In the last month or so, you’ve probably seen a lot of news stories about the economy as experts reflect on the last year and look toward the future. Interest rates remain high and inflation is still a big concern, but there are positive signs too…and plenty of indicators that astute retail chains should pay attention to.
Here is a roundup of observations and a few rays of hope if you’re a retailer:
Consumers are spending.
The Commerce Department reported this month (January 2024) that retail sales were up 0.6% in December 2023 and up 0.3% in November 2023. This flies in the face of some economists’ predictions that consumers would pull back on spending in the fourth quarter of 2023. They didn’t, which is perhaps a sign of continued confidence among consumers in their finances and the future.
Brick and mortar retail sales could see strong growth.
EIU, the research and analysis division of The Economist Group, recently shared an outlook for 2024 on consumer goods and retail and predicted that brick-and-mortar stores will account for over 85% of total global retail sales in 2024. The firm projects that retail will grow 6.7% in 2024 and that offline retail will see the strongest pace of growth since the post-pandemic rebound of 2021.
Demand for retail space is high.
In December 2023, the S. retail vacancy was 4.6%--the lowest it has been since Costar started tracking it in 2007. The cost of financing and still-high cost of land and materials resulted in a dramatic drop in new construction in 2023 compared to 2022 (46 million square feet started in 2023 compared to 82 million square feet started in 2022). That is exacerbating the demand for new retail space, of course, which will be a continuing challenge for retailers looking to add locations in 2024.
Innovation is the new norm.
IHL Group shares that retailers that have embraced artificial intelligence and machine learning technologies experienced 2.3 times the sales growth and 2.5 times the profit growth of their competitors for 2023. Projections for 2024 indicate a similar trend (2.4x estimated sales growth and 2.6x estimated profit growth). AI enables retailers to optimize every aspect of their business, from forecasting sales to product development to demand planning to enhancing the omnichannel shopping experience. (Read National Retail Federation’s 2024 predictions.)
At SiteSeer, we see every day how important it is for retailers to do their research and make decisions based on good data, not guess work. We advise our retail clients to analyze past performance, study the market, and plan ahead. Here are a few takeaways from the above:
Listening to customers is more important than ever.
It is always essential to understand your customers, but in an era where consumers seek inviting shopping environments and personalized shopping experiences, it’s essential to understand customers’ desires and behaviors. You need to know what is important to them and how you can meet their needs. If you don’t, your competitors will.
For retailers looking to expand, fresh approaches and creativity are a must.
Given the current climate, new construction may not be feasible, depending on the market you’re considering for your retail chain. And with high demand for existing retail space, expanding in 2024 may require adapting your strategy. Make sure your development team explores all the options. History has proven that the smartest retailers are opportunistic. They study trends and do not ignore the challenges of the climate in which they operate, but rather, find ways to work around them.
Cost management is important, but you must invest in your success.
Trying or uncertain times might warrant cutting costs, but if you’re planning for the future, it’s important that you do not cut back in the wrong areas. Do not hurt your business by cutting back on marketing, operations or targeting new customers and revenue sources. These are good investments in your long-term success.
Use the right tools to make smart decisions
Whatever your goals in 2024 and beyond, SiteSeer will help you make smarter decisions. Our platform will help you evaluate sites, understand your customers, study your competitors, and grow the smart way.
Contact us for a demo to learn how to achieve your market expansion and site selection goals using quality data and powerful tools.
