Senior retail leaders are more pessimistic about consumers’ confidence to spend in the face of inflation than consumers themselves indicate.
Over three-quarters (77%) of retail executives believe consumers are moderately to extremely concerned about recession, while 57% of consumers expressed the same concern in a report conducted by First Insight in partnership with WWD. The retail executives also think that consumers are cutting back more significantly than consumers say they are across multiple categories, potentially creating a more promotionally-driven —and therefore less profitable — holiday season than may be warranted.
The disconnect between retail leaders and consumers is most apparent within the apparel, footwear and accessories categories, according to the report. For example, 66% of retailers think that consumers will cut back on jewelry, with only 32% of consumers in agreement.
Similarly, 57% of retail executives believe spending on handbags will be reduced, aligned with just 29% of consumers. And 45% of the executives assume consumers will spend less for formal or more dressy apparel, while only 20% of consumers agree.
The report also found that retail leaders’ top three priorities for 2023 are growth strategies, customer acquisition and retention, and store operations. Although consumers have been returning to in-person shopping, 49% of retail executives will spend more of their budget on e-commerce technology investments and less on in-store enhancements.
Increasing prices, reducing inventory and moving excess inventory are the top three ways retailers say they are combatting inflation and increased costs.
Other highlights from the report are below.
at Chain Store Age.
