The survey found that retail executives’ response to inflation has changed compared to actions they took in 2022. In 2023, 84% plan to find cost efficiencies in other ways and 67% plan to renegotiate purchasing agreements, 67%. The change was passing on additional costs to consumers via price increases, down 16% from last year to 56%.
Seventy-one percent of retail executives are prioritizing supply chain efficiency during the next 12 months, making it the most common priority. The second biggest priority, at 51%, was improving customer experience, followed by improving top-line growth, at 48%
Executives see SKU rationalization as the top (56%) priority to improve supply chain, followed by modifying distribution network (42%) and diversifying supplier base (36%).
Retail execs are planning greater Investment in capital expenditures in 2023 compared to 2022 with 77% increasing technology investment, 76% increasing equipment investment and 63% increasing warehouse & distribution.
More than 70% of executives from larger retailers are planning to increase new stores capex in 2023, but 54% of retailers with under 100 stores expect a decline in new store capex.
In 2023, 37% or retailers expect to reduce headcount or not backfill employee attrition. Only 20% anticipate increasing headcount.
Retailers are no longer leaning on wages and bonuses to attract talent. Increasing hourly wage was down 38 points to 19% compared to KPMG’s May survey, and increasing signing or retention bonuses was down 35 points to 16%.
Other findings from KPMG’s “Retail Executives 2023 Outlook & Trends Analysis” are below:
• Seventy-three percent of executives believe the U.S. is already in a recession or will enter one in the next six months, up 32% from August. And 72% see a recession lasting a year or less.
• Eighty percent of executives surveyed reported increasing top-line revenue from 2021 to 2022, with 75% reporting increases in operating profit. Both in-store and online traffic appear to be drivers of the growth, with 72% of retailer executives noting an increase in consumer foot traffic in physical stores and 78% noting an increase in e-commerce traffic.
• Most retailers expect to experience an increase of 2-5% in their revenue in 2023, with the plurality expecting a 0-2% increase in operating profit and gross margin.
• Retailers in grocery and apparel industry expect an increase in revenue, while 67% of home furnishing retailers expect a decline in revenue during 2023.
• Thirty-nine percent of respondents expect an increase to in-store traffic in 2023, which is down, while 51% anticipate e-commerce traffic to increase.
• The majority of respondents recognize the importance of ESG with 88% of ESG initiatives maintaining or increasing in importance, and 84% of budgets remaining equal or higher than 2022.