How did we do? A look back at our 2024 retail predictions

we were right about Amazon opening fulfillment centers out of physical stores, we were wrong about more digitally native brands partnering with Amazon.

Want the full rundown? Here’s how we did.

Prediction: As Amazon invests further in its grocery footprint, it will open combined brick-and-mortar/fulfillment center stores

Outcome: Correct

Amazon expanded its grocery business in 2024, opening more Amazon Fresh locations, testing small-format concepts, and rolling out new grocery subscription plans.

• The ecommerce giant also revamped 26 Amazon Fresh fulfillment centers to include a wider array of products, including items from Whole Foods Market and Amazon.com.
• Amazon is building a micro fulfillment center attached to a Whole Foods location in Pennsylvania, enabling Whole Foods shoppers to order items from Amazon’s website and Amazon Fresh and pick them up in store.

The 2025 takeaway: We expect Amazon to continue experimenting with its grocery strategy to find the right balance between physical and digital.

• The Whole Foods micro fulfillment center is a step in the right direction, but Amazon must understand how consumers will use these hybrid locations before rolling more out.
• No matter how far Amazon pushes its grocery business, it’s unlikely to catch up to Walmart Inc., the leader in US grocery, which will amass $69.60 billion in grocery ecommerce sales next year compared with Amazon’s $49.77 billion.

Prediction: Beauty gets hyper-personalized

Outcome: Correct

Beauty brands prioritized personalization in 2024, leveraging AI and machine learning for tailored product recommendations and messaging.

• Nordstrom added new AI features to its mobile app that showcase relevant beauty trends, match users with products based on their habits and preferences, and enable text-based prompts to search.
• Ulta Beauty’s partnership with Adobe combines customer data, AI, and machine learning to create a “fully automated, real-time personalization engine,” as reported by Retail Brew.

Some brands tailored their product assortments to target specific demographics. For example, Sephora began carrying the eponymous line from beauty product developer Sarah Creal, aimed at Gen X beauty consumers, while Nordstrom launched Gen Alpha-focused beauty kiosks in its teen apparel departments.

The 2025 takeaway: Personalization is critical for beauty brands to cultivate mass appeal while staying relevant, and AI will continue to enable them to achieve personalization at scale. As brands focus on each generation’s beauty approach, expect more demographic-specific product lines to emerge.

Prediction: More digitally native companies will partner with Amazon

Outcome: Incorrect

While many smaller digital brands started selling on Amazon this year, there was little movement from the digitally native vertical brands (DNVBs) we watch.

Instead, digital-native brands like Warby Parker strengthened their own physical and digital footprints.

• Warby Parker is on track to open 40 new stores in 2024, according to its Q3 earnings.
• The retailer’s net revenues grew 13.3% in Q3, driven by marketing, store expansion, and enhanced vision care services.

The 2025 takeaway: Amazon will remain integral to digital strategy, but in 2024, TikTok Shop emerged as another way for brands to connect with consumers, potentially stealing some share away from the ecommerce giant.

• If TikTok is banned, brands may rely more heavily on Amazon for commerce while supplementing their social strategies with Facebook or Instagram.
• But if TikTok survives, it could play a larger role in how digitally native brands scale their business.

Prediction: Off-price and discount retailers lose the customers they gained in 2023 if the economy and consumer sentiment improves

Outcome: A mixed bag

Off-price and discount retailers struggled to maintain their 2023 gains, but not due to economic improvements. In fact, consumers continued to pull back on spending throughout 2024—but it wasn’t a total disaster.

• After some lukewarm results in Q2, sales at Dollar Tree and Dollar General picked up in Q3 as consumers turned to them for essential purchases.
• Off-price retailers like Nordstrom Rack, Burlington, and TJX Cos. also found success among cost-conscious shoppers.
• Walmart could be considered the ultimate value retailer this year, as its low grocery prices attracted both low- and higher-income shoppers.

The 2025 takeaway: With President-elect Donald Trump’s proposed tariffs looming, value will remain top of mind for consumers in 2025. Retailers should keep prices for essentials down and apply strategic discounts to discretionary products.

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