Every month, we reach out to retail industry leaders in order to gain their perspective on the market. This month, we asked Eileen Mitchell, Partner, RCS Real Estate Advisors, about what American consumers will prioritize with regard to their retail/restaurant preferences for the rest of 2022 and early 2023, and why.
“The average consumer is under pressure from increased costs of their daily needs and essential retail expenditures, like back-to-school shopping, food and gas. But American consumers aren’t ready to change what they have become accustomed to post-COVID, aka Q1 2021, in terms of lifestyle. After an incredible two years of robust consumption at all levels of retail/dining/entertainment, the average consumers will likely “price down” their expenditures. Their frequency of dining out may reduce minimally, but more likely these consumers will trade down in the price point of restaurants, or reduce their spending when dining out, or both.
“I believe the consumers will be split based on income. The lower income consumers will curtail dramatically any dining out and superfluous retail, concentrating on essentials and paying their rent and necessity bills. This consumer will be even more value driven and certainly prioritizing ‘need vs. want’ purchases. The middle class will likely continue with their retail and dining expenditures, but with moderately lesser frequency. Families in the middle class will feel the pinch, but they will make great efforts to not give up their current lifestyle, including dining out, travel and shopping. This consumer will trade down quality to maintain frequency. As for the upper middle class, quality will prevail for these consumers, be that better non-chain restaurants with a tremendous quality proposition, like Flower Child, or retail where the goods are priced appropriately and the fashion is relevant, especially at a perceived value. Affluent households will stay the current course.”
