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NRF CEO and president Matthew Shay joined the “Retail Gets Real” podcast live alongside Bill Thorne, NRF senior vice president of communications and public affairs, from Retail’s Big Show to talk about the event, how retailers fared this holiday season and what the year ahead looks like for retailers.
Shay says retailers are coming down from a successful holiday season with sales growing more sustainably at just over 3%, reflecting a more sustainable rate of growth than seen during the pandemic years.
“3% is in line with where would’ve been over the last 10 years, absent the COVID years,” Shay says. “It would be a strong season any other year. People look at this and say that it’s not 8, or 10, 12 or 14%, but those numbers were not sustainable over time.”
Shay says the growth this year was affected by pandemic payments and supply chain issues impacted the recent holiday season. The growth is a reflection of retailers rising to meet consumers’ growing expectations for value as well as seamless experiences across digital and physical stores. It also demonstrates the underlying strength of the economy.
“For all the talk of consumer sentiment, I think the things that drive consumer spending are the unemployment rate and wage growth,” Shay says. “And right now, the unemployment rate is very low. Wage growth remains steady, although it’s moderated a bit, it’s still running in excessive inflation, and consumers vote based on whether or not they have jobs, whether or not they’re making money.”
The future ahead will also depend on how good of a balancing act the Federal Reserve can do with interest rates, Shay says. In addition to other external factors such as global geopolitical conflict and challenging elections in the U.S. In conversations with retail CEOs at the event, he says, many noted how high customer expectations have risen.
“I think there’s a strength in consumers continuing to be engaged in commerce,” Shay says. “There’s a recognition that people will have to make some adjustments as the year progresses. I think consumers have gone back to looking for value and are deliberate about their spending.”
Going into 2024, Shay says he sees consumers continuing to choose various means of shopping, e-commerce and in-store.
“Retailers recognize they need to be in all of the places and they need to deliver an experience that feels similar across those platforms,” Shay says.
Shay noted priorities for NRF in the new year: focus on inflation and Federal Reserve interest rates.
“Interest rates are not something you can lobby on directly,” Shay says. “There are things we can do that will impact the inflation rate and the cost of goods, and one of those is combatting organized retail crime and making sure customers have what they need in stock.”
Shay says focusing on new technologies available to retailers and law enforcement alike to combat retail crime at every level is a big focus for NRF in the new year.
“I’m an optimist,” Shay says. “I love retail, I love the consumer-facing business. I think because we are consumer-driven and our members are always trying to find solutions to help consumers live their lives better.”
For insights into and projections for the independent home improvement channel, click here to download the 2024 Market Measure Report, published by the North American Hardware and Paint Association.
