Consumers in the US and Europe will differ in 2023 | Popgen Tech
In Europe, however, consumers are just beginning to feel the pinch of higher energy costs. Moreover, the war in Ukraine feels much closer. As for the UK, despite the dire warnings, nothing has really happened yet. That is about to change. As Britons grapple with rising household energy bills, higher food prices, more expensive mortgages and tax hikes, they face the most almighty New Year’s bugbear.
From the year behind us: How Target and Walmart fell victim to their own supply chain success: The mountain of inventory US retailers had to contend with was exposed in May when Walmart Inc. and Target Corp. warned about profits after a consumer slump in the spring coincided with inventory arriving late at US ports. Almost overnight, they went from watching their profits get stuck on a ship in the Pacific to languish on the shelf.
Fashion hasn’t been so fashionable since Sex and the City: Spending more on essentials, pressured consumers to curb their appetite for the items they simply wanted. But on both sides of the Atlantic, many people still had strong personal balance sheets and were eager to spend their pandemic savings to make up for all the fun they missed out on over the past two years. That meant swapping sweatpants for smart suits and chichi dresses.
Crypto crashes claimed Rolex and Patek Philippe as victims: It wasn’t just mid-market retailers that suffered a change in fortune. As stock markets stumbled and cryptocurrencies fell, appetite for in-demand watches, such as the Rolex Daytona, evaporated.
The wealthy seem to live in a different world than other consumers, but the Rolex layoff could be a warning sign for other sought-after items, such as luxury handbags.
Our lipstick obsession says a lot about the economy: Some parts of the consumer economy are still going strong, like beauty. These categories tend to do well when times are tough, as women – and men – trade down from more extravagant purchases to small treats.
This time, not only is lipstick flying off the shelves as economies reopen, but perfume and hair styling products are proving to be popular pick-ups. Any flavor index or bouncy blowout effect?
Walmart has a truckload of reasons to love inflation: Here’s one I got spectacularly wrong: I predicted that Walmart would be an inflation winner. Unfortunately, I didn’t take into account the abundance of supplies. My bet for 2023 is that this prophecy will seem less foolish. Walmart is already attracting more middle-class consumers as they trade down to low prices. It also sells fewer discretionary items than Target, which should put it in its favor. What’s more, as the world’s largest retailer, Walmart has the most influence with suppliers. As brand manufacturers begin to see their volumes decline, and are willing to offer more promotions to stimulate sales, Walmart will be in a strong negotiating position. Over the coming months, check out what’s happening in the Walmart grocery aisle. It may look very different from 2022.
This column does not necessarily reflect the opinion of the editors or Bloomberg LP and its owners.
Andrea Felsted is a Bloomberg opinion columnist covering consumer goods and the retail industry. Previously, she was a reporter for the Financial Times.
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