By Anastasia Lloyd-Wallis
Chief Operating Officer and Head of Consumer Insights, Retail Doctor Group
There’s no denying that the last few years have been challenging – for retailers, brands, and consumers alike. Despite a resurgence of Covid-19 variants, the worldwide recession, and bleak economic times, the overall outlook seems positive.
Part of the reason for the pessimism still felt is the high cost of living versus the often too-low salary increases. Brands and retailers – though doing better than they were a couple of years ago – are still struggling to keep the doors open and this has a spillover effect on labour costs.
Two rising phenomena currently drive consumer spending habits:
- Shoptimism: The spontaneous (and often frivolous) art of buying little things to brighten a mood, motivate and encourage, or bring joy to a loved one.
- Conscious consumerism: A lifestyle choice that focuses on two important things: minimalism (using less stuff) and awareness (of our impact on the environment). It’s about ethics, taking responsibility, and respect (for self, others, and the planet).
Consumers’ Confidence About Their Financial Position
Consumers have lost confidence about their financial position, more so than in 2021 or 2022. Just over one third of those polled (34%) stated they are pessimistic about their current and projected financial position.
However, a further one third (33%) of those included in the study stated they are optimistic about their financial position, with the remaining one third (33%) stating they feel neither pessimistic nor optimistic about it.
In a surprising twist, 40% of consumers aged 55+ feel somewhat or very confident about their financial situation. However, 45% of their younger counterparts, those aged between 35 and 54, are pessimistic about it.
It’s concerning to note that women (44%) are more pessimistic than men (29%) about their financial position. A number of studies have discussed this, including those done by the IMF (International Monetary Fund), the Centre for Optimism, and a recent article by Chris Dawson, published in the British Journal of Psychology.
But closer to home, the Australian government’s National Strategy to Achieve Gender Equality discussion paper records that only 20% of Australian industries have gender-balanced workforces. Motherhood, expectations to care for sick loved ones, and the tendency to be employed in part-time or casual positions (more than men) mean that women in general would be far more likely to feel less secure or confident about their financial futures than men would.
Impact of Societal Developments
Labour shortages, workforce challenges, and increased operational costs are the societal developments that have the most impact on Australian retailers in 2023. Companies do not believe they have enough adaptability to respond to these developments.
Confidence in the Future Outlook
In general, retailers around the world are confident about a positive future for their companies in 2030. Average rates of optimism for the worldwide retail market in 2023 (3.1/5) are higher globally than they are for Australian (2.8/5) retailers.
However, 2023 appears to be a challenging year, particularly for Australian retailers. In addition, global retailers don’t seem to have much optimism regarding the balance of the year’s outlook for global retail, with only 31% of all respondents agreeing that 2023 will be a positive year.
This is in sharp contrast to the nearly-two thirds more of respondents, who felt confidence and optimism in their company’s performance and future outlook for 2030.
Profit Forecast Comparison: 2023 vs. 2022
55% of retailers around the world have a positive forecast for 2023.
There are positive expectations to end 2023, as 73% of Australian retailers and 81% Globally consider that the situation for their own business is similar to 2022 or higher for this year.
Facing Scarcity Challenges
Scarcity challenges that retailers currently face include:
- labour shortages
- supply chain issues
- financial constraints and economic downturns
- logistical and warehousing problems
- material and product shortages
People and logistics are the main areas in which Australian retailers are working on to address scarcity. In the world, the main areas that retailers are currently focusing on are people and materials.
Conclusion and Advice For Retail CEOs
Both globally and domestically retailers and consumers are looking for a stronger focus on the human experience coupled with the brands ability to deliver an emotional connection, be that status , safety through to value.
Customer understanding and insights rises in importance as retailer differentiation strategies and deployment rises in significance.
This coupled with the growth in digitization requires fuller retail ecosystem capability to ensure customers’ growing expectations are met at every point of the ecosystem.
The merging of retail technology and media evolves as socially branded, technology rich organizations meet a consumer interested in the brand.
Deliverables in product, values, purpose, sustainability, innovation, emerging realities are underpinned by the essence of what it is to be a world-class retailer.
Be the Best Retailer you can be
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