One of the most promising changes in the retail market has been the regrowth of consumer confidence. At the end of 2023, both financial well-being and future financial confidence hit the highest levels in two years. This has been facilitated by the easing rate of inflation and while, consumer attitudes are not back to where they were before the cost of living crisis, our opinion is that retail is moving in the right direction for growth. This confidence is exemplified by the renewed success of Black Friday. In 2023, we saw a significant rise in involvement from higher-income households, from 48% to 57% year on year.
A Decrease in the Use of Peer-to-Peer Marketplaces
As a result of increased pressure on consumer finances, the use of peer-to-peer sites for buying and selling items has risen over the past couple of years. Generally, users felt they could find better deals on sites like Vinted and Depop and these sites offer an opportunity to make some money too. Now, however, with confidence and finances both looking up, these marketplaces will likely struggle. Consumers will no longer be willing to undergo the inconvenient processes that are synonymous with these websites, such as confusing and inefficient returns and notoriously hard-to-reach customer service because they are in a better position to take their money elsewhere.
To see these websites decline would be a great shame considering their role in promoting circular shopping practices. To ensure their continued relevance, peer-to-peer retailers must look beyond the youth market that they have historically attracted. Targeting a more mature and financially stable audience, particularly those who are tech-savvy, presents a valuable opportunity. Retailers could elevate the peer-to-peer experience significantly by offering curated collections that appeal to this demographic, such as health and beauty products.
Changes to Collection and Delivery Habits
In the wake of the cost of living crisis, delivery collections have become increasingly popular as a convenient method to obtain purchased items without worrying about delivery charges. From 2022 to 2023, collection grew by 5% largely due to the wider availability of collection lockers, like DPD Pickup Shop or Collect+. By investing in these lockers, retailers can mitigate several grievances shoppers may have with collection and returns processes. Offering customers a stress-free returns process is especially important and lockers can be a convenient solution for this as many people are only a couple hundred feet from one at any given time. Lockers also mitigate the frustration caused by long wait times for collection. We found that 1 in 5 online shoppers struggle with long wait times for collection.
There has also been interest in the implementation of autonomous delivery, where automated drones would carry out home deliveries. The idea is that using drones would significantly cut down emissions and contribute £45 billion to GDP by 2030. Trials have already begun with Co-op extending their trial beyond 2023 and Amazon announcing mass-market deployment of drones for delivery in late 2024. Aerial drones will also have the added benefit of connecting more rural and remote locations, particularly if inclement weather affects transport.
The Growth of Impulse Buying for the Home
Since the cost of living crisis, people have been less able to spend money on big home renovation projects. Therefore, as an alternative to this, many consumers have chosen to focus on smaller ticket changes that will still freshen up their living space without the time, cost and mess that is associated with renovating a home. Many retailers, such as IKEA and B&Q, have recognised that people are now impulse-buying homeware products and in light of that, are looking for convenience. By opening high street stores and streamlining the online order process, people are more able to incorporate home improvement into their busy lives.
Technology and social media will continue to drive the DIY and homeware market forward. Dulux has released a colour-matching functionality on their app that allows users to find their desired colour out and about. Then all they need to do is visit participating stores and they can have the colour mixed for them. Meanwhile, Argos has partnered with Pinterest for the Argos Mood Hotel, a temporary hotel based on upcoming interior design trends that customers can win a trip to. Social media is the best place to get interior design inspiration so it makes sense that brands are leveraging that space with influencer-led events, workshops and more.
Looking Ahead with Mintel
While it appears that the worst may be behind us in terms of the challenges posed by constrained consumer finances and diminished confidence, there is still a long road ahead. Retailers will need to be smart about which audiences they want to be investing in. The goal needs to be to establish a secure customer base that will show brand loyalty even outside sales and promotions and this will be achieved with the golden word, convenience! This might look like easy and efficient online returns processes, personalised in-app design and fashion inspiration, complemented by AI product recommendations, and opportunities for peer-to-peer selling directly on a retail platform. Prioritising convenience more than ever will set retailers apart and see them thrive in the years to come.