While 2023 saw a slowdown from the post pandemic sales boom, business was still pretty decent. We are returning to a normalized sales cycle — finally — and the economy is doing well overall.
As we look ahead to 2024, we may face some uncertainty, given that it is an election year and consumers tend to pullback when they are unsure. So, this is the time to get back to your meticulous inventory planning practices and focus on the opportunities we see ahead.
At Blacks, we are predicting low, single-digit growth, with menswear outpacing women’s wear. For retail overall, consultants such as McKinsey & Company expect a 2% to 4% gain in 2024, while the National Retail Federation is a bit more optimistic, predicting growth between 4% and 6%.
So, what are the opportunities and which potential obstacles should you prepare for? Let’s get into it.
First Quarter Softness — We predict a slow start to the year with sales picking up further in the spring season. Since we are going to have a gradual start, make sure that you are not left with excess inventory after the holiday season. Plan your early January markdown strategy now if Holiday sales are not on track.
Fall Caution — Fall ‘24 brings another presidential election cycle, which can be a little rocky in terms of Wall Street performance and consumer confidence. Plan conservatively.
Cost Cutting — Although inflation is slowing, we are facing higher costs for almost everything. One area that you could potentially explore in terms of cost-cutting is rent. Many commercial locations still stand vacant, offering a little bit of wiggle room for price negotiation with landlords if you are willing to move. Some suburban locations are doing particularly well.
Winning Categories — Are there any strong category trends that you missed out on this year, or tuned into a little too late to get the merchandise you needed? Closely review your 2023 sales by category, as well as the winners of 2022. If the 2022 winners lost momentum last year, chances are they could see a pickup in 2024 (think dresses.)
And check out our 2023 category winners and losers story, to see if your in-store trends are tracking with trends nationwide.
Hold Back More OTB — There are two risky retail situations that we are closely monitoring right now. The first is growing inventory levels among some of our merchants. This could leave them in a vulnerable position if we see a sudden slowdown.
The second warning light (that we mentioned above) is the uncertainty around fall of next year. Given these factors, we are recommending that retailers exercise extra caution in 2024 and hold back even more of their open-to-buy (OTB) at the beginning of the season than they have recently.
Whatever you held back in 2023, increase that by at least 5% to help insulate yourself from slowdown risks. If you need the inventory later, you will have the money to go for it.
Digital Marketing Tune-up — Have you explored all the possibilities of AI, beyond just having a chatbot on your websites? Here are a couple of other tools that can optimize marketing engagement and personalization on your website and in your email campaigns.
OptinMonster
This product can help convert website visitors into customers, and it uses behavior automation to target and personalize campaigns.
Personyze
This product is used for website personalization, including recommendation systems, predictive analytics for personalized content, and product recommendations.
At Blacks, we are always on the lookout for new technologies that can make merchants’ lives a little easier and allow salespeople to focus on what’s most important – their customers.
We wish our retail family a prosperous New Year!
