A recent survey conducted by Boston Consulting Group (BCG) has revealed that retailers globally are still concerned about the impact of inflation on consumer spending, despite initial signs that price rises are slowing down. The survey, which polled 561 global retail executives, directors, and managers, found that the rising cost of goods, declining consumer spending, and unpredictable supply chains were the top concerns for retailers.
In Europe, retailers are struggling with slowing sales due to high energy bills, which are squeezing consumer budgets and causing them to spend less on clothes and opt for cheaper food items. Passing on the higher costs to consumers is becoming increasingly difficult, as 72% of respondents said they expected consumers to be more price-sensitive this year.
As a result, retailers are having to get creative to keep shoppers coming back, with many investing in loyalty programmes, price promotions, and improvements to the online customer experience. The report also suggested that retailers should invest in artificial intelligence (AI) to hone their pricing and marketing strategies using algorithms and machine learning. The authors of the report stated that most retailers outside of Asia are neglecting AI and missing out on its potential benefits.
The survey found that Asia was a bright spot in terms of retailers' expectations, with 76% of respondents expecting the region's economy to grow this year after China's reopening following lengthy COVID-19 lockdowns. Retailers were more optimistic about North America than Europe, with 68% predicting growth in the former and 54% in the latter.
Overall, the survey highlights the challenges facing retailers globally as they navigate the impact of inflation on consumer spending and find new ways to adapt to changing consumer behaviours.
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