Boston Consulting Group (BCG) surveyed retail decisionmakers worldwide and found that, despite initial indications that price increases are moderating, retailers are still concerned that inflation will diminish consumer spending.
In Europe, retailers are contending with sluggish sales as consumers, burdened by high energy costs, spend less on clothing and opt for less expensive food.
Among the 561 global retail executives, directors, and managers surveyed by BCG for a report published yesterday as the World Retail Congress conference begins, the rising cost of goods, declining consumer spending, and unpredictability of supply chains topped the list of concerns.
Higher prices will be harder to pass on: 72 percent predicted price sensitivity from customers this year.
“This restricts the options retailers have to recover and combat high input costs, and it creates new challenges retailers must overcome, such as shifting consumer behavior toward specific products and customer segments,” BCG stated in its report.
When purchasing foodstuffs, for instance, British consumers have prioritized affordability over other qualities, with detrimental effects on nutrition.
In addition to increasing prices and renegotiating with suppliers, retailers are investing in loyalty programs, price promotions, and enhancements to the online consumer experience, according to a recent survey.
According to the report’s authors, retailers should invest in artificial intelligence (AI) in order to fine-tune their pricing and marketing strategies through the use of algorithms and machine learning.
“The majority of retailers outside of Asia are ignoring AI and missing out on the potential benefits it could provide,” they said.
Asia was a bright point for retailers’ expectations, with 76 percent of respondents anticipating the region’s economy to expand this year following China’s reopening following lengthy COVID-19 lockdowns.
Sixty-eight percent of retailers anticipated growth in North America, while only 54 percent anticipated growth in Europe.
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