What’s in store in 2024? 

That’s what retailers (and consumers) are asking as they are catapulted into a new year. Many challenges of the early days of the pandemic have settled — inventories have leveled off and people are shopping both in-stores and online.

However there may be trouble on the horizon. A number of large, household name retailers are standing on the edge of bankruptcy. Some direct-to-consumer companies, once seen as disruptors in the industry, are heading on the same path as macroeconomic pressures intensify and capital gets harder to find.

The consumer is still wrestling with the impact of inflation and credit card delinquencies are rising.

Yet, there is still the promise of a new wave of retail that is led by advancements with technology, including artificial intelligence. Retailers are experimenting more with store formats and how to best reach consumers — thinking that is driving innovation and creative problem solving.

Here are some of the biggest trends that are coming up in 2024. 

Is cautious consumer spending the new normal?

Consumers continue to spend cautiously on nonessentials, which is likely to put distressed retailers in a critical position during the first half of the new year. And if the past year is any indicator, more than a handful of retailers may likely slide further into distress or bankruptcy in 2024. 

By Retail Dive’s count, about 20 retailers of note filed for bankruptcy in 2023. Many of them were in the home, apparel and discretionary sectors. One of the most high-profile bankruptcies was Bed Bath & Beyond. 

Analysts said the company’s weak online presence and a failed attempt at a new private label strategy were contributing factors. It appears the brand name, however, will go on after former rival Overstock bought it and rebranded.

Two furniture retailers, Mitchell Gold and Bob Williams, and Z Gallerie also slipped into bankruptcy. It’s the third bankruptcy for Z Gallerie in about 15 years, according to court documents. And two shoe retailers also met the same fate – Shoe City, which liquidated, and Rockport, which plans to reorganize.

Retailers start the year less sure about theft

As the major groups representing the retail industry, the National Retail Federation and Retail Industry Leaders Association have each attempted to quantify the problem of retail crime. In part due to confusing terminology and statistics, that’s long been a struggle. As of November, there is one less number to help them out.

Following Retail Dive analysis of the research on retail theft, the NRF retracted a key number related to “organized retail crime,” which has been a focus of both groups in recent years. The organization’s top asset protection official testified before a U.S. House subcommittee without that metric in hand, and one member of the panel challenged the industry to “Get some real data.”

“We’ve got to figure out some solutions there, but, you know, smash and grab, organized crime, retail theft — it’s hard to figure out which is which,” Lou Correa (D-California) said during a Dec. 12 hearing. “But if you don’t know which is which, then it’s even harder to come up with a good solution.”

Retail C-suites see lots of new faces

The revolving doors of the C-suite have been turning faster recently, with dozens of retail CEOs exiting their roles in 2023. Boards were quick to cut ties with leadership in the face of disappointing growth trends or after financial restructurings. 

The influx of new leadership is set to continue next year, as Bloomingdale’s veteran Tony Spring takes over the top spot at Macy’s, former Kohl’s exec Michelle Gass takes the helm at Levi’s and Costco’s longtime chief Craig Jelinek steps aside for Ron Vachris.

The long list of departures is partially due to a challenging macroeconomic environment that has caused stocks to fall, fundraising to dry up and boards to scrutinize leadership more closely. But the changes aren’t just hitting chief executives. A slew of other C-suite roles have seen turnover in the past 12 months, including at companies like Walgreens, where a leadership overhaul led to the departure of the brand’s CEO, CFO, CIO, chief medical officer and chief marketing officer. Kohl’s COO and president also left the retailer after less than a year in November, while Claire’s hired a joint CFO-COO position.

One department in particular has seen an influx of hires: marketing. Marketing roles are often axed or pared down in tough economic conditions, then rehired when companies can afford to invest in that side of the business again. In the last two months of 2023 alone, new chief marketers joined the likes of Macy’s, Nike, Peloton, Vuori and Birdy Grey.

The performance of new executives and the pace of change in retail’s top offices could have big impacts on some of retail’s largest players.

Layoffs likely to remain in focus as cost-cutting measures persist

Expense cutting has shifted to the forefront for retailers as businesses emphasize profits in a tough macroeconomic environment. As a result, retailers of all sizes have turned to layoffs to trim costs and streamline operations. By October 2023, nearly 50 major retailers had announced layoffs that year, including large companies like Amazon, Dick’s Sporting Goods and Kohl’s, as well as smaller businesses like Everlane, Allbirds and Ruggable.

Layoffs in 2023 did not discriminate: They hit relatively successful retailers, as well as businesses facing serious financial difficulties. And they stuck around all year. Even in December, artisan marketplace Etsy announced it would cut 11% of its workforce due to the challenging macroeconomic environment and Nike rolled out a cost-savings plan that includes reducing management layers and “streamlining” the organization.

Catherine Lepard, global managing partner of retail and direct to consumer at Heidrick & Struggles, said this fall that layoffs were likely to continue for a host of reasons.

“In a down economy, they’re often thought of as a cost-cutting measure, and we’ve seen retailers using layoffs to preserve capital,” Lepard said. “We’re also seeing layoffs stemming from the closures of brick and mortar that are struggling either financially or with other issues such as theft. Outside of the fiscal drivers, layoffs have recently been the result of retailers rethinking their larger business strategy — right-sizing their footprints to align with consumer behaviors shifting from physical to online shopping.”

Retailers increasingly look outside the mall

Physical stores remain a key component of retail. That’s evidenced by data that not all malls are dying. Some – especially top-tier malls – are thriving, according to analysts and industry observers. Others are evolving. Instead of exclusively housing retail, their vast indoor commercial spaces are being transformed into mixed-use properties that incorporate a smaller retail segment.

On the other hand, malls may not offer the flexibility that retailers need in the current business environment. That’s why several retailers have or say they plan to move off-mall. Over the past year, some of the retailers to make that move include Macy’s, which said in October it wants to open up to 30 off-mall stores nationwide in the next year and a half. Bath & Body Works also opened 30 new off-mall stores in North America during Q2.

Shoe retailers Journeys and Foot Locker also have plans to step outside the mall. Journeys is the flagship brand for parent company Genesco, which opened five stores in Q3, primarily off-mall and in outlets. And Foot Locker said last March it plans to close 400 mall-based stores by 2026.

What the consumer faces

By and large, as inflation ebbed and wages and employment remained relatively strong, consumers came through for retailers by the end of the year. Black Friday helped push up holiday sales, even though many seasonal promotions had begun the month before. 

One way many shoppers accomplished this level of spending was through credit cards. Balances were already hitting records by October, and retailers including Macy’s, J.C. Penney and Nordstrom reported rising delinquencies. Buy now, pay later plans are providing an option for consumers but add to their debt load. Rules limiting retailers’ ability to charge steep fees on late payments could help consumers but undermine retailers.

The holiday retail sales boom may also come at a price in the New Year, noting Adobe data showing that buy now, pay later usage was up 40% on Black Friday and Cyber Monday, according to Bankrate Senior Industry Analyst Ted Rossman.

“I worry about how consumers are paying for all of this stuff,” he said in emailed comments. “And credit card balances and rates are at all-time highs. It feels like the holiday debt hangover could be particularly nasty this year.”

A new approach to marketing strategies

To attract customers in 2023, many brands integrated tech into their marketing strategies. Virtual experiences gained steam, with J. Crew introducing a holiday version of its virtual store and Kohl’s launching a number of virtual holiday events that tapped into social media and augmented reality.

Shoppable content has been gaining steam as well. Walmart this past holiday season announced a 23-part shoppable rom-com commercial series running across TikTok, Roku, YouTube and the retailer’s own social media channels. The series followed other shoppable content efforts the mass merchant had launched in recent years.

Social media itself is increasingly becoming a shopping destination. TikTok late last year launched TikTok Shop, allowing consumers to purchase recommended products directly in the app.

Retailers, however, are continuing to look offline to promote their marketing efforts as well. Several have turned to physical retail through pop-up shops or other events, including Shein’s in-store experience at Forever 21’s Time Square location and DTC bedding brand Parachute’s holiday market in early December.