Retail & Leisure Outlook Report 2024

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Download our Retail & Leisure Outlook Report 2024 (preview) to learn about key retail trends and insights for next year!

This report is a must read for anyone in retail or leisure (or associated industries) in order to deeply understand the drivers of consumer spending and behaviour, and what trends retailers need to be aware of in 2024 to survive ongoing disruption. We'll email you the full report version as soon as it's published.

 

Click here to explore working with Retail Economics for publishing world class thought leadership research like this.

 

Contents:

• Foreword

• Section one: The Big Picture

• Section two: Megatrends for 2024

  • Trend one: Sustainability & ethical consumption

  • Trend two: Generative AI & the tech revolution

  • Trend three: Omnichannel reality

  • Trend four: Disruptive models

  • Trend five: Navigating in a permacrisis

• Section three: The Outlook for 2023

  • Consumer trends & forecasts

  • Business trends & forecasts

  • Future trends to watch out for

• About Retail Economics

 

Section one: The Big Picture

As we approach 2024, the UK finds itself at a critical juncture. The nation has navigated successive waves of disruption, continuing to feel the impacts from the pandemic, geo-political instability and the ongoing effects of the cost-of-living crisis. With interest rates remaining at decade-highs, fragile consumer confidence and the prospect of a general election sets the scene for heightened uncertainty against a backdrop of ongoing business and consumer caution. Nevertheless, there is room for optimism.

 

Inflation is falling fast, the labour market remains robust, and the consumer sector has performed stronger than many had predicted. The worst of the cost-of-living crisis has now passed, and fears of a deep and prolonged recession have largely faded.

Businesses managing to pivot their proposition to focus on value have outperformed the market; gaining market share and winning new customers.

In the final report, this section will focus on the key economic factors impacting the prospects for the consumer sector.

 

We will dissect these main components to set the stage for our outlook for 2024 which are likely to include the following areas:

Macro outlook: The outlook for economic growth, inflation and the labour market and its potential impact on retail and leisure spending.

 

Wage growth and employment: The labour market has remained resilient, but wage growth is expected to soften as unemployment rates rise. This section will look more closely at the squeeze on household spending power and focus on the outlook for 2024.

 

Housing market and interest rates: The Bank of England's monetary policy will play a pivotal role in the outlook for consumer spending power and confidence. Any changes in interest rates will directly affect consumer loans and mortgages, influencing discretionary spending. We will take a look at the current and future strength of the housing market, and the impact of interest rates on mortgage repayments.

 

Government policies: Fiscal measures like tax cuts or increases have a direct bearing on disposable income. Also, there will be increasing focus on government policy as we near an election.

 

Consumer confidence: Importantly, confidence is expected to remain fragile as high interest rates, a weakening housing market and lacklustre economic growth creates an environment of caution. Here we’ll explore consumer confidence in detail and look at the key drivers.

 

Global factors: From trade wars to oil prices, global events can have a trickle-down effect on the UK market. The current geo-political arena remains a key concern to global shocks with the Russia-Ukraine (Israel-Palestine) conflict still looming over commodity prices and supply chains.

 

 

Section two: Megatrends for 2024

The retail and leisure landscape is not merely evolving in 2024 - it's undergoing a transformative shift. It’s being driven by a series of mega trends that are redefining many aspects of the sector. These trends are set to shape consumer behaviours, business models, and the broader retail ecosystem in profound ways.

 

The past year has provided a glimpse into the future, with digitalisation surging to the forefront, sustainability transitioning from a niche concern to a mainstream imperative, and global economic dynamics exerting palpable influence on business operations. From inflationary pressures to interest rate dynamics, the economic backdrop plays a pivotal role in shaping the trajectory of these transformative forces.

 

Yet, beyond the numbers and forecasts lies the human element—the evolving consumer. Today's consumer is more informed, more discerning, and more connected than ever before. Their expectations are reshaping retail and leisure, driving demand for personalised experiences, ethical practices, and seamless integration between the digital and physical realms. The rise of e-commerce, the push for sustainability, and the integration of cutting-edge technologies like AI are not isolated phenomena; they are characteristic of broader mega trends that are intertwined and mutually reinforcing.

 

This section delves deep into these megatrends, offering a panoramic view of what 2024 holds for UK retail. It draws upon a wealth of data, insights, and forward-looking analysis to support business planning, strategy development and many other aspects of retail and leisure operations.

 

Trend one: Sustainability & Ethical Consumption

The modern consumer is becoming increasingly environmentally and ethically conscious.

This continued trend is pushing retailers to adopt more sustainable practices, from sourcing to packaging. Brands that align with these values, emphasizing ESG (Environmental, Social, and Governance) principles, are likely to witness enhanced loyalty and market share if communicated correctly.

This section will explore sustainability and ethical consumption, a theme that will only become more prominent as we look toward the future.

 

Trend two: Generative AI & the Tech Revolution

Generative AI is emerging as a standout force above all other mainstream technologies.

The technological undercurrents shaping the retail and leisure sector are becoming increasingly dominant as the necessary computing power is becoming more accessible.

This cutting-edge technology, capable of creating content, designing products, and predicting consumer behaviours, is set to revolutionise retail and leisure experiences in ways yet unimaginable.

Drawing insights from our research, it's evident that the fusion of AI with business operations is more than just a megatrend – it’s a complete shift that will disrupt many industries and present new opportunities.

Retail and leisure brands poised to harness the capabilities of generative AI stand at the cusp of unprecedented innovation, offering bespoke solutions and experiences that were once in the realm of science fiction.

 

Trend three: Omnichannel Reality

Getting omnichannel right within the retail and leisure customer journey is exceedingly challenging for many – but getting it right offers significant rewards.

The evolution of omnichannel is being driven by the increasing complexity of the customer journey, blending online and offline experiences across multiple platforms and devices.  From the rise of online channels in hospitality to the burgeoning experience economy, the boundaries between digital and physical retail are increasingly blurring as technology affords greater opportunities.

For example, social commerce (powered by influencers on platforms like TikTok) is reshaping purchasing behaviour, while the connected customer journey emphasises a harmonised approach across touchpoints.

Here we take a look at how the resurgence of in-store experiences, supported by advanced technologies like Generative AI and digital wallets, is redefining the purpose of brick-and-mortar establishments among other issues.

 

Trend four: Disruptive Business Models

The retail and leisure sectors are experiencing significant disruption from innovative business models that are challenging the status quo at every turn.

The ascendancy of marketplaces and direct-to-consumer strategies are not just alternatives but game-changers. They will continue to disrupt and reshape traditional operating paradigms as we head into 2024 and beyond.

Dynamic pricing, sophisticated subscription models, and specialised online marketplaces are capturing the attention of consumers in new ways.

Amidst this transformative backdrop, we look at the range of factors that are driving innovative thinking in these areas and how businesses can leverage alternative business models to their advantage.

 

Trend five: Navigating a Permacrisis

Looking back at the last three years, the retail and leisure sector finds itself navigating a 'permacrisis' landscape, characterised by a series of prolonged and overlapping challenges.

From the lingering effects of the Covid pandemic to mounting geo-political instability, businesses are grappling with unprecedented uncertainties. The looming shadow of higher interest rates, corporate distress, and a potential debt bubble further complicate the scenario.

In this tumultuous environment, the concepts of resilience and agility have emerged as paramount. Business need to deeply understand the associated risks and manage risk as effectively as possible.

In this section we take a look at the key crisis points for businesses to be aware of and urge them to integrate intelligent risk management strategies into their planning for 2024.