According to a poll of retail decision-makers done by Boston Consulting Group, businesses worldwide are nonetheless concerned about inflation suppressing consumer spending despite early indications that price increases are decreasing.
Retailers in Europe are struggling with sluggish sales as customers choose to spend less on clothing and more money on less expensive food as a result of rising energy costs.
The top three issues for the 561 global retail executives, directors, and managers questioned by BCG for a report released on Tuesday as the World Retail Congress conference gets underway were generally rising costs of goods, decreased consumer spending, and uncertain supply chains.
It will likely become more difficult to pass on rising expenses to customers: Respondents predicted that customers will be more price-sensitive this year by 72%.
According to BCG, “this restricts the options retailers have to recover from and combat high input costs, and it creates new challenges that retailers must overcome, like shifting consumer behavior toward specific products and customer segments.”
For instance, customers in Britain have prioritized price over other factors when purchasing goods, which has had a negative influence on nutrition.
Retailers must get creative to keep customers coming back, the poll showed, and many are investing in loyalty programs, price promotions, and enhancements to the online customer experience. This is in addition to raising pricing and renegotiating with suppliers.
Retailers should invest in artificial intelligence (AI), according to the report’s authors, to fine-tune their pricing and marketing strategies through the use of algorithms and machine learning.
The majority of retailers outside of Asia, they claimed, “ignore AI and the potential additional benefits it offers.”
In terms of retailers’ forecasts, Asia was a bright light, with 76% of survey participants anticipating economic growth in the area this year following China’s reopening following protracted COVID-19 lockdowns.
Compared to Europe, retailers were more upbeat about North America, with 68% of them seeing growth there compared to 54% in the latter.
