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January 2025  |  Newsletter No. 18

 

Baker Retail Rundown

Stay in the know with monthly retail challenges and our rundown of top retail industry news, curated by our talented Penn student analysts.

SUBMIT HERE: January Retail Challenge

In 25 words or less, how would you leverage predictive analytics to anticipate and respond to rapid changes in consumer preferences and demand?

Prize for best solution.

BE CREATIVE!

 

U.S. Consumers Increased Holiday Spending This Year Despite Battling Higher Prices

Holiday sales from November to Christmas Eve rose 3.8% this year, surpassing the 3.1% increase seen in 2022, according to Mastercard SpendingPulse. Despite facing higher prices for groceries and necessities, consumers were willing to spend, driven by a search for value, particularly during major online promotions. Online sales grew 6.7%, while in-person spending increased 2.9%. Retailers were under pressure due to a shorter shopping season and external factors like the presidential election and weather-related car sales. Categories like clothing, electronics, and restaurants saw gains, but some areas, such as grocery and general merchandise, experienced declines. The National Retail Federation expects total holiday spending to increase by 2.5%-3.5%, reflecting slower growth compared to last year.

 

Glossy 50 2024: The People Who Shaped Fashion and Beauty This Year

The Glossy 50 highlights the trailblazers who transformed beauty and retail throughout 2024, a year that set the stage for future innovation. Kenny Mitchell, CMO of Levi’s, turned a viral moment into a groundbreaking partnership with Beyoncé, cementing the brand’s cultural relevance. Designer Willy Chavarria left a powerful mark with his September show, advocating for inclusivity and political engagement. At Ulta Beauty, Michelle Crossan-Matos pushed boundaries with initiatives that emphasized diversity and personalization. These leaders, among others, defined the trends and innovations that continue to shape the industry.

 

Retail Returns Hit $685 Billion in 2024, Marking 13.2% of Total Sales

 New research from Appriss Retail shows that merchandise returns in 2024 totaled $685 billion, representing 13.2% of total retail sales, which are expected to reach $5.19 trillion. While the return rate decreased from 14.5% in 2023, the report highlights a significant challenge for retailers: fraudulent returns, which led to $103 billion in losses. The study, based on data from over 60 U.S. retailers and a survey of 50 retail leaders and 1,000 consumers, also revealed that 60% of retailers experienced "wardrobing" (buying, using, and returning items), and 55% faced fraudulent returns using stolen or counterfeit methods. To combat these issues, experts suggest using AI-driven loss prevention strategies while balancing customer experience.

 

Albertsons Demands Billions From Rival Kroger After Terminating Merger Bid

 Albertsons and Kroger ended their $25 billion merger plan after courts blocked the deal, with Albertsons suing Kroger for breach of contract. The termination follows a two-year effort to combine, which was challenged by regulators arguing it would reduce competition and raise prices. Albertsons is seeking billions in damages, including a $600 million termination fee, while Kroger called the claims baseless. Two courts sided with federal and state antitrust regulators, who feared the merger would hurt competition. Kroger and Albertsons had argued that the merger could bring lower prices, but the courts disagreed. As a result, both companies are focusing on other growth strategies, including new share repurchase programs.

 

Store Closures Have Surged 69% in 2024: Retailers Shuttering Thousands of Stores

U.S. retailers have faced a tough holiday season, with more than 7,100 store closures announced through November 2024, a 69% increase compared to last year. Additionally, 45 retailers have filed for bankruptcy protection so far in 2024, up from 25 last year. Despite strong consumer spending boosting the economy, many retailers are struggling as inflation-weary shoppers become more selective, particularly discount chains and drugstores like Family Dollar and CVS Health. Analysts point out that the closures are driven by factors beyond the economy, such as poor consumer appeal and failure to adapt to competitive pressures. While some sectors, like discount stores, are expanding, the overall retail landscape remains challenging, with more closures expected in 2025 as companies try to stabilize.

 

December Challenge Winner: Return Strategy

What innovative strategies would you implement to make returns and exchanges effortless while reducing costs and waste in the retail ecosystem?

 

Feifei Yu, WG'25

AI-powered return lockers scan items, instantly match like-new returns with local shoppers' wishlists, maximizing resale speed and revenue while reducing shipping waste.

 

2024 Challenge Winners

Jessa Glassman, In-Store Experience

Alex Jiang , Retail Shrink

Michael Kim, Customer Journey

Isabella Yu, Sustainability

Shweta Mokashi, Future of Retail Tech

Adam Farhat, Brand Loyalty

Suzie Kim, Omnichannel Strategies

Eugene Waweru, Consumer Data Security

Allison Xu, Retail Workforce

Liam Shi, Creating Experiential Spaces

Abby Chen, Impact of AI on Retail

Salonee Kabra, E-Commerce Optimization

Kathleen Yu , Holiday Profitability

 

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