Sarah Quinlan The Chief Economist of The Consello Group is not uncertain about this economy – nor about all the great potential for retail. 📷 SARAH QUINLAN So many people are crying doom and gloom about retail and the uncertain economy, but you’re especially bullish.
We’re not in an uncertain economy. I’ve been bullish about the economy all year. Employment is sky-high, and jobs equal spending. Retailers should be leaning into that. So when people tell me the economy is uncertain, I tell them, ‘You’re the ones who are uncertain.’
But what do you say about all the store closings?
In 2023, there have been 1000 more openings than closings. It’s the first time in six or seven years that we’ve seen an increase. We’ve seen a lot of retailers right-sizing and vulnerable retailers liquidating rather than trying to stay alive. Bed Bath & Beyond stayed alive for a long period of time when they should have cut their losses and exited the stage. Interest rates are no longer zero, and retailers can’t finance their inventory cheaply, so you’d better have a reasonable profitability goal if you want to stay in business.
What’s keeping the successful retailers successful?
It’s all about the experience, exciting, meaningful and provocative. People go back to the stores because they like each other and want to spend time with each other. Those successful retailers are creating the best environments that connect to their shoppers.
What are the biggest retail stories of 2023?
Two things drove consumer summer spending this year: the Taylor Swift tour and ‘Barbie.’ All the special clothes just to go to the concerts and the movie, all the related merchandise and the spending – on travel, hotels, meals. The Swift tour is estimated to be generating $1 billion in revenue, not including ticket sales.
“Barbie” came out of the blue – or pink.
Not to women. We knew Greta Gerwig would do a different take on Barbie. And women grew up with Barbie. Grandmothers and granddaughters share the passion. And remember, women do 75 percent of shopping. Catching on to those phenomena was absolutely critical for retailers.
Perhaps there should be more women on the executive floor.
You’re preaching to the choir.
Where are the clues to today’s success?
In history. The recession of 2007-09 made us look differently at when, where and what we spend on. We became a nation of value-for-money shoppers. If we can find what we want cheaply, we’ll pay for it. That’s why the success of Walmart, Target and other mass merchant retailers. And during Covid, Walmart had the things everyone needed – and they stayed open. They also kept their shelves filled. A whole new constituency of more upscale shoppers went there, liked what they found and became loyal shoppers. The average income of the Walmart shopper has gone up $25,000 from what it was before Covid. And then Covid made us want to be together because we were losing so many people who were close to us.
Isn’t Walmart an unlikely 21st century success story? It used to be characterized as a battleship that struggled to turn itself around.
Walmart is killing it. Its CEO, Doug McMillon, walks their stores all over the country on a regular basis. He doesn’t just sit at his desk in Bentonville. That’s the key. Go into your stores, go into competitors’ stores and see what’s going on. That’s the biggest thing for a retail CEO to do.
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