The insight: After a year of coping with rising prices and economic uncertainty, most consumers are looking to keep a lid on expenses and avoid unnecessary spending in 2023.
A challenging year: While consumers were largely able to keep pace with inflation in 2022, 2023 could be a different story as persistent inflation takes its toll on spending power.
How retailers can respond: The most pressing question for retailers now is how to encourage value-conscious shoppers to spend at a time when they feel increasingly stretched thin.
Looking ahead: Despite the difficulties ahead, there are some silver linings. The Conference Board’s consumer confidence index hit 108.3 in December, its highest reading since April 2022, as inflation eased and gas prices fell. A tight job market and low unemployment levels are also giving consumers a modicum of security.
Still, the behaviors that developed over the course of 2022—a shift to private labels and value-oriented retailers, and the prioritization of essentials over discretionary goods—will remain in play in 2023 as consumers’ financial concerns guide their purchasing decisions.
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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