March 29, 2023 — The National Retail Federation (NRF) recently hosted a webinar, “State of Retail and the Consumer,” an annual conversation to discuss where U.S. consumers and the economy are headed.
 
NRF president and CEO Matthew Shay opened the discussion with an overview of the retail industry’s current state: The retail industry supports 50 million jobs—1 in 4 jobs in the U.S.—making it the largest private sector economy. Consumer spending totaled $7 trillion last year, contributing $4 trillion to the annual GDP.
 
“In just the last three years, the retail industry has experienced growth that would normally take almost a decade by pre-pandemic standards,” says Shay. “While we expect growth to moderate in the year ahead, it will remain positive as retail sales stabilize to more historical levels.”
 
NRF chief economist Jack Kleinhenz announced NRF’s annual sales forecast, which is above the pre-pandemic average annual retail sales growth rate of 3.6%. Online sales are expected to grow between 10% and 12%, or $1.41 trillion to $1.43 trillion. However, the role of brick-and-mortar stores remain the primary point of purchase for consumers, accounting for 70% of total retail sales.
 
NRF predicts full-year GDP growth of around 1%—half of the 2.1% increase from 2022. Although inflation is on the way down, it will remain between 3% and 3.5% for all goods and services this year. The unemployment rate is likely to exceed 4% before next year, as the trade organization anticipates job growth to slow down at pace with economic activity and the prospect of restrictive credit conditions. 
 
Kleinhenz acknowledged that recent developments in the financial market and banking sector, along with unresolved public policy issues, complicate the outlook. “While it is still too early to know the full effects of the banking industry turmoil, consumer spending is looking quite good for the first quarter of 2023,” says Kleinhenz. “While we expect consumers to maintain spending, a softer and likely uneven pace is projected for the balance of the year.”
 
The following are additional takeaways from the virtual discussion:
 

• While consumers continue to utilize the conveniences offered by online shopping, many purchases are driven by multichannel sales, where brick-and-mortar stores are connected to digital services.
• The value of the storefront is here to stay, as consumers seek convenience without friction; consumers appreciate the ability to shop online and pick up at store, for example.
• Overall, consumer behavior is trending toward deals as value has become much more important. Consumers seek a similar product quality while purchasing non-name-brand options.
• As consumers trend toward value-driven searches, keywords like “deal” and “value” in shopping-related searches exploded before the 2022 holiday season and are continuing strong.

 
For more information: nrf.com.