ESM editor Stephen Wynne-Jones offers up five trends that are likely to gain prominence as the year progresses.
1. Range Consolidation
With the current inflationary situation expected to persist until at least the summer, mainstream grocers are expected to follow the lead of discounters and reduce the number of products they carry, especially in categories where there is limited product differentiation.
This will help them manage their cost base and absorb future cost increases more effectively. However, this shift is likely to affect mid-tier brands, as value and premium ranges are expected to gain greater preference with shoppers.
2. Price Wars
Another trend to watch for is the price wars that may emerge when the current inflationary situation comes to an end later this year. It is expected that prices will fall abruptly, led by aggressive discounting campaigns, rather than gradually.
This is likely to be more of a 'price reset' than a full-blown price war, as retailers seize the opportunity to deliver good news to consumers.
3. E-Commerce Fights Back
The e-commerce sector is also expected to make a comeback this year, as consumers re-discover the convenience it offers. With the rise of time-poor lifestyles, and greater integration of online and offline shopping, more consumers are expected to shift to online shopping.
4. Niche Concepts To Remain Niche
Niche retail concepts, such as quick commerce and autonomous stores, which gained popularity during the pandemic, are expected to remain somewhat niche in the near term. The quick commerce sector has undergone significant consolidation due to a lack of investment, and the remaining players are facing challenges in driving profitability.
Meanwhile, the recent job cuts announced by Amazon in its autonomous store division could lead others to reconsider their plans.
5. Personalisation Is Power
Finally, personalisation is expected to become a key factor in the retail industry this year. With the advent of artificial intelligence and machine learning, retailers now have the capability to act on the data they have been collecting on shoppers for years.
The coming year is likely to see a ramping up of personalisation in the retail environment, with retailers delivering tailored promotions, personal services, and a more bespoke shopping experience, especially online.