Modern Retail+ Research roundup: Retailers’ e-commerce, retail media and social media strategies were 2024’s biggest trends

2024’s biggest takeaway: Modern Retail Index — How businesses evolved their digital strategies amid uncertain times

In the face of a shifting retail landscape fraught with new business demands and economic dynamics, the Modern Retail Index (MRI) provided an in-depth look at how businesses evolved their digital strategies to handle uncertain times. This research framework analyzed the maturity and breadth of a retailer’s digital strategy, not the retailer’s performance across all business aspects. The scored dimensions included E-commerce Experience, Ease of Fulfillment and Financial Momentum. Within the collection of indexed retailers, we identified five cohorts: Big Box, Drugstore, Dollar Store/Off-Price, Home Goods and Specialty Retail. The index included Amazon in its own cohort due to its unique position in the market.

Key findings:

E-commerce Experience

• The majority of big-box retailers ended up in the top half of the index’s E-commerce Experience dimension – with Walmart and Best Buy taking the first and second spots. Their e-commerce dominance was maintained largely due to new innovations in both paid membership programs and applications of emerging tech.
  
• Within the drugstore cohort, CVS revamped its membership program to include a free membership tier and a paid membership tier. The paid membership excels at linking both sides of CVS’s business, non-prescriptive products and pharmaceuticals.
  
• The dollar and off-price stores cohort added more emerging technology to its sites and apps. Dollar Tree added virtual store tours and virtual try-on, while T.J. Maxx offers an AR-powered image search engine. 

• Amazon excelled in e-commerce through its paid Amazon Prime membership program. Amazon created extended touchpoints for its consumers by striking agreements with Shopify and Meta: shoppers can use Buy With Prime on Shopify-powered merchant sites; ads on Meta-owned sites show Amazon products that can be purchased within the apps if the user connects them to their Prime account. 

Ease of Fulfillment

• Lowe’s ranked No.1 among all 30 retailers included in the index for ease of fulfillment. Lowe’s performed well for both product accessibility, post-purchase options and online returns. Stores within the home goods cohort like Lowe’s have found ways to trim supply chain costs by investing more heavily in automation and mechanical technology to build high-tech warehouses and distribution facilities.
  
• Big-box stores Target and Walmart expanded their stores’ local fulfillment capabilities by building more micro-fulfillment centers and large-format stores that act as fulfillment hubs for online orders, including drive-up and same-day local deliveries.
  
• Specialty retailers made it easy for customers to try out products and return them online by offering various free options for returning online orders, including in-store and prepaid shipping labels.
  
• As one of the first retailers to move on automated warehouse technology, Amazon has built a powerful supply chain network to support its massive e-commerce business and set the standard for quick delivery and customer service expectations.

Financial Momentum

• Big-box retailers performed high in terms of both e-commerce experience and ease of fulfillment, but that didn’t always translate into strong financial momentum. In the big-box cohort, only Walmart saw positive revenue growth year over year. The rest of the group saw an average -7% year-over-year decrease. 

• Despite low performance in both the fulfillment and e-commerce dimensions, the dollar stores and off-price retailers cohort had the best overall financial performance of any cohort. Most of the retailers in the group ranked in the top 10 spots of the financial dimension – notably TJ Maxx held the second spot in the dimension after Amazon.
  
• The home goods cohort did not see strong financial performance in 2023. The majority of the cohort fell to the lower half of the financial momentum dimension and had an average year-over-year revenue decrease of -11%, with no retailer citing an increase. 
• Amazon had the best financial performance and also ranked No. 1 in the overall index. The retail giant’s success comes as no surprise, and the retailer has continued to expand into new markets to increase growth.

The charts that tell the story:

E-commerce Experience

Ease of fulfillment

Runner up: CMO Strategies – Brands took advantage of retail media’s renaissance, but remained most invested in social media

Modern Retail’s 2024 CMO Strategies series analyzed key marketer strategies and challenges across leading marketing channels including retail media and social media. During the last year, retail media surged in popularity with many brands spending more in the channel and others venturing into retail media for the first time. New platforms popped up from specialty retailers like luxury department store chain Saks Fifth Avenue and travel company Expedia, and the wide range of new entrants marked a renaissance for retail media networks. However, among all marketing channels considered in Modern Retail’s CMO Strategies series, social media had the highest usage rate for the second year in a row. Ninety-seven percent of marketer respondents said their company currently uses social media for marketing, according to Modern Retails’s first-quarter 2024 survey.

Key findings:

• Amazon holds the majority of marketing budgets for retail media. However, Walmart’s Walmart Connect and Target’s Roundel platform saw increased adoption from 2023 to 2024, with Walmart in particular almost doubling in percentage points from 24% of marketer respondents who said they used Walmart Connect last year to 46% who said they use it this year.
  
• The majority of marketers said that they measure retail media success via commerce or sales rather than awareness metrics like impressions or engagement — 86% of respondents said commerce or sales is their primary measurement of marketing success across all retail media platforms in 2024, versus 9% who said the same of engagement and 1% who said impressions is their top success metric.
  
• As more retailers introduce their own RMNs, marketers have had to stretch their budgets in order to balance their platform mix. Some experts have even said that this influx of new RMNs is not sustainable and can harm retailers and advertisers.
  
• Meta-owned platforms Instagram and Facebook remain the predominant players within social media, holding the No. 1 and No. 2 spots, but marketers’ use of Pinterest, Reddit and Snapchat has increased in 2024.
  
• Marketers’ use of TikTok declined slightly in 2024. TikTok faces a potential ban or sale in the U.S., and marketers are exploring contingency plans, such as moving ad spending to other platforms. Marketers’ use of X dropped by 6 percentage points in 2024. X has experienced continued turbulence since Elon Musk’s takeover, including mass layoffs and seemingly never ending platform and policy changes.
  
• Engagement is the primary measurement of success marketers turn to on all social platforms, with the exception of Pinterest. Engagement on social media is unique among marketing channels in that it shows marketers the types of products consumers gravitate toward.

The charts that tell the story:

In third place: The state and future of the media agency, from client spending to retail media’s impact

Modern Retail’s 2024 media agency report examined the current and future state of media agencies from the perspective of total client spending and spending by media channel. It also delved into the impact of retail media on the agency landscape. One thing agencies were clear on is that digital channels will be the big winners when it comes to where clients up their spending in 2025.

Key findings:

• Agencies selected social media (90% of respondents), retail media (50% of respondents) and streaming video and CTV (45% of respondents) as the top three channels in which they expect to see increased client spending next year.
  
• Within social media, agency clients are shifting spending into short-form video in particular. Short-form video offers the opportunity to reach younger audiences where they are most active. Viewers’ need to watch short-form videos with the sound turned on has also increased clients’ interest in short-form video advertising.
  
• The majority of agencies (63%) said they are currently advising their clients to invest in retail media. Raising consumer awareness of a product or brand is the top reason agencies said they recommend that clients invest in retail media. Forty-eight percent of agencies said this.
  
• Lack of budget and too many investment options is the top challenge agencies say they face within retail media — 36% of respondents said this. As retail media has surged in popularity, a plethora of new RMNs have popped up, forcing clients to stretch their budgets in order to balance their platform mix.

The charts that tell the story: