What should retailers and brands do now about a possible coming recession?
With the stock market on a roll and unemployment near historic lows, how worried should retailer and brand execs be about a possible recession? A newly released BDO “Consumer Beat Study” points out potential reasons for concern, including some volatility in consumer spending in recent months, consumers seeing signs of potential distress in brick and mortar stores and online shoppers being affected by increased online sales tax due to a recent legal ruling.
According to the study, shoppers believe the brick and mortar shopping experience is declining. Thirty-eight percent have received poor customer experiences; 29 percent have noticed empty shelves; 28 percent experienced limited product selection; 24 percent have seen run-down stores; and 18 percent have noticed deep discounts. Forty-eight percent have noticed a retail store close within the past month.
Millennials are especially concerned. Sixty-seven percent think a recession is likely within the next year and 34 percent are adjusting their spending habits.
Fifty-nine percent of consumers overall think a recession is likely, and 31 percent of Gen Xers and 21 percent of Baby Boomers have adjusted their spending. Meanwhile, 44 percent of retailers are actively planning for a downturn.
In an interview with RetailWire, BDO exec Natalie Kotlyar, who leads the firm’s retail & consumer products practice, said brick and mortar retailers are bolstering their digital capabilities and closing underperforming stores in advance of a potential economic downturn. Pure play online retailers are working to establish direct relationships with consumers, since they don’t have the face-to-face interactions that brick and mortar retailers have.
In another BDO study, 63 percent of pure play e-commerce retailers cited exclusive product offerings as their top competitive differentiator — more significant than pricing, convenience, and marketing efforts. BDO recommends prioritizing supply chain optimization, upgrading mobile shopping platforms and apps, better social media use, meaningful loyalty and rewards programs, and the possible use of exclusive spokespersons and influencers to reach younger shoppers who trust them.
- BDO Consumer Beat Study Infographic – BDO
- BDO Retail Rationalized Survey – BDO
- A Look At The U.S. Economy, And The Next Recession – Seeking Alpha
DISCUSSION QUESTIONS: Are retailers (especially brick and mortar) doing enough to prepare for a recession? What steps can retailers take now to be in better shape when it happens?