The winners: Several retailers managed to thrive in 2024 even as the lingering effects of inflation drove consumers to sharpen their focus on value.
- Aldi, which is in the midst of adding 800 stores nationwide by the end of 2028, found success focusing on the twin pillars of value and convenience. The grocer captured consumers’ attention by cutting prices around food-centric holidays like Labor Day and Thanksgiving. It also retrofitted a store in suburban Chicago with checkout-free technology to create an experience it calls “Aldigo.”
- E.l.f. Beauty’s strategy of rolling out low-cost “dupes,” complemented by savvy marketing campaigns and international expansion, is paying off. The brand, which has recorded 23 straight quarters of net sales growth, is “the No.1 brand amongst Gen Z by a pretty wide margin,” CEO Tarang Amin told CNBC, in addition to being “the most purchased brand amongst Gen Alpha and millennials.” Its popularity is growing across nearly every age and income cohort thanks to distribution deals with Target and Walmart and a new partnership with Dollar General to increase its reach with rural audiences.
- Temu made gains by stealing share from Dollar General in Q3, per credit card data analysis by Earnest Analytics. At the same time, the company tried to minimize the impact of the Biden administration’s crackdown on tax loopholes by successfully attracting Amazon sellers to its platforms.
- Walmart’s clear value proposition helped it attract consumers across the income spectrum—especially in the grocery category. And its Walmart+ membership service helped it retain those customers by quickly delivering online orders at no additional cost. The combination of Walmart’s booming grocery and ecommerce sales also fueled its highly lucrative advertising business.
The losers: Unsurprisingly, the retailers that struggled the most this year largely rely on discretionary spending in categories like apparel, home furnishings, and consumer electronics.
- Macy’s faced no shortage of competition from off-price retailers, brands, and mass merchants like Amazon. With Macy’s core customers growing increasingly “discriminating,” the retailer had to rely on promotions and targeted messages to drive spend.
- Nike’s overreliance on profitable franchises like Air Jordans and Air Force Ones, its lack of innovation in the performance sneaker space, and its decision to pull back from wholesale opened the door for upstart brands like Hoka and On Running—and gave rival adidas an opportunity to recapture consumers’ attention with its hugely popular Terrace styles. Nike also failed to capitalize on the Paris Olympics: Many of the styles it featured won’t hit store shelves until next year.
- Starbucks reported its steepest quarterly sales decline in four years in fiscal Q4 ended September 29, underscoring the scale of the challenges new CEO Brian Niccol faces as he tries to revitalize the struggling company. Niccols’ lengthy to-do list includes simplifying Starbucks’ menu, rethinking pricing, fixing staffing issues, and improving both the worker and customer experience.
The big takeaway: Execution matters. While conditions were favorable for each of our retail winners, their abilities to thrive stemmed from their clear visions and strong execution.
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