With Slowing Consumer Spending, Global Retailers Look For New Ways To Entice Customers

Discount shops have profited from Europe’s cost of living problem, but mid-market names are feeling the pressure as consumers restrict their spending, executives and analysts said on Tuesday at an industry conference.

The luxury market is still doing well, and there are hopes that China’s reopening would provide it a boost as Americans’ prolonged post-pandemic spending spree comes to an end.

However, “if you are not really offering the best price, and you are not luxury, then it is difficult,” said Thomas Harms, global retail head at consultancy EY, on the sidelines of the World Retail Congress in Barcelona.

Retailers around the world are seeking for new strategies to draw customers despite the fact that price increases are moderating. They are concerned that inflation would reduce consumer spending.

Sales have slowed, particularly in Europe, as consumers buy fewer or less expensively priced food and clothing as a result of rising energy costs.

According to a Boston Consulting Group poll released on Tuesday, the top concerns among retail executives and managers were the rising cost of goods, falling consumer demand, and uncertain supply chains.

Additionally, it may become more challenging to pass on rising expenses to customers: Respondents predicted that customers will be more price-sensitive this year by 72%.

According to CEO Hajir Hajji, this benefits businesses like Dutch non-food discounter Action, which built 280 outlets in 10 nations throughout Europe last year and added its first branch in Slovakia this year.

Big international corporations like Nestle reported mostly positive results, demonstrating that despite rising costs, people were still spending money. However, some companies warned that sales may be affected in the upcoming quarters if inflation does not slow down.

According to the BCG poll, retailers are using innovative strategies outside of the discount sector to keep customers coming back, investing in loyalty programmes, price reductions, and bettering the online customer experience.

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.

“It’s a very positive moment,” said Ying Xu, president of Chinese supermarket chain Wumart, referring to the reopening. “It takes a bit of time, but the direction is correct.”

According to Lane Crawford Joyce Group CEO Jennifer Woo, the company has noticed a pattern of “revenge travel” since its reopening and anticipates a full second-half rebound in the Chinese market. Lane Crawford Joyce Group has luxury department stores in Shanghai, Beijing, Chengdu, and Hong Kong.

(Adapted from Market Screener.com)

Categories: Creativity, Economy & Finance, Entrepreneurship, Strategy

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