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.
- With 71% of households looking for sales and coupons to combat rising grocery store prices, per 84.51°, retailers may have no choice but to offer more sales or deeper discounts to keep shoppers from switching to cheaper competitors or stop shopping altogether.
- More retailers are also turning to gift cards as a way to encourage spending, said Stacey Widlitz, president of SW Retail Advisors. For example, Anthropologie is offering $50 in credit to shoppers who spend $200 or more online—but the money can only be used on purchases made before the end of the month (and quarter).
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.