High inflation and rising interest rates took their toll on consumer spending this year, though there were some spending trends that stand out more than others. Placer.ai Head of Analytical Research R.J. Hottovy says there are a few retail trends that will carry into 2024.
One is experiential spending, saying "experiences were one of the key categories of growth last year... the halo effect that that had on the retailers was absolutely phenomenal," using the Taylor Swift "The Eras Tour" and the "Barbenheimer" phenomenon as examples. He adds that the trend has extended to restaurants as well, with people seeking new dining experiences.
Another trend Hottovy is watching is the shift from urban to suburban as return to office starts to stall. The trend is most notable among restaurants, with companies such as Cava (CAVA) and Chipotle (CMG) opening more suburban locations.
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Video Transcript
- It has been a tumultuous year for retailers as inflation and higher rates fluctuate consumer behavior. Yet resilience and consumer spending did peek through amid economic headwinds revealing bright spots that can shape the wider consumer landscape in the coming year.
Here to discuss the retail trends to watch, we have R.J. Hottovy Placer.ai, head of analytical research. It's good to see you, R.J., especially with a different hat than we used to talk to you. So appreciate you joining us.
So it's interesting when we look at the retail trends that you're expecting in the coming year. And I found a lot of them have to do with people not just spending on stuff still, but spending around doing things. Even if they're buying stuff, it's sort of experience related.
- Yeah, there really is this kind of experiential or almost fear of missing out element when people are looking to spend right now. We saw experiences were one of the key categories of growth last year. And if you look at things like the Taylor Swift concert, or Beyonce, or even Barbenheimer, the movie phenomenon, the halo effect that had on other retailers was absolutely phenomenal. So I think that that's been a big trend. People are looking to spend.
We see it in the restaurant category. We see it with players like sushi, the revolving sushi bar or Korean barbecue where you actually cook at the table. People are looking to actually do different things when they dine out or have experiences.
And retailers and restaurants are starting to figure this out. I mean, McDonald's has done a lot of promotions with celebrities. Other players are starting to get in this game too as well.