Retail Industry’s Message in a Bottle: Consumers Focus on Essentials, Itching To Travel

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Now that the retail industry has closed the books on fiscal 2022, the outlook as we head into year one of a post-pandemic economy seems clear — 

Consumers are hedging discretionary spending while eager to get out and see the world.

That was the topline takeaway from a recent survey by consulting giant Deloitte. The firm reported last month that about 40% of Americans surveyed for its Global State of the Consumer Tracker “feel financially worse off compared to a year ago … and nearly half still say they’re delaying large purchases.”

Meanwhile, Deloitte reported, “The US travel industry recovery doesn’t seem to have skipped a beat. Hotel occupancy is beginning to rival pre-pandemic levels. Rooms command significantly higher rates compared to 2019. And, in February 2023, more passengers moved through US airports than February 2019.”

The Deloitte Tracker findings seem to confirm the broader story told by the industry’s overall financial results for fiscal 2022 (which ended in January). 

According to the US Census Bureau’s retail trade report for the fourth quarter, sales of companies with assets of $50 million or more saw their sales spike by 24% over 2021, but after-tax profits plunged by 44%.

Behind the overall results, we find discretionary retailers like Macy’s, Best Buy, and Home Depot turning in results that fell short of expectations. It was Home Depot’s first revenue miss since 2019. The company said it expects sales to be about flat for the current fiscal year and projects a decline in diluted earnings per share. Although Home Depot may not profile like a department store, the results indicate where consumers spend their money.

Fiscal 2022 was not the year to go hunting for new customer cohorts. That’s the message from Allbirds, the direct-to-consumer footwear company. Allbirds finished 2022 with disappointing sales and a net loss that more than doubled over 2021 to more than $100 million, according to industry news site

According to the report, Allbirds “lost its focus on its core business as it over-invested in seasonal trends, colors, and new silhouettes that failed to attract new consumers and proved to have lower conversion and sell-throughs.”

On the other hand, retailers whose core business is seen as basics — think Walmart (food, household products, pharmacy) and Tractor Supply (agriculture, livestock, pet supplies) — clocked respectable increases.

Walmart turned in a revenue increase of 2.4% for fiscal 2022, and Tractor Supply reported fourth-quarter comparable-store sales growth of 8.6% and earnings-per-share growth of 26%.

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cost-cutting  retail  apparel industry  retail trends  consumer spending  Walmart  travel

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