In recent months, I have talked to dozens of retailers, taking their pulse on the economy, how they’ve responded and what they’re anticipating over the next 12 to 18 months.
These operators represent the c-suite, category managers and directors.
First and foremost, while everyone is attuned to inflation and differing strategies for dealing with it, one area of near consensus is emerging: optimism.
Despite higher cost of goods and reduced basket sizes, foot traffic is strong, fuel prices are stable and the need for the right product assortment is at an all-time high. In short, the convenience industry continues to leverage data to remove slow(er)-selling products and increase facings of drivers across all inside categories. It’s also gradually improving customer engagement via rewards and social media, and hiring better at the store level.
There are also key national metrics showing positive signs:
- Retail sales (not just c-stores) continue a monthly climb, generally growing 0.3% to 1% or more vs. a year ago.
- Gasoline prices are down about one-third from their peak last year.
- Inflationary increases are falling, largely in accordance with the Federal Reserve’s strategy of raising interest rates in order to bring down the consumer price index.
- And most recently, according to the Mortgage Bankers Association, mortgage applications—while down 27% from 12 months ago—increased 7.2% in the final week of May, compared to a week earlier. The overall picture seems to show some sun breaking through the financial clouds.
“We think the profits in 2023 are going to be slightly ahead of last year,” one retail executive shared. “But I would argue that where we are most bullish is we believe the psychological barriers brought on by COVID have been removed. … People are returning to their normal behaviors and are feeling a bit more optimistic than they were even just six months ago.”
Mitch Morrison is vice president of retailer relations at Winsight. Reach him at mmorrison@winsightmedia.com.