At the halfway point of 2023, the retail industry has tackled rapidly changing consumer demands, store closures and bankruptcies and inflationary price trends — the economic headwinds have hit hard, leaving executives with a loss of control.
In the latest WWD-hosted webinar, Ethan Chernofsky, senior vice president of marketing at Placer.ai, joined Arthur Zaczkiewicz, executive editor of strategic content development at WWD, to see where retail sits at the half-year mark and discuss what retail will look like in the second half of 2023.
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Chernofsky addressed retail’s first-half challenges, acknowledging that retailers and brands are still very much dealing with the impact of several macroeconomic headwinds. Simultaneously, consumer behavior shifts are taking place which has created a trading down effect with increasing mission-driven shopping, especially in discretionary-oriented categories. But most of the forces impacting retailers such as workforce shortages, inflation and supply chain disruptions are out of the direct control of executive leaders.
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“The distinction you make is really important because you can’t control [inflation],” Chernofsky said. “I think if you accept the fact that this is a scenario that you can’t control, then there’s a couple of really important things we need to remind ourselves of. First, the road is slick and not fully visible, you’re not growing as fast as you want to be. The second piece is that there needs to be a shift in focus on not necessarily the short term, but what this means for the long term.”
As new consumer behaviors emerge, businesses should question if they are likely to maintain or if they will be a short-term phenomenon that will revert to pre-inflation behaviors. In many cases, such as trading down and mission-driven shopping, new behaviors could represent a new opportunity for growth. Consumers have shown flexibility when they see benefits in behavior change which can be a win-win for retailers who can optimize the behaviors and maintain trends to drive success in the longer term.
Importantly, one of the biggest long-term impacts of the last several years has been the move to work from home and now a return to the office. The hybrid work schedule that many companies have adopted has resulted in a nearly 30 to 40 percent decrease in retail store visits. Chernofsky shared that businesses that adjust their strategy to accommodate the shift in traffic open themselves to new opportunities. For example, a deli that may have seen a decline in business on Mondays, due to people working from home, could focus on distribution that day while being open normally the other days of the week.
To make strategic decisions about the next six months or even several years, Chernofsky said companies should look at data by segmentation, where migrations are occurring, and where it makes sense to reach the target consumer.
Discussing other long-term opportunities, Chernofsky said Placer.ai remains excitedly optimistic about the potential of malls and the experiences that retailers can bring consumers to this place. The opportunity for fashion and beauty retailers has not changed but meaning that the long-term underlying factors have as a more diverse set of offerings (such as medical retail or purely experiential plays) have entered the mall.
“We are in a difficult environment, we must acknowledge that, accept that and judge accordingly,” Chernofsky said. “But there are opportunities in a difficult environment and opportunity to think about what’s really changed and try things that might give a short-term boost or even potentially a long-term boost. Those two things happen simultaneously. The situation is hard, but the most important lesson is that there are opportunities.”
To learn more about the state of Retail in 2023 and Placer.ai’s analytics solution, watch WWD’s full webinar HERE.