 14.6% of total global retail sales. Yet, experts caution that challenges remain. Retail executives continue to journey through post-pandemic recovery and grapple with rising labor costs, lack of visibility into the supply chain, global political and economic hotspots, and consumers’ increasing need to seek out discounts regardless of brand.  

Still, there is much to be hopeful about in retail. eCommerce and brick-and-mortar are facing positive outlooks as they fine-tune their omniexperience strategies and navigate this current wave of AI transformation. The study reveals that retailers are willing to pivot quickly when a key initiative fails to drive intended results – indicating positive agility to change course in a fluid environment.  

It also reveals what retailers are doing right and affirms that their devoted efforts to improve customer experience paid off in the 2023 peak season – and will continue to do so.  

In comparison to peak 2022, three out of four retail executives reported that peak 2023 was “more successful” or “far more successful” across the board:  

Energized by this positive experience, retail executives are looking at what’s working, what needs to change, and they’re taking action.  

An area of persistent challenge is order fulfillment. Retail executives report they’re tackling the following:  

Customer behavior data is fueling retail decisions about what strategies to continue, abolish, or put into place in 2024. Here’s what they had to say about consumer behavior.  

Customers continue to choose convenience when it comes to order fulfillment, regardless of channel. While in-store fulfillment continues to be popular, there has been a marked increase in traditional doorstep delivery.  

Compared to 2022, retail executives report that the following channels have seen significant increases in customer utilization: 

The rise suggests that customers are moving fluidly between fulfillment channels, with a normalization of omniexperience shopping, where shoppers view their interaction with a brand holistically and do not break it down into different channels.  Convenience remains a priority, and retailers must ensure their fulfillment operations are able to meet customers’ preferences.  

Retailers have been rescinding free shipping as status quo and either eliminating it entirely or requiring spending thresholds or reward memberships to obtain it. We’re starting to see data on how shoppers are reacting to these constraints.  

Retailers charging for shipping found that shoppers still want choices in delivery speed and cost. As a percentage of all orders, customers chose the following fulfillment options:  

More than half of retail executives found that customers will give up 1-2 day delivery (speed) for:  

Consumer willingness to trade speed for cost may reflect their current cost-conscious mindset. This trend may easily reverse when economic conditions improve, which means retailers need to remain agile when it comes to fast fulfillment processing and delivery.  

Next, we’ll look at what retail executives are changing their minds about.   

Retailers have adapted remarkably well in the last few years, navigating their way through crises that temporarily shuttered their doors and shifted the bulk of their operations to eCommerce. The pendulum has swung again, with a post-pandemic influx of shoppers wanting in-store experiences AND the ease and convenience of digital commerce. Customers have shifted to omniexperience retail – flowing among channels and assuming it will be a smooth journey. Retailers have done an amazing job in rising to meet these expectations.  

Perhaps one of the biggest lessons retailers have learned since 2020 is the need to be able to implement and discontinue tactics quickly. Retailers can no longer afford to take their time in changing strategies, they must be responsive and proactive to survive. This lesson learned backs the survey data: retailers are willing to stop major initiatives in 2024 that were put only the year before.  

Here’s what retail executives said they’re planning to do.  

In a recent report, we noted that 81% of retailers were charging for returns and 53% saw a drop in return rates. However, 48% also experienced a decrease in average order value and in overall sales. Retailers continue to navigate these uncertain waters. While a majority are staying the course, a significant number are rescinding stricter return policies and fees.  

Charging fees for return shipping  

Charging fees for restocking 

Offering a shorter window to accept returns  

Enacting stricter standards and restrictions (i.e., original packaging, never been used before, etc.) for eligible returns 

Most retailers that have implemented artificial intelligence (AI) for inventory, customer service, risk management/fraud protection, predictive analytics, and customized shipping intend to enhance their AI for improved performance.  

AI in inventory management (e.g., forecasting demand, managing inventory levels, optimizing the allocation of stock across different locations, etc.) 

Additionally, 42% of retail executives say they plan to enhance their forecasting capabilities for anticipating product demand by enhancing collaboration with suppliers for real-time market insights. They also anticipate:  

AI in customer service (e.g., chatbots and virtual assistants providing real-time support to customers, helping customers track shipments, answering queries, etc.) 

AI in risk management and fraud detection (e.g., detecting anomalies in shipping patterns, identifying potential fraudulent activities, etc.) 

AI in predictive analytics for returns (e.g., analyzing historical data to predict potential returns, enabling proactive measures to streamline the returns process, etc.) 

AI in customized shipping solutions (e.g., tailoring shipping solutions based on individual customer preferences) 

Enhancing AI will help improve operational efficiency and leverage the AI investments that retailers have already made.  

2024 will see a reshaping of the retail experience with a broader utilization of AI tools and the reversal of returns policies to improve the customer experience. Retailers face eCommerce fulfillment challenges, but are well positioned to innovate to meet those challenges. Those that need support are partnering with third-party logistics experts, like Radial, to fast-track their modernization and enhance their eCommerce fulfillment capacities.  

Please note: Radial no longer offers a Customer Care solution as of September 15, 2024.

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