Forrester’s Sucharita Kodali joins the "Where We Buy" podcast to discuss retail trends, luxury markets, consumer confidence, and AI’s impact on the industry.
Podcast
30 July 2024
Forrester's Sucharita Kodali joins "Where We Buy" Podcast
Your browser doesn't support speech synthesis.
Listen to article •
Read time: 1 sec
Checking in on the U.S. consumer
To get a better understanding of the current state of the U.S. consumer, I spoke with Forrester’s Sucharita Kodali. Sucharita is a VP, Principal Analyst at Forrester and an expert in retail and consumer behavior. She joined me on the latest episode of Where We Buy. Here are five key take-aways from our conversation.
Watch a video of the podcast on LinkedIn or listen on Apple Podcasts or Spotify.
There is a persistent disconnect between how consumers feel about the economy and what the data is telling us.
Sucharita pointed out the striking disconnect between positive economic indicators and low consumer confidence. Despite low unemployment and high wages, consumer confidence is at levels comparable to past economic crises.
She believes there may be a variety of factors that contribute to this disparity, including political dissatisfaction and a lack of understanding about the actual state of the economy. In fact, survey respondents of whichever party is not holding the presidency will often judge the economy to be poorer off. And while inflation is nowhere near the highs it saw in 2022, the fact is that many consumers are understandably unhappy with higher prices at supermarkets and restaurants.
Political turbulence promotes anxiety but may not impact the economy.
As the U.S. approaches another election, Kodali draws parallels to the 2016 election, which was marked by similar levels of consumer anxiety and uncertainty.
73% of U.S. adults feel anxiety about the upcoming election and 43% feel more anxious than they did a year ago, according to a recent poll conducted by the American Psychiatric Association.
Despite concerns, consumer spending remained robust then, and Kodali anticipates a similar outcome, highlighting the resilience of consumer behavior amidst political division.
AI applications in retail are not new, and generative AI may have little immediate impact.
AI is another hot topic in retail, with applications ranging from robotics and machine learning to sophisticated personalization algorithms. Kodali says that many technologies under the AI umbrella have been in use for years. The most promising applications of AI in retail today involve marketing and operational efficiencies, rather than revolutionary changes in customer service.
U.S. luxury retailers await the return of Asian tourists.
The luxury retail market is experiencing mixed signals, with softness in certain regions like Asia. This has been caused by a decline in Chinese consumer spending, which has long been a significant growth driver for luxury brands. This raises questions about the future of luxury brand strategies and the role of affluent consumers in Western markets. In the U.S., there has been an ongoing recovery of international tourist spending in luxury sectors, apart from tourists from Asia, whose travel has remained well below pre-pandemic levels.
Meanwhile, the potential merger of luxury department stores Saks and Neiman Marcus could have mixed impact on luxury brands, many of which are increasingly opting for direct-to-consumer models, reducing inventory at department stores.
The CrowdStrike Failure is another example of the vulnerability of global interconnectedness.
The recent CrowdStrike update failure, which caused significant computer disruptions and outages around the world could serve as a wakeup call for businesses, including retailers. Not unlike recent supply chain snarls, this new business disruption showed the dangers of a globally interconnected economy without failsafes and redundancies. And if nothing else, it points to the need for businesses to purchase ample continuity insurance.