Retailers are holding their breath to see what the U.S. Economy has in store for 2023. In the midst of changing market conditions, we are being pelted with conflicting economic data. Although slowing, inflation is still stubbornly high, and the jobs market is full speed ahead despite sectors seeing waves of layoffs.
The Fed is expected to raise interest rates again in March, and according to Olu Sonola (Head of U.S. Regional Economics), they’re likely to remain high for at least another year. “Core inflation is projected to remain too high for the Fed to pivot to rate cuts," said Sonola. "Sustained cooling of the labor market should take pressure off wage growth and allow the Fed to commence rate cuts in 2024.”
As for consumer spending, Fitch Ratings expects a drop to 0.2% in 2023 from a healthy 2.8% in 2022, "reflecting monetary tightening’s lagged effect on demand and higher inflation’s ongoing drag on real incomes.”
In the mood for more concerning news? A recent survey of over 30,000 shoppers showed that in 2022 "shoppers were 4.3% less satisfied with shopping journeys than a year before.” The study (by PYMNTS and CyberSource) notes that “consumer satisfaction is higher when merchants offer digital shopping features that can add certainty to their shopping and payment experiences. Satisfaction also rises when merchants make the full range of their digital feature offerings known to local shoppers.”
It's clear that the industry is listening. In the annual "Pulse of Retail Report,” a survey of more than 500 retail executives showed that 87% of respondents are investing in technology centered around customer experiences in 2023. "Only 11% currently offer a frictionless omnichannel experience where customers can seamlessly transition between shopping online and in-store."
The Innovative Takeaway:
Efficient engagement with shoppers is more important than ever as consumers tighten grips on their wallets. In 2023, brands and retailers that invest in improving shopper satisfaction (by creating a seamless omnichannel experience) will be able to rise above this unsteady market.
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