Sustainability returned as a hot topic at the 2023 National Retail Federation’s Big Show in mid-January in New York City. Other trending themes were the global economy and the fast-growing resale market. Despite news swirling about inflation and a possible recession, retail specialists noted consumers are still spending on “wants” and not just “needs.” Customer experience is at the forefront of retailers’ minds as supply chain issues, inflation, sustainability demands, and other hurdles continue to plague retailers. Even with these challenges, retailers remain optimistic that they can continue to deliver a unique and authentic customer experience while driving growth. This article focuses on the key highlights from the event.
Highlights & Trends
- As we noted after last year’s NRF, consumers are showing an increased interest in seeing more sustainable business efforts from retailers. Gen Z, which represents over 25% of the United States population, is gaining more financial freedom. They are notably conscious consumers who want to see transparency and authenticity as it relates to sustainable business efforts from brands. Not only do customers want to see this shift, but retailers should start thinking about preparing for the possibility of mandated sustainability reporting.
- Inflation remains a top concern for consumers going into 2023. Data shows that, for many consumers, wages have not kept up with inflation. Retailers should consider offering flexible payment options to consumers, such as “buy now, pay later” bundling, or additional perks for staying brand or store loyal. Knowing that wallets may be slimmer, retailers should be analyzing their supply chain operations to identify cost savings and avoid consumer price increases. Effectively managing omnichannel fulfillment and supply chain logistics is a must.
- A unique combination of saving money and offering a sustainable shopping option for customers is the resale market. Brands are addressing the financial concerns of consumers by offering customers the ability to sell their pre-owned goods directly through the brand. Brands that have successfully implemented resale have seen an increase in foot traffic and higher sales. Resale is also inherently sustainable, addressing a growing interest among consumers for products from companies with sustainable business practices. Retailers will need to carefully consider operational and accounting considerations while building a resale option for customers.
- Labor Crisis
- The shortage of labor, while better than in the recent past, is still proving a challenge for retailers. There are more people leaving the workforce than entering, leaving a high vacancy rate. The U.S. Bureau of Labor Statistics noted in November 2022 that there were about 10.46 million job openings.1 Labor challenges are not only a U.S. problem. Many countries have seen a sharp drop in immigration, a significant factor in the workforce deficit. Economists expect to see a global labor shortage unless immigration and/or workforce participation goes up. Identifying and implementing process improvements can assist in employee retention, especially at the corporate level.
- Organized Retail Crime
- Another contributing factor to retail labor shortages in the U.S. is that store workers have become fearful for their safety in the midst of violent store thefts. Retailers across the nation are experiencing larger financial losses per incident, with some extreme cases even leading to store closures. NRF speakers emphasized the importance of retailers proactively working with legislatures and law enforcement to tackle this growing epidemic from every angle. A strong cybersecurity program can also protect retailers from a variety of losses, not the least of which is customer trust. Retailers should consider developing a structured store audit program to help prevent and detect internal and external theft.
- Customer Experience
- With many retailers selling similar products, customer experience is the key differentiator. Retailers need to create an authentic connection between the brand and consumers. NRF speakers discussed the “shoppertainment” experience when retailers engage their audience and entertain customers while they shop. A great customer experience often begins with engaged team members. Investing in creating a positive experience for store team members can create employee buy-in. This fostered enthusiasm can translate into team members creating a positive experience for customers shopping in-store. Retailers can benefit from tracking and analyzing customer experience data to enhance programs that are working or make key decisions going forward. Tools are available to help clients turn data into actionable insights.
How FORVIS Can Help
FORVIS has an experienced retail team who collaborates with other industry and service line professionals to provide the resources available to help you identify solutions. Whether it is bringing together our environmental, social, and governance (ESG) and climate risk team to help you work toward a more sustainable future or helping your CFO unlock incremental value through organizational change, process re-design efficiencies, or analytics and automation, the professionals at FORVIS have the experience to help you achieve your retail goals. Reach out to a retail industry professional at FORVIS today or submit the Contact Us form below.