“Although consumers are still on guard about the pandemic, inflation is the main factor influencing their shopping behaviors at this time. They continue to be very value-driven which provides retailers with opportunities to redefine how they offer value, both from a monetary and nonmonetary standpoint. Despite ongoing headwinds, the retail industry is growing overall, normalizing nearly three years after the start of the pandemic. However, the cost of doing business is squeezing some middle-tier and specialty retailers signaling troubling times ahead for those unable to adapt swiftly enough.”
– Diana Smith, Associate Director – Retail & eCommerce
This Report looks at the following areas:
- How inflation has – and will – shift consumers’ shopping tendencies
- Which shopping behaviors have been retained amid the pandemic, and which are retracting
- How consumers are shopping across channels by category
- Which retailers will succeed and which will struggle
- Key influencers of retailer preference
- How consumers define value, other than savings
- Shoppers’ experience with tech at retail
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Overview
- What you need to know
- This Report looks at the following areas
- Definition
- Market context
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Executive Summary
- Top takeaways
- Market overview
- Figure 1: Total US retail sales and fan chart forecast, including eCommerce, at current prices, 2017-27
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- Figure 2: Retail and eCommerce outlook, 2023-28
- Opportunities and challenges
- Economic instability will continue to influence shopping behaviors
- Social commerce will continue to be a key area of focus – and scrutiny – this year
- Inventory management needs to improve
- The next wave of omnichannel is here
- Innovative new revenue opportunities are materializing
- Key consumer insights
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Market Size and Forecast
- Retail industry keeps trekking despite strained economy
- Figure 3: Total US retail sales and fan chart forecast, including eCommerce, at current prices, 2017-27
- Figure 4: Total US retail sales and forecast, including eCommerce, at current prices, 2017-27
- More ecommerce growth ahead, but at a slower pace
- Figure 5: Total US retail eCommerce sales and fan chart forecast, at current prices, 2017-27
- Figure 6: Total US retail eCommerce sales, at current prices, 2017-27
- Figure 7: eCommerce share of total sales, 2017-27
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- Figure 8: Estimated quarterly US retail ecommerce sales – percent of total sales; change versus prior quarter and year, Q3 2021 – Q3 2022
- Retail industry keeps trekking despite strained economy
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Segment Performance
- Nearly all store types see sales lifts, but growth is decelerating
- Figure 9: Year-over-year percentage change in total retail sales and food services, by type of store, January – November 2022
- Nearly all store types see sales lifts, but growth is decelerating
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Market Factors
- More inflation woes ahead
- Inflation is coming down, but will stay elevated for much of 2023
- Figure 10: Consumer Price Index change from previous period, 2007-22
- Threats to disposable income force down personal savings rate, causing credit card usage to spike
- Figure 11: Disposable Personal Income, 2020-22
- Americans are split regarding how they temper inflation
- Figure 12: Inflation behaviors, 2022
- Many other factors concern consumers, impacting their confidence and spending
- Figure 13: Consumer concerns, 2022
- Impact to consumer confidence
- Figure 14: Consumer Sentiment Index, 2019-22
- Impact to GDP and consumer spending
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- Figure 15: GDP change from previous period, Q1 2020-Q3 2022
- Unemployment improves in the midst of other economic chaos
- Figure 16: Unemployment and underemployment, 2010-22
- The country’s youth and diversity will influence future retail trends
- Figure 17: Population by generation, 2017-27
- Figure 18: Projected age distribution by race and Hispanic origin in 2027
- Legislation in the works could impact retail industry
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Competitive Strategies and Market Opportunities
- Payment options are expanding
- Payment apps
- Buy now, pay later
- Figure 19: Klarna adds price comparison tool
- Emerging payment forms
- Figure 20: Amazon One palm-based payment solution
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- Figure 21: PacSun uses cryptocurrency as a promotional tool
- Retail media provides another revenue source
- Figure 22: DoorDash enhances ad solutions for brands
- Brands need to stay ahead of consumers when it comes to understanding opportunities in the virtual world
- Figure 23: Attitudes toward the metaverse, 2022
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- Figure 24: Walmart houses Walmart Land on Roblox
- Figure 25: Laura Mercier creates World of Beauty in the metaverse
- Brands should be cautiously optimistic about social commerce
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- Figure 26: Chipotle promotes Freepotle reward perk on Instagram and TikTok
- Figure 27: Crocs promotes its shoes during the holidays
- Free online return policies are starting to disappear
- Figure 28: DoorDash launches packet pickup service
- Retailers are testing new store formats and floor plans
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- Figure 29: Lowe’s adds Petco shop-in-shops in select stores
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The Consumer – Fast Facts
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Shopping Method by Category
- Products shopped for
- Inflation is impacting consumers’ spending patterns and suppressing pandemic recovery
- Figure 30: Products shopped for throughout pandemic, 2020-22
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- Figure 31: Products shopped currently versus pre-pandemic and one year ago, 2022
- Shopping method and channel approach
- Gap between multichannel and single channel shopping narrows for most categories
- Figure 32: Multichannel shopping versus single-channel shopping, 2022
- Multichannel shopping has become the norm due to the rapid growth of ecommerce
- Figure 33: Percentage of total purchases made online, by generation, 2022
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- Figure 34: Online shopping frequency, 2022
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- Figure 35: Devices used to shop online, 2022
- Online for searching, in-store for buying
- Figure 36: Method of shopping – search versus purchase, by channel, by item, 2022
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- Figure 37: Purchase location, online versus in-store by category – current versus pre-pandemic, 2020 and 2022
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Retailers Shopped
- Consumers branch out more, but still have their favorites
- Figure 38: Retailers shopped – Any shopping (net), 2022
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- Figure 39: Tanger Outlets Phoenix emphasizes promotions during holidays
- Despite ecommerce growth, stores remain preferred channel
- Figure 40: Retailers shopped, by channel, 2022
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- Figure 41: Amazon sentiment, by key demos, 2022
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- Figure 42: Retailers shopped in-store, by generation, 2022
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- Figure 43: Retailers shopped online, by generation, 2022
- Consumers branch out more, but still have their favorites
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Retailer Drivers
- Primary drivers
- Convenience in all forms
- Figure 44: Factors driving selection of retailer, 2022
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- Figure 45: Factors driving selection of retailer , by generation, 2022
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- Figure 46: Factors driving selection of retailer, by race and Hispanic origin, 2022
- Health and safety-related considerations
- Cleanliness and employee welfare matter to consumers
- Figure 47: Retailer offerings related to health and safety, 2022
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- Figure 48: Retailer offerings related to health and safety, by gender and age, 2022
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Shopping Behaviors
- Notable pandemic-related shopping shifts have been retained
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- Figure 49: Primary shopping shifts compared to last year, 2022
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- Figure 50: Primary shopping shifts compared to last year – doing more, by key demos, 2022
- Other notable shopping behaviors reflect growth of eCommerce
- Figure 51: Shopping behaviors, 2022
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- Figure 52: Shopping behaviors – frequency versus last year, 2022
- Inflation is now causing more shopping shifts
- Figure 53: Impact of inflation on shopping behavior, 2022
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- Figure 54: Impact of inflation on shopping behavior, by financial situation, 2022
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- Figure 55: Impact of inflation on shopping behavior, by race and Hispanic origin, 2022
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- Figure 56: Shopping behaviors in light of inflation, by parental status, 2022
- Figure 57: Everlane takes transparent approach to promoting value
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Meaning of Value
- Value entails more than savings
- Figure 58: Nonmonetary forms of value, 2022
- Women find value in free benefits; men find value in service options
- Figure 59: Nonmonetary forms of value, by gender, 2022
- Younger generations look beyond the value of low prices
- Figure 60: Nonmonetary forms of value, by generation, 2022
- Value entails more than savings
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Technology at Retail
- Education is needed to realize full potential of tech
- Figure 61: Usage and interest in tech at retail, 2022
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- Figure 62: Usage and interest in tech at retail, by gender and age, 2022
- Fun can be a primary benefit of tech
- Figure 63: Fun of shopping, in-store versus online, by gender and age, 2022
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- Figure 64: Walmart’s Text to Shop feature makes it easier and more fun to make shopping lists
- Education is needed to realize full potential of tech
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Attitudes toward Shopping
- There are ways to provide value besides dropping prices/constant sales
- Figure 65: Price-related attitudes, 2022
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- Figure 66: Price-related attitudes, by gender and household income, 2022
- Consumers want their stuff; tolerance for inventory-related issues is diminishing
- Figure 67: Inventory-related attitudes, 2022
- Shopping local seen as a great way to demonstrate community support
- Figure 68: Attitude toward localism, 2022
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- Figure 69: Attitude toward localism, by key demos, 2022
- There are ways to provide value besides dropping prices/constant sales
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Appendix – Data Sources and Abbreviations
- Data sources
- Sales data
- Forecast
- Consumer survey data
- Abbreviations and terms
- Abbreviations
- Terms
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Appendix – The Market
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- Figure 70: Total US retail sales and forecast, including ecommerce, at inflation-adjusted prices, 2017-27
- Figure 71: Total US retail ecommerce sales, at inflation-adjusted prices, 2017-27
- Figure 72: Financial health, 2022
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- Figure 73: Population by race and Hispanic origin, 2017-27
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Appendix – The Consumer
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- Figure 74: Retailers shopped online, by household income, 2022
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- Figure 75: Interest in paying with cryptocurrency, 2022
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