Yeah yeah, I know, annual recaps are everywhere. But during the holiday season I believe it’s important to reflect before we look ahead.
Retail continues to navigate challenges such as inflation and shifting consumer behavior, with e-commerce and omnichannel strategies driving growth. Brands are leaning into personalization and AI-powered tools to enhance customer experiences, while sustainability initiatives remain a key focus. Traditional brick-and-mortar stores are evolving, integrating technology and experiential elements to stay competitive. Brands must continue to reinvent themselves and everyone must fight complacency on a daily basis.
The word that is coming to mind……Experimental.
What’s Old is New Again
Nostalgia was in full force. After a seven year absence, J. Crew brought back it infamous catalog. Once an iconic symbol of American fashion, the catalog’s return coincides with J.Crew's resurgence, with sales nearing $3 billion this year after struggling with debt, fast fashion, and online shopping. The new catalog will be more magazine-like, featuring editorial content and less product. It will be distributed three times a year, targeting loyalty program members and other customers. While digital marketing largely replaced catalogs, physical mailers are making a comeback with brands like J.Crew, Jenni Kayne, and Amazon reviving them.
Retailers are investing in recommerce in part due to sustainability and a generational shift occurring in retail right now. The U.S. recommerce market is estimated to be worth more than $200 billion in 2024, showing substantial growth from $140 billion in 2020. Gen-Z is at the forefront of this trend, with over two-thirds preferring to buy secondhand over new products. H&M debuted their new store concept in New York’s Soho neighborhood featuring their first “Pre-Loved” shop-in-shop experience. Ikea also tested a secondhand concept in Madrid and Oslo.
The decline of shopping malls may be reversing. Placer.ai reported a 6.4% year-over-year increase in foot traffic at indoor malls in November, with outdoor shopping centers and outlet malls also showing growth. Black Friday weekend was particularly strong, with all mall formats outperforming 2023 figures and even reaching pre-pandemic visitor levels.
This trend highlights a shift toward "experience shopping," where customers value the tactile and social aspects of retail over purely transactional interactions online.
Success Stories
If there was an MVP, it was Abercrombie & Fitch. In 2024, Abercrombie & Fitch has shown strong financial performance, building on the momentum achieved under Fran Horowitz's leadership. In the third quarter of fiscal 2024, the company reported record net sales of $1.2 billion, a 14% increase year-over-year, and comparable sales growth of 16%. This growth was driven by solid performance across all regions and brands, with the Abercrombie brand seeing a 15% increase and Hollister growing by 14%. Operating income rose by 30%, reaching $179 million, and the operating margin expanded to 14.8%.
Year-to-date, Abercrombie has also demonstrated strong liquidity, with $1.1 billion available, and it retired its long-term debt earlier this year. The company repurchased shares worth $130 million, reflecting confidence in its financial health. For the full fiscal year, Abercrombie has raised its outlook, now anticipating 14% to 15% net sales growth and an operating margin around 15%. This marks a continuation of its transformation into a digitally driven, omnichannel retailer. This revised projection puts their 2024 revenue expectation at approximately $4.8 to $4.85 billion. This growth is driven by double-digit increases in Abercrombie brand sales, while Hollister continues to see more moderate growth.
Vuori, achieved a valuation of $5.5 billion following an $825 million investment led by General Atlantic and Stripes. The investment aims to support Vuori's expansion plans, including increasing its store count to over 100 by 2026, with a focus on Europe and Asia. In 2024, Vuori significantly expanded its retail presence by opening 20 new stores across the United States, bringing its total to nearly 70 U.S. locations. This development follows a previous investment in 2021, when SoftBank Vision Fund 2 invested $400 million, valuing the company at $4 billion at that time.
TIkTok Shop thrived in 2024 but it’s future might be in jeopardy. Over Black Friday and Cyber Monday 2024, TikTok Shop reported a 165% annual increase in sales, surpassing $100 million on Black Friday alone. Viral marketing on TikTok, driven by user-created content and hashtags, has been a key factor in its success.
Despite its rapid growth, TikTok's future in the U.S. remains uncertain due to national security concerns about its Chinese parent company, ByteDance. Legal rulings and legislation could lead to TikTok being banned in the U.S. unless ByteDance sells it to a U.S.-based entity by January 19, 2025. The decision may also depend on the policies of the incoming administration.
Walmart has recently experienced a notable increase in patronage from higher-income households, particularly those earning over $100,000 annually. In November 2024, 87% of consumers in this income bracket reported shopping at Walmart, marking a new peak. This shift has positively impacted Walmart's financial performance. In the third quarter of 2024, Walmart U.S. reported a 5.3% increase in comparable sales, surpassing expectations. The company's stock has risen by 64% this year, trading at a forward price-to-earnings ratio of 33, reflecting investor confidence in its strategy.
Innovations & Tech-Driven Retail
The retail industry saw increased adoption of AI-powered personalization and phygital retail strategies, blending physical and digital shopping experiences to meet evolving consumer expectations.
The store is getting considerably more connected…..Implementation of RFID, QR codes, and advanced video analytics is helping improve inventory management, theft prevention, and customer journey analysis. The adoption of contactless payment methods has surged, with over 70% of retailers offering these options. Mobile wallets like Apple Pay, Google Wallet, and Samsung Pay have become increasingly popular.
Amazon expanded Just Walk Out technology to numerous college campuses, including Emory University, the University of Maine, and the University of Virginia, bringing the total number of campus stores using the technology worldwide to over 30. Additionally, the technology was introduced to several NFL stadiums, such as Lumen Field in Seattle and M&T Bank Stadium in Baltimore, enhancing the fan experience by reducing wait times at merchandise stores and concession stands.
Amazon Haul Launch: Amazon introduced its social shopping platform, connecting influencers and consumers in a new way.
Drone Deliveries: Amazon began rolling out drone deliveries in select cities like Tolleson, Arizona, setting the stage for quicker, more automated fulfillment. Walmart significantly grew its drone delivery program, covering over 50 markets by the end of 2024. Customers in suburban and rural areas benefited from faster deliveries of small, high-demand items
Amazon Vision-Assisted Package Locationing launched this year. The system uses advanced computer vision technology to streamline the process of locating, sorting, and delivering packages within Amazon's delivery vans.
Walmart decided in 2024 it will go with digital shelf labels moving forward, and will officially launch the tech in stores in 2026.
The Year of AI: Retailers like Amazon and Target use AI to suggest products tailored to individual users, driving higher conversion rates. Walmart and Zara use AI-powered tools that let customers upload images to find similar products.
Walmart signed a deal to acquire VIZIO and its SmartCast Operating System for $11.50 per share in cash, equating to a fully diluted equity value of approximately $2.3 billion.
Integrations Galore: Both Target and Starbucks rolled out Apple Carplay integrations in 2024.
Turning the Page
Several major retailers underwent significant C-suite changes in 2024:
Department Stores and Fashion
Tony Spring took over as Macy’s CEO.
Kohl's appointed retail veteran Ashley Buchanan as CEO
Kering promoted Cédric Charbit to CEO of Saint Laurent, while Gianfranco Gianangeli became CEO of Balenciaga.
Diane Von Furstenberg hired Graziano de Boni as its new CEO.
Nike named Elliot Hill President and CEO effective October 14th.
Beauty and Apparel
Estée Lauder announced CEO Fabrizio Freda would retire in 2025.
Victoria's Secret appointed Hillary Super as CEO, who left her role as CEO of Savage X Fenty.
Under Armour's chief consumer officer, Jim Dausch, departed after a year.
Food and Beverage
Nestlé replaced CEO Mark Schneider with Laurent Freixe.
Starbucks selected Chipotle CEO Brian Niccol to replace Laxman Narasimhan.
Other Retailers
Party City named Barry Litwin as president and CEO.
Wayfair's COO Thomas Netzer departed after nearly six years.
Joel Anderson left Five Below and joined Petco days later.
Kmart, once a dominant force in American retail with over 2,000 stores nationwide, has been steadily declining due to increased competition and financial challenges. On October 20, 2024, the company closed its last full-size store in the continental United States, located in Bridgehampton, New York.
Following this closure, Kmart's presence in the U.S. is now limited to a small store in Miami, Florida, and a few locations in U.S. territories, including Guam and the U.S. Virgin Islands. The Miami store operates more like a convenience store, offering a limited selection of merchandise.
In September 2024, the Nordstrom family, including CEO Erik Nordstrom and President Pete Nordstrom, partnered with Mexican retail conglomerate El Puerto de Liverpool to propose taking Nordstrom Inc. private. They offered $23 per share, valuing the company at approximately $3.8 billion. This initiative marks the family's second attempt to privatize the company, following a failed bid in 2017. The current proposal would increase the family's ownership to 50.1%, with Liverpool holding the remaining 49.9%. The deal is expected to be financed through a combination of equity from the Nordstrom family and Liverpool, along with $250 million in new bank financing.
More Closures
Retail store closures in 2024 have notably increased compared to 2023, reflecting ongoing challenges in the industry. As of late 2024, over 7,100 closures have been announced in the U.S., marking a 69% year-over-year increase. This reverses previous trends where store openings outpaced closures, a shift driven by changing consumer habits, economic pressures, and operational inefficiencies.
Topline Summary of Retail Closures by Sector (2024)
Discount and Dollar Stores: 1,154 closures
Pharmacies and Health Stores: 1,253 closures
Furniture and Home Goods: 1,119 closures
Apparel and Specialty Retail: 858 closures
Convenience Stores: 575 closures
Department Stores: 94 closures
Beauty and Personal Care: 97 closures
Groceries and Food: 82 closures
Music and Specialty Goods: 117 closures
Office Supplies: 31 closures
Retail bankruptcies increased, with 45 retailers filing for bankruptcy protection through November, compared to 25 in all of 2023.
The FTC made its Presence Felt
The $24.6 billion Kroger-Albertsons merger, proposed in 2022, failed in December 2024 after federal and state judges blocked the deal. Two judges ruled against the merger, citing concerns about reduced competition and potential price increases for consumers. Albertsons terminated the merger agreement and sued Kroger for allegedly not securing regulatory approval and ignoring regulators' concerns. The Federal Trade Commission (FTC) challenged the merger, arguing it would eliminate competition and lead to higher prices4. A major issue was the inadequate divestiture plan involving C&S Wholesale Grocers, which was deemed insufficient to mitigate lost competition. Kroger called Albertsons' lawsuit "baseless" and accused Albertsons of breaching the merger process.
The Federal Trade Commission (FTC) introduced a new rule prohibiting fake reviews and testimonials, aiming to improve transparency and trust in the retail sector. This regulation seeks to ensure that online reviews genuinely reflect real customer experiences, which will benefit both consumers and retailers that offer high-quality products. Businesses must adhere to this rule by avoiding practices like buying or incentivizing reviews, and ensuring any reviews from employees or those with vested interests are transparently labeled.
The FTC filed a lawsuit against Southern Glazer's, the largest U.S. distributor of wine and spirits, alleging illegal price discrimination against small and mid-sized retailers. The FTC claimed that Southern Glazer's offered favorable discounts to large chain stores, disadvantaging smaller competitors, in violation of the Robinson-Patman Act. Southern Glazer's disputed the charges, asserting that the price differences were lawful volume discounts.
Grubhub agreed to pay $25 million to settle charges with the FTC and the Illinois Attorney General over allegations of inflating delivery costs and engaging in deceptive practices. The settlement requires Grubhub to enhance transparency regarding delivery fees and to cease listing restaurants without authorization.
Capri Holdings and Tapestry canceled their planned merger after the Federal Trade Commission (FTC) filed a lawsuit to block the deal. The two luxury brands, both based in the U.S., mutually decided to terminate the merger, acknowledging that they were unlikely to receive regulatory approval before the deal's February expiration.
The Not so Good
Spirit Airlines filed for Chapter 11 bankruptcy protection, citing persistent losses, rising debt, and a failed merger with JetBlue. The airline has secured a prearranged agreement with bondholders, including $300 million in financing to maintain operations, and aims to exit bankruptcy by early 2025.
Mattel is facing a class action lawsuit after accidentally printing a pornographic website link on the packaging of dolls tied to the movie adaptation of Wicked. Instead of directing buyers to the movie's promotional site, the packaging listed "wicked.com," a pornographic site. The lawsuit, filed by a South Carolina mother, alleges negligence and seeks $5 million in damages. While Mattel issued an apology and recalled the dolls, the case underscores corporate responsibility in safeguarding children's products.
In late 2024, an E. coli outbreak linked to McDonald's affected 104 people across 14 U.S. states, primarily due to contaminated slivered onions on Quarter Pounders. The outbreak, which lasted from September 12 to October 21, resulted in 34 hospitalizations and one death.
In October, a short strike commenced in the United States (US) by the East Coast and Gulf Coast dockworkers represented by the International Longshoremen's Association (ILA). The strike was the first large–scale strike in nearly 50 years, halting the flow of approximately 50 percent of the US ocean shipping.
In 2024, Target Corporation faced several significant challenges that impacted its financial performance and market position. Shoppers, strained by inflation, are prioritizing essentials like food over discretionary items like trendy clothing and home goods—areas where Target has traditionally excelled. In addition to economic factors, Target's appeal as a "fun" shopping destination has waned. Shoppers complain about long checkout lines, locked-up goods to deter theft, and fewer enticing or unique products. This decline in the in-store experience has diminished the brand's once-vibrant reputation.
I’m sure I’ve missed a few things here and there but overall
Looking Ahead
I cant tell you enough how fun this journey has been in 2024. Between now and the ned of the year ill be sharing my predictions for 2025 and give you a bit of a taste of what to expect int he new year.
I’d love to her from you…….Comment below on content you would like to see.