2023 retail and restaurant industry outlook
OUTLOOK | August 29, 2023
Authored by RSM US LLP
Retail and restaurants sector trend #1: Offsetting shortages with automation
Embracing value: The key to retail and restaurant success
Value stores, discount strategies and labor challenges are among key retail and restaurant trends.
Automation is the name of the game
While optimistic, consumers remain wary of inflation, seeking discounts. Excess supply and competition boost demand for value stores. Retailers use discounts to manage excess inventory, and the consumer price index suggests better shopping value. To cater to value-conscious shoppers, retailers should enhance brand awareness, convenience, loyalty programs, and margin analysis.
However, inventory shrinkage from theft is a concern, impacting profits and supply chains. Organized retail crime and digital theft are rising, demanding cybersecurity. Labor shortage and inflation push retail and restaurant sectors to adopt labor automation like self-checkout and AI-driven suggestions. Upskilling and data use optimize labor alongside automation for efficiency and growth. The aim is a symbiotic relation between automation and humans to navigate the economy effectively.
Retail and restaurant sector trend #2: Expansion into new markets, products
New opportunities, optimizing operations and engaging customers
From inventory management challenges to shifting consumer preferences, middle market retail and restaurant executives have much to focus on this year.
Managing inventory and labor challenges in retail
In 2023, retailers face dual challenges of managing inventory amid price hikes. Despite a strong supply chain recovery, inventory management shifts focus to turnover ratios and cost-effective strategies. Labor shortages persist, with increased 'quits' affecting the retail industry. Though job openings rise, retention remains a concern, pushing automation adoption.
Consumers demand online shopping, sustainability, and personalization, prompting retailers to adapt multichannel approaches. Amid inflationary pressures, customer spending fluctuates, driving businesses to prioritize SKU profitability. Middle market retailers can leverage unique strengths to differentiate in a competitive landscape.
Retail and restaurant sector trend #3: Continued cost pressure for all
Retailers and consumers face continued increases in costs
While retailers will see the return of consistency in both foot traffic and number of products on the shelf, the ability to sell and move products profitably in the face of headwinds will be key.
Pursuing profitability in 2023
In the challenging landscape of 2023, retailers must navigate increased costs, evolving consumer behavior, and ongoing labor constraints while focusing on profitability. Despite stabilized foot traffic and supply chains, selling products profitably remains paramount. The persistent pressure of rising costs affects both consumers and retailers, prompting adjustments in spending patterns.
As the Federal Reserve raises rates, retailers seek technological and customer-focused solutions. Restaurants, facing changes in consumer preferences, emphasize digital engagement and data utilization to enhance value and customer retention.
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This article was written by Seth Bacon, Nick Stuart and originally appeared on 2023-08-29. Reprinted with permission from RSM US LLP.
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