Food and health and beauty to perform better in 2024
According to the RTT, food retail will see headline value growth of 4-5% with volumes up around 0.5-1% next year
Food and health and Beauty are expected to be two of the best performing retail categories for 2024, according to predictions from the KPMG/RetailNext Retail Think Tank (RTT), an independent board of retail experts.
In its latest 2024 Retail Outlook report, the RTT predicts a return to volume growth in food retailing in 2024, after 2 years of falling volumes. RTT member, Mike Watkins, who is head of retailer insight at NIQ, predicts food retail will see headline value growth of 4-5% in 2024, with volumes up around 0.5-1% next year.
Off the back of record-breaking Christmas sales, which saw Lidl and Aldi post 12% and 8% sales rises respectively earlier this week, discounter performance is set to continue into 2024 as consumers switch supermarket allegiance and opt for more own branded goods, according to the RTT.
Watkins said: “Most of the growth in 2024 will again come from the Discount and Value retail channels, with Aldi and Lidl having crossed the threshold of a combined 20% market share after over 20 years in the UK.”
Retail consultant, Nick Bubb, added: “sales growth for the big supermarkets in 2024 is likely to be more subdued, with the boost from grocery price inflation dropping away”, as well as pointing to the ongoing pressure on consumer spending.”
Meanwhile retail consultant and former Globaldata director, Maureen Hinton, said: “the switch to own brands will continue in 2024 as consumers prioritise their needs and are more selective about where they shop and what they buy.”
The ‘lipstick effect’ – where consumers buy small ‘everyday’ treats rather than big-ticket items in economic downturns – prompted a 5.6% uptick in pharmacy and health and beauty sales last year, according to Barclaycard’s annual spending survey.
Retail consultant, Natalie Berg, expects circular retail will see even more success in the year ahead, with “the pre-loved movement continuing to gain momentum, fuelled by the desire or need for value.” She also predicts this will drive “greater demand for durability, traceability and more transparency in retailers’ circularity efforts.”
Fashion has been one of the early adopters of circular retail models, with the global apparel resale market expected to grow 127% by 2026 – three times quicker than the wider clothing industry as a whole.
Meanwhile, Barclaycard data suggests home improvement and DIY retail spend fell 4.7% year-on-year in 2023, while furniture stores also experienced a 5.2% downturn in takings last year, as consumers move away from big-ticket purchases.
The report expects home retail to continue to face a challenging 2024, with Hinton suggesting “a slow housing market, and the pandemic boom for home-related big-ticket items and technology delaying the replacement cycle” making it more competitive for home-related sectors.
While the RTT’s outlook for fashion in 2024 is one of muted growth, Hinton adds that “as ever, success in clothing and footwear depends on those retailers and brands who understand and inspire their customers.”