Every month, we reach out to retail industry leaders in order to gain their perspective on the market. This month, we asked: Which types of retailers/restaurants do you think will be prioritized by consumers in the event of a future economic downturn, and why?
Brandon Isner, Americas Head of Retail Research, CBRE
Grocery stores have generally seen sales grow during times of recession, as people eat out less, and prepare more meals at home. Grocery continues to evolve. These aren’t your childhood grocers with just a meat, dairy and a produce section. Many have their own brand of prepared foods and custom bakeries, and even in-store restaurants and cafes. Grocery continues to see foot traffic in times of economic uncertainty, so the one-stop-shop concept can really thrive.
Spence Mehl, Partner, RCS Real Estate Advisors
During a tumultuous economic period, retailers and restaurants that have a loyal customer base will be prioritized by consumers. Especially during hard times, consumers rely on familiarity. When the market’s future may be unknown, brands in which the customer understands what they are getting can be a great source of comfort. Additionally, stores that provide a synergistic experience will continue to draw customers as convenience becomes more important to consumers. For example, companies like Whole Foods and Kohl’s are strategically placing Amazon pickup centers within their stores. This way, foot traffic increases with consumers who now roam around when they otherwise might not have before.
Ami Ziff, Managing Director, National Retail, Time Equities, Inc.
Discounters or value retailers will be prioritized, as consumers seek value during tough times. Regarding restaurants, those that offer value should gain market share. However, consumers generally eat in more during a recession; therefore, grocery stores could be the benefactors of a downturn, as preparing your own meals with store-bought ingredients is the most affordable avenue.
Jason Baker, Principal, Baker Katz
The experts are predicting a slowdown going into the end of 2023 and into the mid/later part of 2024. As a rule, people trade “down” in an effort to save money during uncertain economic times. We are already seeing signs of this to a certain degree. Discounters in every category, including discount grocers, will reap the benefit of the economic turbulence.
