In the latest report from Coresight Research, Deborah Weinswig, chief executive officer and founder, is blunt about what 2023 has in store for retailers: the post-COVID-19 recovery was short-lived and the “roaring ’20s” never got off the ground.
And with the Asian and U.S. luxury markets continuing to be locally driven, Weinswig said, “luxury growth in Europe will increasingly depend on domestic consumers and moderate in the medium term.”
In an overview of the U.S. market, Weinswig said higher interest rates, inflation, higher food and energy costs and expectations of a recession have battered consumer confidence. “High borrowing costs have squeezed household spending,” Weinswig said in the report. “The low-income-group households have faced limitations in discretionary spending due to the high prices of essentials as well as declining savings and contribution to higher credit card debt.
And while spending, in nominal terms, was resilient this year, Weinswig said in real terms, “shoppers have been cutting spending on big-ticket categories such as furniture, household appliances and home-improvement products, as well as groceries .” “As we head to 2023, the U.S. economy is giving mixed signals for recession, but households are struggling under the burden of high prices,” the report stated. “High prices, high input costs and a shortage of labor and raw materials could lead to a new dynamic of insufficiency of supply. Such a sentiment might prove unsettling for businesses, and supply-side stimulus might be required in the months ahead.
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