Levin Management Corp. of North Plainfield on Thursday released the findings of its 12th annual Outlook Retail Sentiment Survey, which confirmed ongoing uncertainty tied to inflation and economic headwinds.
Overall, however, brick-and-mortar retailers are largely optimistic about what may come in 2023 as they come off a strong year and see labor availability trending in the right direction.
In a survey history high, more than three-quarters (76.5%) of the store managers who participated in this year’s outlook poll reported their 2022 sales matched or exceeded the prior year. Looking ahead, most LMC survey participants are feeling positive about 2023. Nearly 70% said they are optimistic about store performance in the coming year. And just over 28% said they anticipate their company will open additional locations in 2023.
“Brick-and-mortar retail had an impressive year,” LMC CEO Matthew Harding said. “Beyond the survey metrics, the evidence is clear at retail properties — especially open-air shopping centers along main retail corridors here in the Northeast — which have fewer vacant storefronts and an array of new brands side-by-side with established favorites.”
Harding added that, amid ongoing conversation around the growth of e-commerce, physical retail continues to display its resiliency. LMC Outlook survey participants were asked what they feel is the No. 1 advantage brick-and-mortar provides over online retail. Leading the way was customer service and support, followed by the social experience of in-person shopping.
To that end, retailers continue to evolve. Nearly 40% of survey respondents said their companies have recently adapted — or have plans to adapt — their business model to maintain or improve competitive advantage. Nearly 80% of those embracing change have increased training and focus on customer experience. More than half have introduced new or updated loyalty or incentive programs.
Following the retail industry’s well-documented, pandemic-era labor shortages — which peaked at 1.32 million job openings nationwide in mid-2021 — it appears that staffing concerns are easing. Only about 23% of LMC survey participants said they anticipate labor availability will affect their business significantly in the coming year.
Just under half (48.3%) of the survey respondents are in hiring mode, compared to 62.6% in the 2022 Outlook survey. Of that cohort, 56.3% report it is harder to find qualified job candidates than in the past; in last year’s survey, 70.9% found it more challenging to fill positions. This drop tracks with U.S. Bureau of Labor Statistics data, which recorded monthly job openings under 1 million through most of 2022.
The LMC survey asked respondents to select the Top 3 drivers likely to impact performance in 2023. Topping the list was the economy/consumer confidence — selected as a Top 3 driver by 68.1% — followed by inflation/rising prices (62% of participants). Coming in third was supply chain/inventory availability (36.1%).
Over the past year, more than 80% of LMC survey participants have raised prices due to inflation. However, about half said they have increased less than 10%. Of those who have implemented a hike, more than one-third (34.7%) expect to raise prices further. About half (50.5%) are not sure whether inflation will spark further increases.
“Today’s changeable climate — with its related anticipations and uncertainties — can be felt throughout the business community,” Harding said. “Yet, while a sluggish economy could slow retail sales growth, and inflation-strapped consumers may feel the pinch on their spending power, this industry is well positioned to enjoy continued progress in 2023.”