![Making sense of 2024’s retail trends [GfK]](images/loader.gif)
Making sense of 2024’s retail trends [GfK]
From the cost-of-living crisis to post-pandemic trends, what’s happening in retail right now? GFK address the key questions asked at their Q2 2024 retail event
Consumer confidence is still low, but it’s steadily improving – the latest score of -21 (March 2024) is a vast improvement on the -45 score we saw in January 2023. Consumers are spending more but buying less, with value up and volumes down in 2023 vs. 2019. Almost all categories are impacted, with only Small Domestic Appliances and DIY & Garden recording small value growth. In this environment, it’s not surprising to see that consumers are delaying product upgrades, with more people now waiting to replace faulty items instead of choosing to buy to have the latest model.
How has the role of credit changed since COVID?
Around 18% of consumers are now having to use savings or are going into debt just to exist. As a result, the use of credit has increased, with lending via credit cards and other loans up by 9% in the last 12 months to January 2024. Buy Now Pay Later schemes have also grown in popularity, especially among young shoppers aged 18-24. Electronics & Clothes are the categories most commonly purchased using such schemes.
Retailer credit schemes are playing a more important role in influencing consumers choice of retailer, particularly for buyers of TVs, Laptops & Tablets. For those on higher incomes leading the trends in Technology goods, more shoppers are turning to credit schemes to upgrade.
How is sustainability impacting purchasing?
Appliances with higher energy ratings tend to outperform those with lower ratings. A and B rated washing machines posted 51% and 35% growth respectively in full year 2023 versus full year 2022. In comparison, models rated C to G saw a combined value decline of 9% as consumers moved towards more sustainable and cost-effective products in the long term.
Energy efficiency has traditionally been an important factor when it comes to heavily used products such as white goods. Today, it is growing in importance in other areas, such as TVs, Small Domestic Appliances, and Mobile Phones. One-quarter of all mobile phones sold in the UK in 2023 were bought secondhand or refurbished, with demand for the latter up 36% since 2021 as consumers balance sustainability with cost-cutting.
Will Black Friday 2024 be a success?
In Black Friday 2023, spending was up slightly versus 2022, but consumers bought less, reflecting the general slowing pace of the Tech market. However GfK has been tracking a new trend where older products are heavier focus for retailers during Black Friday, with newer products making up less than half of the value sales in Black Friday week – down from 59% in 2019.
The deeper the cuts, the more attractive the deal for consumers and this translates into higher index sales. For Air Fryers, the amount of promotional activity in 2023 versus 2022 more than tripled with much deeper price cuts. This resulted in much higher sales in 2023 in terms of both value and volume.
Are consumers moving away from brands to own label?
Traditional shoppers tend to be more brand loyal, as do those on higher incomes. Online shoppers cite retailer brand trust as more important to them. All shoppers expect great customer service, but while traditional shoppers seek an overall store experience with good prices, where they’re able to see the products and have help from the sales assistant, online shoppers need to ensure they trust the retail brand as they’re navigating products alone.
Premium brands have been outperforming standard and lower-priced brands across all Tech & Durables (2023 versus 2021). In contrast, trade brands are experienced value decline year-on-year in categories traditionally dominated by trade brands (DIY & Garden, Major Domestic Appliances and Small Kitchen Appliances).
How concentrated is the Tech & Durables market?
Many major categories have seen a reduction in the percentage volume sold in the product’s release year. This is likely due to a combination of many factors including a lack of innovation, the current economic crisis and post-COVID seasonality changes. With fewer barriers to entry, the move online in 2020 led to a rise in digitally native brands and models – these are now maturing, and demand has stabilized. Consumers value the ease of finding and purchasing products online, despite the overwhelming choice.
Finally, GfK has uncovered another new trend within key product groups where a small percentage of SKUs account for the majority of that product’s value. This suggests the importance of having the right range, rather than a huge assortment.
To see the full insights on each of these topics, watch our video on demand here >>
