Economy Roars Back with Evolving Consumers

Jun 17, 2021
|
Written by Washington Retail
|

On June 9th, the National Retail Federation (NRF) streamed their Inaugural State of Retail and the Consumer presentation live. Matthew Shay, President and CEO of NRF, began with positive news for the retail industry, most notably regarding revised forecasts of anticipated retail growth in 2021 of between 10.5 and 13.5%. Included in the figure is an 18 to 23% growth expected from non-store and online sales.

NRF now projects GDP output to return to pre-pandemic levels this quarter. The economy and consumer spending have proven to be much more resilient than NRF initially forecasted. The combination of vaccine distribution, fiscal stimulus, and private-sector ingenuity has put millions of Americans back to work. The pandemic was a reminder of how essential small, mid-size and large retailers are to the everyday lives of Americans in communities nationwide.

NRF’s Chief Economist, Jack Kleinhenz, noted, “Most indicators point toward energetic expansion over the upcoming months. We are anticipating the fastest growth that we’ve seen in this country since 1984.”

There is a shifting in the “balance of power,” where consumers can access information and research brands. In order to be successful retailers will need to better analyze and understand their customer’s needs, motivations and habits. Changes are shaping the industry more dramatically and profoundly than ever before, most notably how consumers are seeking out brands that align with their core values and how they expect brands to speak up, taking a stand on issues including the environment and racial justice.

The presentation included video interviews of millennials who shared their needs and expectations of the retailers. The shift is evident in the changing shopping habits of consumers affected by the pandemic, as well as a growing social consciousness. One millennial shared that she looks for retailers that care about the social and political issues affecting the customers who shop with them. Another mentioned they want to ensure they are putting their money towards a company that shares their values. If values don’t align, they will shop elsewhere. It’s no longer about the product or service. It’s also about the mission and purpose of that company—the brand they’re going to support and patronize.

A discussion amongst several retail experts revealed the dichotomy between consumers desiring for companies to take a stand on issues important to them in a diverse culture without unanimity. Taking a stand is complicated and can be challenging to the company’s reputation. The younger consumer is voting with their wallet, and that is going to make a huge difference in how companies respond.

Adding to the complication is the decline of consumers’ open-mindedness and their desire to be exposed to points of view other than their own. People don’t want other people’s opinions—they only want their own. Strong points of view create a polarizing environment. You can’t be “one size fits all” to every shopper coming through your store.

Retailers must also make a firm commitment to diversity, equity, and inclusion and not be solely focused on deliverables such as convenience and supply if they want to retain and foster their relationships with consumers.