Deloitte has released its 2023 retail industry outlook report exploring retail trends to help retailers elevate their business strategy beyond traditional cost-cutting. The report is based on a series of interviews with 50 senior retail leaders, 70% of which are from companies with an annual revenue of $10 billion or more, as well as Deloitte’s economic outlook for the retail industry. Key highlights include:
- Volitivity Shakes Retailers: The retail sector has been through a lot during the most condensed time frame of any recent business cycle. As a result, only one-third of retail executives are very confident about maintaining or improving profit margins this year.
- Inflation Digs Deep: All surveyed executives expect inflation to pressure their profit margins, and six in 10 expecting inflation to raise operating costs. And while passing higher prices to consumers has been standard, nearly all retailers (eight in 10) anticipate diminished consumption this year due to financial instability.
- The Transforming Consumer: The changing consumer will be a key challenge, as two-thirds of executives expect the price to be more important than brand or retailer loyalty. Nearly all executives (nine in 10) say consumers will expect seamless shopping experiences across all channels.
- Three Hot Button Issues: As ESG is becoming increasingly important to consumers, six in 10 retailers say the industry will face increased scrutiny on the topic, but more than half are planning minimal to no ESG investments. Additionally, retail theft is expected to increase, posing concerns for retailers. And labor issues will come into play as seven in 10 retail executives predict it will be their number one challenge this year.
- Supply Chain Disruptions Continue: Seven in 10 executives note that supply chain disruption will impact growth, leaving only three in 10 who feel confident in navigating domestic supply chain disruptions. To combat disruption, eight in 10 executives said they plan to make moderate-to-major investments to modernize their supply chain this year.
- Social Commerce Strengthens: Six in 10 executives foresee strengthening digital commerce offerings as a top growth opportunity, with another six in 10 anticipating consumers using social media platforms to purchase products directly. Moreover, seven in 10 executives expect retailers to collaborate with social media networks and influencers to grow social commerce.
Deloitte provides audit, consulting, tax and advisory services to many of the world’s most admired brands, including nearly 90% of the Fortune 500 and more than 7,000 private companies. Building on more than 175 years of service, its network of member firms spans more than 150 countries and territories.