[Analyze] The six major challenges facing retail in 2024

In the U.S.A., instead of a predicted recession, 2023 finally ended with a G.D.P. rise of 3.1%. The economy benefited from a resilient job market and buoyant consumer spending, despite a property sector at the lowest level for 30 years. The U.S. economy is expected to grow by about 1% in 2024.

The European economy is slowing. In France, the economy increased by only 0.9% in 2023, after a recession in the second half of the year (INSEE) and growth rates of 2.5% in 2022 and 6.4% in 2021. INSEE is forecasting sluggish growth of 0.2% over Q1 and Q2 2024, despite an improvement in inflation and steady business investment.

France: Food volume down 5.2% in two years, e-commerce slowing

In France, 2023 was the 2nd consecutive year of falling volumes in grocery stores, by 3.1% in 2023 after a fall of 2.2% in 2022. That’s a 5.2%-drop in two years. Against a backdrop of food inflation of over 21% between 2021 and 2023, consumers are continuing to make choices in favor of essential products. Last year, we saw an unprecedented wave of consolidations, with the cards largely reshuffled in the supermarket sector. Casino collapsed (with a debt of €7.4 billion at the end of July 2023), Carrefour took over Cora, and Auchan and Intermarché are now taking over the former Casino supermarkets. These consolidation moves will now have to be “digested”, IT systems merged and a refocus on the best business models.

In France, specialty retail has also experienced difficulties, due to weak demand and high levels of debt, in a context where money has become more expensive. The D.I.Y. market decreased by 13% in volume terms in 2022 (Inoha) and companies such as Made.com and Habitat closed. In the fashion and accessories mass-market sector, 2023 was a massacre for retailers that had not embraced digital or omnichannel technology fast enough and not retained customers or won new business. Examples were Chaussexpo, San Marina, etc. GoSport was taken over by Intersport and Pimkie Spain went into liquidation.

In France, e-commerce continued to fall in 2023. After a 7% drop in 2022 (for sales of products, excluding services), it was stable in the first half of 2023, then fell by 1.5% in Q3 according to Fevad (annual reported figured due soon). In 2022, e-commerce accounted for 12.5% of French retail sales, compared with 14% in 2021. These data exclude services.

In the U.S.A., after an erratic first half of 2023, total retail sales have been increasing again since the summer of 2023. Since Covid-19, they jumped by 35% in value between the pre-Covid-19 period (February 2020) and November 2023.

E-commerce keeps gaining traction in the U.S.A. It accounted for 15.6% of the retail market in Q3 2023 (US Census Bureau) compared with 14.6% a year earlier, down by 1%. There are gaps however, depending on the category. E-commerce for food, where inflation rose by 13.1% over two years to the end of December, decreased by 2% last year to US$95.8 billion (Mercatus Grocery Shopper Survey).