Retailer Outlook Looks Positive Despite Economic, Inflation Uncertainty, NJ Report Says
Brick-and-mortar retailers are very optimistic about what may come in 2023, coming off a strong year and with labor availability trending in the right direction, according to new data from Levin Management Corporation in North Plainfield.
The commercial real estate services firm recently released the findings of its 12th Annual Outlook Retail Sentiment Survey, which also confirmed ongoing uncertainty tied to economic headwinds and inflation.
What did the survey find?
More than three-quarters of store managers who were surveyed reported that their 2022 sales either matched or exceeded 2021, said Levin Management CEO, Matthew Harding. That is an all-time high, he added.
About 70% are optimistic about store performance in 2023 and just over 28% said they anticipate their company will open additional locations this year.
Optimism is high because people are back out at the stores shopping, Harding said. That drives up results which in turn, drives up optimism.
Last year, supply chain and hiring issues were high but both those have declined as levels of concern, he said.
However, leading the list of concerns is economic uncertainty and inflation which are natural with the talk of recession, Harding said.
What are the top advantages of brick-and-mortar stores over online shopping?
Customer service and customers being able to physically touch and feel the goods are tops for brick-and-mortar stores.
“We also see retailers investing in that. Nearly 80% of those that we’ve surveyed are increasing training with the focus on customer experience, being in the store, interacting with folks, getting out, and seeing the merchandise,” Harding said.
More than half have introduced new or updated loyalty or incentive programs.
Is staffing still an issue?
While staffing was a huge concern for retailers last year, that concern seems to be easing up for 2023.
Only 23% of participants said that they anticipate that labor and availability will impact their business in the coming year. That’s a big change from last year where hiring was really a constraint on operating, Harding said.
Just under half (48.3%) of the survey respondents are in hiring mode, compared to nearly 63% in the 2022 Outlook survey.
A little more than 56% report it is harder to find qualified job candidates than in the past.
What are the top three drivers that could impact retail performance in 2023?
Economy and consumer confidence is the top driver. Nearly 70% of the survey participants highlighted this as a concern. 62% cited inflation and rising prices. Supply chain availability was number three, but that’s down to 36% of the folks that were surveyed, Harding said.
“In terms of inflation, we’re seeing that in the results of our poll that at least from raising prices at the retail level is easing a bit,” Harding said.
Over the past year, more than 80% of survey participants raised prices but of that, about half said they have increased less than 10%.
About half think inflation may not spark future increases so perhaps, one of the higher level concerns is leveling off also which could be a good sign for the rest of the year, he added.
“While a sluggish economy could slow retail sales growth and inflation-strapped consumers may feel the pinch on their spending power, this industry is well positioned to enjoy continued progress in 2023,” Harding said.