With the crucial holiday shopping season merely weeks away, retail leaders are more pessimistic about consumers’ confidence to spend in the face of rising inflation than consumers themselves indicate. Forty-five per cent of retail executives assume consumers will spend less for formal or more dressy apparel, whereas only 20 per cent of US consumers agree.

While 77 per cent of retail executives believe consumers are moderately to extremely concerned about recession, only 57 per cent of consumers expressed the same concern, according to a report conducted by First Insight in partnership with Women’s Wear Daily (WWD). The report titled ‘The Inflation Disconnect Between Retail Executives and Consumers’ reveals that retail executives also think that consumers are cutting back more significantly than consumers say they are across multiple categories, potentially creating a more promotionally-driven — and therefore less profitable — holiday season than may be warranted.

With the crucial holiday shopping season merely weeks away, retail leaders are more pessimistic about consumers’ confidence to spend in the face of rising inflation than consumers themselves indicate. Forty-five per cent of retail executives assume consumers will spend less for formal or more dressy apparel, whereas only 20 per cent of US consumers agree.

Fifty-two per cent of retailers believe that consumers are reducing their spend on apparel, footwear, and accessories because of higher prices when, in fact, only 40 per cent of consumers indicate that they are doing so.

Within the apparel, footwear, and accessories categories, retail leaders are even more disconnected from the consumer. Sixty-six per cent of retailers think that consumers will cut back on jewellery, with only 32 per cent of consumers in agreement. Fifty-seven per cent of executives believe spending on handbags will be reduced, aligned with just 29 per cent of consumers.

“The US apparel, footwear, and accessories categories go into the holiday season facing the macro disruptions being seen across the economy,” said James Fallon, editorial director for Fairchild Fashion Media, which includes WWD, Footwear News, Beauty Inc, and Fairchild Live Media. “Although the challenges presented by supply chain issues, inflation, and workforce shortages are significant, pricing strategy was cited by 40 per cent of retail leaders as the one variable within their control. Given that, a well-developed pricing strategy will make all the difference in retailers’ end-of-year performance.”

Retail executives largely believe that rising prices have changed consumers’ shopping habits to focus more on promotions, sales, and discounts. However, that presumption is not supported by the data. For instance, 58 per cent of retail executives think that consumers are shopping more for deals, but this is true for only 40 per cent of consumers. Forty-three per cent of retailers think consumers are buying less overall, yet only 29 per cent of consumers admit that this is the case. Forty per cent of retail executives think consumers are using more coupons, compared to only 24 per cent of consumers. The one place both retailers and consumers agree is that inflation has forced consumers to stay within a budget.

The report also finds that 75 per cent of retail executives believe the country is currently experiencing a recession, compared to 66 per cent of consumers.

Among retail leaders, the top three priorities for 2023 are growth strategies, customer acquisition and retention, and store operations. Although consumers have been returning to in-person shopping, 49 per cent of retail executives will spend more of their budget on e-commerce technology investments and less on in-store enhancements.

Sixty per cent of retail executives believe Voice of Customer and assortment/pricing predictive analytics software is important or very important to their business.

Increasing prices, reducing inventory, and moving excess inventory are the top three ways retailers say they are combatting inflation and increased costs.

Fibre2Fashion News Desk (NB)