The retail industry has been through dramatic changes in recent years driven by covid-19 and rapidly changing consumer tastes. With the height of the pandemic largely behind us, retail businesses have been focused this year on restoring profit margins and bracing for what is sure to be an unpredictable economy next year. 

Big challenges are on the horizon, from high interest rates to a shift in consumer spending toward experiences and geopolitical conflicts snarling supply chains. While retailers have proven nimble in the past, there are two big trends the industry should consider keeping to help weather the storm and two they should ditch. 

Trends to keep in the new year:

Generative AI: Shopping may seem more digitally focused than ever, but retailers have yet to incorporate and stretch the full potential of technology, namely generative artificial intelligence to improve everything from their marketing to supply chains. Generative AI is like ChatGPT in that it generates text, images or audio based on data. For instance, Instacart Inc. partnered with OpenAI this year on a function that lets consumers ask open-ended questions such as “what should I have for dinner?” to get product recommendations. It then makes a recommendation and connects consumers to specific products. Wayfair Inc.’s recent investments in generative AI tools such as Decorify, which allows shoppers to see a digital version of a re-designed room, will help the company return to mid- to high-single-digit earnings gains beginning in 2024, according to Bloomberg Intelligence’s retail analysts.

Physical stores: Despite the growth of e-commerce, people still really like shopping in person out of pure convenience and pent up demand to socialize following the pandemic. That made it a big year for retail real estate. Heading into 2023, grocery stores, discount stores and restaurants rushed to grow their physical footprints. Shopping mall owner Simon Property Group Inc. reported a 95.2% occupancy rate at the end of the third quarter, up 70 basis points from a year earlier. Rents rose 2.9% from a year earlier, Simon Property chief executive officer David Simon told investors in October. With more retailers experimenting with in-store exclusives and experiences, retail real estate is likely to continue to be a big part of how people shop.

Trends to ditch in the new year: 

Drone delivery: As the character Regina George says in the cult classic movie Mean Girls, “stop trying to make fetch happen.” For retailers, that means drone delivery. Walmart Inc. and Amazon.com Inc. have tried to get drone delivery off the ground, but it never quite takes off. It’s a neat idea: some flying contraption delivers your order right to your door from out of the sky. But it’s one of those innovations that seem more like a tech flex than something that actually solves any problem. Amazon’s drones can only safely deliver packages weighing up to five pounds that don’t include anything breakable (deliveries are dropped from about 12 feet in the air). They also are limited by harsh weather. Walmart’s drones only operate during certain hours and can only delivery packages that weigh less than three pounds. The largest US retailer says its drones lower packages to the ground with a tether. This all seems very inconvenient. 

Self-checkout only stores: Kroger Co. and Dollar General Corp. experimented over the last year with stores that only have self checkout as retailers sought ways to reduce labor costs and speed up transactions. But the promise of self checkout as a time and cost saver has proved to be a bit overblown. Shopper complaints mounted over errors, waiting times as associates helped other customers or even finding no one was available to address problems. The frustrations with self checkout even inspired a gag event called “Walmart Self Checkout Employee Christmas Party” on Facebook that caught the interest of more than 41,000 people. What’s more is self checkout is also contributing to retailer “shrink” from theft. Shoppers sometimes scan a cheaper item for a more expensive one or skip scanning certain items altogether. Self checkout might seem cheaper than labor, but ultimately retail thrives on a human touch. 

Leticia Miranda is a Bloomberg Opinion columnist covering consumer goods and the retail industry. She was previously a business reporter at NBC News and a retail reporter at BuzzFeed News.