Industry / Retail

COVID Habits Fade as Shoppers Return to Brick-and-Mortar Stores


Consumers are shopping like they did before the COVID-19 pandemic, returning to brick-and-mortar stores after years of online sales growth, according to the National Retail Federation (NRF) presentation “2023 State of Retail & the Consumer.”

“We are going back to behaviors that we saw three years ago,” said Jonathan Silver, president and CEO of Affinity Solutions. “People like in-store experiences. They are social beings.”

But he noted that consumers also like the ability to switch back and forth between online and in-store channels. He predicted more “blended” store experiences that incorporate technologies such as augmented reality and the metaverse.

“Those retailers that accept the fact that there are lots of customer journeys, lots of paths to purchase, and [develop] the ability to personalize the experiences accordingly, are going to be the winner,” Silver said.

Pashmeena Hilal, research manager and thought leadership head at Google, agreed that “the storefront is here to stay.… This omnichannel digital-to-store [concept will] continue to stay. We are seeing folks starting to use apps when they are shopping the aisles of stores.”

Even spending demographics are reverting to familiar patterns, Silver said.

During the pandemic, “lower-income folks increased their spending overall, and the higher-income folks pulled their spending down. And that switched as the pandemic ended and things [got] back to normal. We saw the higher-income folks drive more of the economy.”

But he added: “The good news for the economy in general is, we are starting to see low-income spending sustain itself…which is very important, because if you are relying on only higher-income folks, that’s not a good place to be.”

He added that consumers “are looking for deals more often than not. They are going from high-priced versions of the same product to off-brand and generic products.”

Haio Barbeito, president and CEO of Old Navy, said consumers are shopping “very strategically.” They are “buying what they need, rather than what they want,” he said.

Anushka Salinas, president and chief operating officer of Rent the Runway, said that while “higher-end consumers have been relatively less impacted in this environment,” consumers are as cost-conscious as ever.

“Even the higher-end consumer is doing the math right now,” she said.

Overall, the NRF predicted that retail sales will increase between 4 and 6% in 2023.

“This growth rate is above the annual pre-pandemic growth rate of 3.6%,” said NRF chief economist Jack Kleinhenz, who has said he doesn’t foresee a recession this year.

“Consumer spending is looking quite good for the first quarter of 2023, as it’s been supported by a strong labor market, wage growth, excess savings buildup during the pandemic, access to credit, and lower energy costs.”

Later in the year, “spending will be likely tempered, as access to credit becomes more expensive, and job growth slows,” Kleinhenz said.

Kathy Bostjancic, senior vice president and chief economist for Nationwide, predicted a “mild recession,” especially if credit continued to be constrained.

“Higher-income households still have a lot of desire to spend,” she said. “The lower income brackets, which are more affected by higher inflation and have been relying on credit to fund their purchases, will feel the pinch even more.”

But even if there is a recession, Greg Daco, chief economist at EY-Parthenon, doesn’t expect the “broad-based” firings that characterized past recessions.

“For the past 12 to 18 months, business executives have been trying to hire and retain talent,” he said. “They aren’t going to be quick with layoffs.”

That will mean “just a slight uptick in the unemployment rate,” which doesn’t indicate a “massive pullback in consumer spending,” he said.

(Photo: Getty Images)

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By: Rob Bates

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