Despite initial signs that price rises are slowing, retailers globally are still worried about inflation dampening consumer spending, a survey of retail decisionmakers conducted by Boston Consulting Group (BCG) showed.
In Europe, retailers are contending with slowing sales as consumers, squeezed by high energy bills, spend less on clothes and buy cheaper food.
Overall, the rising cost of goods, declining consumer spending and unpredictable supply chains were the top-ranked concerns for the 561 global retail executives, directors and managers surveyed by BCG for a report published yesterday as the World Retail Congress conference begins.
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Passing higher costs on to shoppers is likely to become harder: 72 percent of respondents said they expected consumers to be more price-sensitive this year.
“This limits the options retailers have to recover and combat high input costs, and it creates new difficulties that retailers must combat, such as shifting consumer behavior towards specific products and customer segments,” BCG said in the report.
When buying groceries, for example, consumers in Britain have been prioritizing affordability over other qualities, with negative knock-on impacts on nutrition.
As well as hiking prices and renegotiating with suppliers, retailers are having to get creative to keep shoppers coming back, with many investing in loyalty programs, price promotions and improvements to the online customer experience, the survey found.
The authors of the report said retailers should invest in artificial intelligence (AI) to hone their pricing and marketing strategies using algorithms and machine learning.
“Most retailers outside Asia are neglecting AI and missing out on the potential additional benefits it offers,” they said.
Asia was a bright spot in terms of retailers’ expectations, with 76 percent 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 percent predicting growth in the former and 54 percent in the latter.
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