The situation: One potential casualty of an expected economic slowdown in 2023 may be steep sales declines at mid-tier retailers that lead to the shuttering of some or all of their brick-and-mortar stores, per Insider.
Too much stuff: One catalyst that could spur some mid-tier retailers to close stores is the massive amount of excess inventory that they are struggling to sell.
Mid-tier retailers are at risk: Despite the stiff economic headwinds, we expect personal luxury sales will grow by a healthy 13.3% this year thanks to a core consumer base that has been less affected by inflation. At the same time, value-oriented retailers have benefited from consumers trading down from more expensive alternatives. That’s left mid-tier retailers feeling the brunt of the challenging economic climate.
The big takeaway: Retailers with a strong brand and clear positioning should be fine even if the US falls into a recession. However, shoppers have far less reason to visit retailers that lack a distinct identity, particularly if they can find the same, or similar, products elsewhere.
This article originally appeared in Insider Intelligence's Retail & Ecommerce Briefing—a daily recap of top stories reshaping the retail industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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