We’re almost to the midway point of 2024. Here’s how the retail landscape has shaped up this year so far.
Ecommerce Holds Steady Despite Price FluctuationS
While the ecommerce boom of the pandemic might be plateauing, online retail continued to show growth in Q1 2024. According to CommerceIQ's State of Retail Ecommerce Report for Q1 2024, US online revenue saw a 9.5% increase year-over-year. This growth was primarily driven by a 10.4% rise in the number of units ordered, indicating a focus on volume over price Interestingly, this trend coincides with a slight decrease in average online product prices (-0.9%)
Main takeaway: Consumers might be seeking out deals and promotions to maintain spending levels.
Brick-and-Mortar Shows Signs of Life
While ecommerce continues to grow, physical stores showed surprising resilience in Q1. Data from analytics firm, Placer.ai, indicates a 3.9% year-over-year increase in visits to Walmart during the first quarter. This points towards a potential return to a more balanced omnichannel approach, where physical and online stores complement each other.
The Rise of the Value-Conscious Consumer
A significant theme in Q1 retail was the emergence of the value-conscious consumer. With inflation remaining a concern, shoppers are prioritizing affordability and seeking out deals. This trend is evident in the success of discount retailers like Walmart, whose stock price rose 18% over the past 12 months.
At eZCom, we map to all the major discount retailers and their online marketplaces such as Walmart Marketplace. Many of our customers utilize either the native shipping integrations in Lingo to connect to UPS, FedEX, and USPS or the integration we have with Shipstation. Many also use a custom integration we do with most 3PLs to streamline the process and keep labor costs down.
Inventory Management Challenges Persist
While consumer spending remained positive, rising costs of goods sold (COGS) and increased discounting put pressure on retailer margins. CommerceIQ's report highlights a 7.4% decrease in gross margins year-over-year for Q1, underscoring the ongoing challenge of managing inventory effectively in a dynamic market.
On the EDI front, the EDI 846 provides real-time stock levels to retailers, allowing us to help brands manage stock levels in other systems like Shopify.
Prices Still Higher, But Cooling
Via NPR: “Consumer prices in April were up 3.4% from a year ago, according to the Labor Department, a smaller annual increase than the month before. The cost of living rose 0.3% between March and April. Rising rents and gasoline prices were partially offset by falling prices for groceries, including household staples such as eggs and milk.”
According to Wells Fargo economists Tim Quinlan and Shannon Seery Grein via RetailDive, “Even as price growth is slowing, it can simply just feel like everything costs more, because it does. This is challenging for consumers where prices of key items like groceries and gasoline have outpaced broader inflation and average wages. This is one of the reasons we believe we’re seeing persistently low confidence/sentiment readings and the emergence of a more choosy consumer who is spending less on discretionary items today in order to prioritize non-discretionary purchases.”
Looking Ahead
While summer may be on everyone’s mind at the moment, brands and retailers are focused on the holiday season. According to Numerator’s 2024 Holiday Preview, “grocery stores and big box stores are the top two locations consumers plan to shop for all major holidays, with food-focused holidays leaning towards grocery and gift-focused holidays leaning towards big box stores or online retailers.”
