ORLANDO (World Report Studio News) - As inflation and interest rates remain stubbornly high in Q3 of 2023, consumer foot traffic has continued to be weighed down in the face of these economic headwinds. According to Placer.ai, Retail foot traffic, which includes Apparel, Department stores, and Malls saw a 2.8% decline year over year (YoY). Additionally, as consumers begin to tighten their discretionary spending, Dining Establishments, Superstores, and Grocery Stores experienced visit dips of 2.4%, 2.1%, and 1.4%, respectively. Conversely, Discount & Dollar Stores saw an uptick in business, as visits increase 3.4% YoY as shoppers begin their hunt for discounts. However, not all spending has fallen, as consumers who prefer spending their limited budget on experiences rather than on products flocked to the recent hit phenomena's, Barbie and Oppenheimer, causing Movie Theater foot traffic to skyrocket.

 

Despite these headwinds, there are still many positive outlooks across many industries, including entertainments, dining, and shopping. Many of these positives developments are likely to continue into 2024 and shape future spending amongst consumers.

 

Attempting to Lure Back Hesitant Shoppers

Although the COVID Public Health Emergency was officially declared over by the CDC in May 2023, some consumer behaviors have been slow to re-emerge, each returning to pre-COVID norms are different paces.

 

The National Retain Federation, the largest retail trade group in the nation, has forecasted that U.S. holiday sales will rise 3% to 4% for November through December, down from the 5.4% recorded last year. However, this project is consistent with the average annual holiday increase of 3.6% which was seen from 2010 until the outbreak of the pandemic. Last years spike is partially attributed to frenzied spending from consumers, who had additional cash on hand from savings and federal relief checks.

 

As U.S. consumers continue to watch their spending and hold out for price cuts, stores are increasingly being pressured to provide steep discounts. However, retailers now worry that this may not be enough.

 

During the pandemic, retailers were able to withhold their deals and discounts which were the norm in the pre Covid-era, and instead charge full price for their items. This was thanks to the incredible demand from the stay-at-home consumers and and supply chain difficulties which limited the amount of products available. Companies like Target and Walmart are now stuck with the highest inventory levels in years, suggesting that discounts may follow to offload the excess products. Walmart CEO Doug McMillion stated that the company was in a period of “rightsizing” its inventory after dedicating much of its effort to ensure adequately stocked stores.

 

Consumers have largely begrudgingly accepted higher prices the last few tears under the guise of inflation, but many are now beginning to feel the squeeze. Many have shifted away from durable goods such as couches, cars, and electronics while focusing more on experiences and returning to the office.

 

Although not all outlets have caved into the need for steep discounts, many may be forced to do so as an increasing number of companies follow suit.