Kearney: Three retail predictions for early 2024

As retailers move into 2024, they should focus on liquidating inventory — and sooner rather than later. 

That's according to Michael Brown, partner and Americas leader at global strategy and management consulting firm Kearney, who shared his thoughts on key retail trends for 2024 with Chain Store Age. He also gave some perspective on retailer performance during the 2023 holiday season.  

 Here are some of Brown's insights into 2024 and post-holiday strategies, and a few  thoughts on how retailers exceeded expectations for 2023.

Post-holiday liquidation

It's easier to liquidate goods in December than it is in January.  So immediately following Christmas, retailers moved from holiday gift-giving to clearing the way for spring goods. Most retailers are going to start their fiscal 2024 on February 1, which is also around the time they are are going to want spring goods in the store. 

So now is the time for them to optimize as much as possible from the leftover inventory to end this fall/winter season and begin the spring season. As we start to move into cruise and then vacation seasons, post-holiday discounts will be better than holiday discounts were, but the goods won't be as plentiful or diverse. 

There will be limited sizes, holiday gifts people didn't want to keep, and so on. Many of the most desirable items or sizes are out of stock now, but for retailers it’s time to liquidate what remains.  

Gift card spending

Gift card spending post-holiday is very limited. Gift card spending all took place before the holidays, when people were trying to fill stockings and check off their gift lists for those people that are hard to shop for. 

Gift certificate or gift card shopping is not that active right now, but it's the redemption that people really look to leverage at this time of the year, during post-holiday sales. But because there's a long enough expiration date on any type of gift card, many consumers will wait until retailers are back in stock.

Goods vs. experiences

We did see some good holiday numbers this year, but we also saw some interesting spending patterns. If we look at the numbers that were published immediately after Christmas, restaurant spend was very high, travel was high, apparel did okay, but electronics was down. 

We have to take a step back and think about how the consumer is going to spend in 2024. Are they going to be back in retail stores looking for goods, or will it be another period favoring experiences such as dining with friends and family, travel, and so on?  Are those experiences more fulfilling to them than more goods? Time will tell.

2023 holiday analysis

The emergence of ‘Orange Friday’

It became more and more important for retailers to capture the consumer as early as possible, to not get caught in that last-minute frenzy of capturing those last dollars, but to capture the early dollars, creating a foundation of business for the holidays. 

Retailers promoted earlier and earlier to capture the early dollars that the consumer is spending. We started to see holiday sales break right after Halloween at the beginning of November. So Black Friday had effectively moved forward from the day after Thanksgiving to the day after Halloween.  

Discounting

Retailers did a great job of moderating their discount levels this past holiday season. Although there were a lot of promotions, we saw only moderate promoting early in the season. 

We saw 25% off select items, 40% off in some cases, as well as many items the retailer was looking to price at full margin. As the season went on, we saw a continued but gradual increase in the promotions that were able to capture the consumer while they were shopping. 

[Read more: Kearney: U.S. executives cautiously optimistic about end of inflation]