Stop worrying about inflation. The NRF is cautiously optimistic about economic growth

WASHINGTON – The National Retail Federation predicts that retail sales will grow between 4% and 6% in 2023, with retail sales reaching between $5.13 trillion and $5.23 trillion.

Matthew shay - cropped
Matthew Shay

“In just the past three years, the retail industry has experienced growth that would normally take almost a decade by pre-pandemic standards,” said NRF president and CEO Matthew Shay during today’s third annual  State of Retail & the Consumer virtual conversation. “While we expect growth to moderate in the year ahead, it will remain positive as retail sales stabilize to more historical levels.”

The 2023 figure compares with 7% annual growth to $4.9 trillion in 2022. The 2023 forecast is above the pre-pandemic, average annual retail sales growth rate of 3.6%.

Non-store and online sales, which are included in the total figure, are expected to grow between 10% and 12% year-over-year to a range of $1.41 trillion to $1.43 trillion. 

Pashmeena Hilal Google“Consumers are not loyal to just one channel,” Pashmeena Hilal, head of industry research and thought leadership at Google said during the State of Retail & the Consumer conversation. “Even in furniture, customers are now trying to virtually places couches in their homes. The new technology has allowed us to change, people are now doing much more research on their own which has changed the journey to in-store.”

Hilal said the new non-linear journey to purchase is frenetic in a positive way.

“It’s not mathematically possible to see how people shop since there are so many options,” she added. “With the sheer number of touchpoints available to them, it’s impossible to see all the examples. Retailers are now able to create individual journeys for each furniture shopper.”

While many consumers will continue to use online shopping, much of that growth is driven by multichannel sales, where the physical store still plays an important component in the fulfillment process, according to the NRF. As the role of brick-and-mortar stores has evolved in recent years, they remain the primary point of purchase for consumers, accounting for approximately 70% of total retail sales.

NRF projects full-year GDP growth of around 1%, reflecting a slower economic pace and half of the 2.1% increase from 2022. Inflation is on the way down but will remain between 3% and 3.5% for all goods and services for the year.

Although the labor market has remained resilient, the trade organization anticipates job growth to decelerate in the coming months in lockstep with slower economic activity and the prospect of restrictive credit conditions. The unemployment rate is likely to exceed 4% before next year.

NRF Chief Economist Jack Kleinhenz noted that aggregate economic activity has held up well, despite restrictive monetary policy that is working purposefully to curb inflation. He also acknowledged that recent developments in the financial markets and banking sector as well as some unresolved public policy issues complicate the outlook.

“While it is still too early to know the full effects of the banking industry turmoil, consumer spending is looking quite good for the first quarter of 2023,” said Jack Kleinhenz NRF chief economist. “While we expect consumers to maintain spending, a softer and likely uneven pace is projected for the balance of the year.”

See also:

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *