The year 2023 brought significant challenges and transformations to the retail and e-commerce sectors, which were directly impacted by economic uncertainty and changes in consumer habits. This scenario slowed sales growth, which in the second quarter of this year fell to less than 1% compared to the previous year (a rate so low that, with the exception of the second quarter of 2020, it had not been seen since 2009).
The hybrid shopping trend has continued, with nearly 60% of consumers worldwide preferring to shop online over in-store, according to research from GWI. Meanwhile, interactive ad formats have reached the streaming and social media giants like TikTok are expanding their shopping tools, making it easier than ever for brands to drive conversion quickly.
The conversation about artificial intelligence has reached a massive level, and as the discontinuation of cookies approaches, new promises of proprietary data emerge from digital communication networks, attracting brands even more to this vast universe.
These are the most significant changes we’ve seen throughout this year, and which are expected to shape retail and e-commerce in 2024. So, with a helping hand from The Drum, we’ve listed the six main trends that are coming, according to experts. .
#1 Expansion of artificial intelligence
She is here to stay. AI, especially in machine learning applications, will be critical to improving operational efficiency and reducing costs. From discovery to the media supply chain, AI will be a great ally, offering brands innovative ways to interact with consumers.
As an example, David MacDonald, managing director of Publicis Commerce, points to the Chinese giant fast fashion Shein, which is employing AI to help it optimize product development.
She puts a product on her website before even creating it. And then, based on how people interact with it and purchase, the product life cycle is adapted, she explains.
According to MacDonald, brands will also use AI to ensure they reach specific audiences in the right places, and to dynamically adapt content across channels and touchpoints in the retail and e-commerce media ecosystem.
But as AI improves brands’ operational and cost efficiencies, it will also continue to raise questions about how work is being done and how a supplier charges for it.
Brands should soon demand greater transparency from agencies about how they use AI. For example, was AI used in the ideation and production of creatives, or was the result a product of human ingenuity? And they will want to reassess cost structures to reflect agency practiceshighlights Rachel Tipograph, founder and executive director of the e-commerce platform MikMak.
#2 Integration of the physical and digital worlds
The fusion of digital and physical in retail will accelerate, not just with displays digital in stores, but also with more personalized hybrid experiences. Retailers are expected to create engaging immersions in apps, transforming each physical store into a personalized experience for the customer.
O display digital in the middle of the hallway will look like rubbish within two years, and it won’t be possible to personalize it. But the idea of being able to walk past a supermarket and say I’m on a gluten-free diet, show me what’s on the shelf that I can eat something everyone wants. It’s also a perfect opportunity for advertisers to promote products that really matter to you and are most valuable to them when it comes to sales. It’s a much more targeted and programmatic approach if the investment is in applications, and it’s also smarter from a cost perspective, says Jeriad Zoghby, director of commerce strategy at IPG.
#3 Connected television (CTV) and streaming in central Athens
This year, for the first time, the streaming has overtaken cable in terms of viewership, now representing 38% of all TV viewing compared to cable’s 31%, according to recent data from Nielsen.
In 2024, CTV and the streaming online are expected to continue to take a larger share of the market, and CTV ads will provide opportunities to deepen interest and generate commerce by allowing viewers to add products directly to shopping carts during showings.
Media planning practices will finally catch up with consumers in 2024. We are close to the inflection point where addressable media will be the first step brands take in planning. Hard-hitting, non-targeted media will be used secondarily to fill gaps, says Cara Pratt, senior vice president of Kroger Precision Marketing at 84.51, the retailer’s media network.
#4 Margin Challenge for Retailers and Brands
The search for convenience by consumers, accelerated especially by the Covid-19 pandemic, has increased pressure on the margins of retailers and brands. The complexity of purchasing and delivery options has resulted in challenges, creating the need for more effective pricing strategies, adaptation to consumer demand and more selective advertising investment.
This scenario indicates an urgent need for brands to be more strategic to capture consumers who will likely continue to spend more cautiously next year, says Tipograph.
#5 Medium master
Measurement standardization, a contentious issue in the retail media ecosystem, will be a critical focus in 2024. Today, 62% of media buyers in media outlets consider the lack of measurement standards to be one of the top issues inhibiting growth. continuous, according to recent data from the Interactive Advertising Bureau (IAB).
Operational transparency will be key, and brands will seek more open and simplified ways to buy media, creating uniformity for advertisers of all sizes. However, some believe that the complexity of the purchasing process itself will have to be resolved before the industry can move toward standardized measurement.
While standardization of ad sizes, targeting and measurement parameters is important, it is being promoted too early in the development of retail media. Centralizing the buying and selling process on new retail media management platforms is a necessary innovation that provides the basis for standardization, comments Greg Stevens, president of Turbyne, a retail media delivery platform.
#6 Increase in retail media networks
Social media networks will continue to emerge, offering opportunities for smaller retailers to attract advertising investment. However, the threat from larger ecosystems such as Amazon and Walmart, integrating diverse forms of media and commerce, could pose a significant challenge.
From a brand’s point of view, this is great because there are more places to communicate with customers, recalls MacDonald, from Publicis Commerce.
But the emergence of new media networks does not guarantee success. On the one hand, advertisers don’t necessarily have more money to spend and will be forced to triage to understand where their spending will bring the most return. MacDonald predicts that AI could help solve this problem with personalized recommendations on where to spend media dollars.
As we approach 2024, the retail and e-commerce landscape will continue to transform, driven by technological innovation, changes in consumer behaviors and the ongoing quest for efficiency and convenience. Brands that can adapt to these trends will be well positioned to thrive in this new business environment.
* With information from The Drum | Cover photo: iStock
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