Adapting to change: retail innovations and opportunities

As spring emerges in many parts of the country, the retail industry demonstrates its resilience by adapting to change and seizing new opportunities amidst challenges. 

Retail sales rose for the second straight month in March, up 0.7% from February, beating economists’ expectations. That Commerce Department data appears in a Reuters report, which also notes that “strong retail sales prompted economists at Goldman Sachs to boost their gross domestic product (GDP) growth estimate for the first quarter to a 3.1% annualized rate from a 2.5% pace.” 

This growth is evident in burgeoning innovation throughout the industry. A trends article from the National Retail Federation (NRF) indicates that retailers are “looking for ways to identify new opportunities, redesigning physical stores to be more coordinated with shoppers’ desire for experiences alongside efficiency, and investing in tech projects that deliver personalization and optimization.” 

The NRF piece lays out other predictions and trends, many of which now appear likely to have impacts far beyond this calendar year. Here are three that caught my eye: 

1. The ever-onward march of omnichannel: Technology-mediated in-store experiences are becoming an important response to customers’ increasingly lofty expectations. For example, retailers can deploy “store mode” digital features that enable customers to see only items that are available in their local store. As I noted in this post, brick and mortar locations will continue to play an important role in retailers’ strategies, but the lines between physical and digital worlds are starting to blur. 
2. AI’s unstoppable advance: Artificial intelligence (AI) offers a vast range of potential applications for retailers, from enabling faster decision-making to optimizing product sourcing to improving store layout. At the same time, retailers will need to continue to pay close attention to ethical and privacy concerns while establishing (and sustaining) transparency regarding their AI usage.  
3. The circularity surge: Shoppers may not be familiar with the term “circular economy,” but they are enthusiastically embracing offers of used and refurbished products and the use of tags such as “gently worn” or “previously loved.” For sellers, 2024 is a pivotal time to invest in programs to educate customers, tell their circularity story and ramp up the in-store experience for these products. 

The retail industry is facing numerous challenges and opportunities this year, and I'll keep you posted with updates. As businesses navigate these changes and embrace innovation, it's crucial to stay informed about the ever-evolving indirect tax landscape, ensuring compliance and adaptability in the face of new challenges.