Customers and retailers alike appear to be cautiously optimistic about the economic outlook for 2024. Overall, recession worries appear to be retreating and inflation is slowing.
Meanwhile, many industry and consumer trends that have been building for the last few years have reached a fever pitch.
Euromonitor International’s “Top Global Consumer Trends for 2024” report pointed to the rise of artificial intelligence, consumer demand for wellness, sustainability and social responsibility from brands — all of which we’ve been watching develop over the past few years — as top trends to watch for 2024. Also included on Euromonitor’s list is shoppers’ demand for value as customers continue to face cost-of-living challenges. Customers are also seeking an escape from daily stress with 29% of customers reporting they would be comfortable with brands tracking their emotions and personalizing experiences to their moods.
Shifting Tides
While customer sentiment about the economy dipped from August through the end of December, as of mid-January it had begun ticking upward again, rising above the February 2023 high of 36.9 to 37.7, according to CivicScience.
It’s not a surprise as the U.S. economy grew faster than expected in Q4 2023 due to strong consumer spending. Inflation is on the decline and recession fears are reportedly retreating.
Real gross domestic product (GDP) increased at an annual rate of 3.3% in Q4 of 2023, according to the Bureau of Economic Analysis. The White House announced that for the full year (from Q4 2022 through Q4 2023) the economy grew 3.1%, which Reuters pointed out was much better than economists’ estimates of a 0.1% contraction. Still, headwinds for 2024 show a potentially slow year.
J.P Morgan predicted a “soft landing” in 2024, with GDP growth falling somewhere between a slight expansion and contraction for much of the year with a 0.7% pace of expansion predicted.
J.P. Morgan forecast that consumer growth will slow this year due to consumers’ diminished savings, plateauing wage gains, low savings rates, less pent-up demand and the restart of student loan payments, among other reasons. While J.P. Morgan agreed inflation is declining, it expects it to remain above the Fed’s target goal of 2% in 2024.
Pricing Pressures
While 2024 is off to a better start than expected, customers seem to be feeling the pinch more than ever. Prices may not be rising as quickly as before, but they remain elevated compared to pre-pandemic levels.
Deloitte’s “2024 Consumer Products Industry Outlook,” report found half of consumer product companies surveyed don’t think they can count on price as a source of growth in 2024. Four in 10 consumer product executives expect to see retailers push back on major price hikes this year. What’s more, customers are less willing and/or able to pay higher prices today. Executives surveyed reported that they don’t believe they can raise prices without decreasing demand.
Check out CStore Decisions’ 2024 Category Handbook for more on the trends impacting each category for the year ahead.
