Restaurants
2023 could reflect a return to normalcy for consumers but restauranteurs will face ongoing operational challenges.
THE VALUE GAP
- The balance of power - on-site vs. off-premises
- Traditional meal periods blurred
- Chronic labor shortage, inflation, product provenance
- Dynamic menu pricing and ingredients
- Consumers eating consciously and sustainably - "climatarians" and "regenivores"
Source: National Restaurant Association, Modelez Food Service, FSR
Grocery
Inflation is still the primary cause of grocery sales growth.
CONSUMERS' FRAGMENTED SHOPPING
- Digital represents 11.2% of the $1.2 trillion U.S. grocery sales market
- Food technology accelerated to drive efficiency, growth and combat inflation
- Market share winners and losers - Walmart leading the industry
- Competition for third-party delivery - grocers cannot afford to subsidize
- Retail media in grocery to gather data, provide personalization and engagement
- Amenitizing online grocery shopping to recapture impulse buys
Source: Wainwright Grocery Business, eMarketer, Madison Marquette Retail Services
Entertainment
Consolidation activity and strategic partnerships are driving the entertainment industry in 2023.
THEATERS VS STREAMING
- U.S. box office to reach $8.6B in 2023, up from $7.5B in 2022.
- Growth from more immersive experiences in high caliber films, VFX, 3D movies, and the digitization of films
- Genre driving theatrical release vs. straight-to-streaming strategy
- Second screen gaining market share
- Shrinking portfolios aligning with market realities
- Streaming market has flaws - "free rider" and lifetime customer value
Source: Comscore Movies, Variety, Deadline, The Hollywood Reporter
Fashion
Fashion brands will struggle to deliver growth in 2023 after the demand booms in 2021 and 2022.
APPAREL
- Recession chic meets environmentally conscious with personal flare
- Fashion tech - AI powered search and discovery, engagement
- Tackling "greenwashing" and the "slow fashion" movement
- Supply chain disruption catalysts for the reconfiguration of production and digitization
DEPARTMENT STORES
- Off-price and luxury directly completing for customers
- Digital investments and smaller format stores as sector savior
- Expanding product lines to capture customers
- Large-format leading store closures
LUXURY
- Luxury becomes luxury again as aspirational shoppers reduce spending
- New digital frontiers to attract next-gen shoppers - capitalizing on e-commerce, virtual influences and phygital identities in the "Me-taverse"
- Old vs. new luxury trends and resale
- Luxury converging with gaming, hospitality, art, culture, the street
Source: McKinsey, Bain & Company, Luxe Digital, Robb Report
Health & Wellness
Consumers are focused on collective health and wellness for all across eleven holistic sectors including fitness and beauty.
NO LONGER SEASONAL OR DEFINED BY AGE
- "Dr. Me" in the $1.2 trillion Wellness Economy in the U.S.
- Wellness spending - 70% products, 30% services
- Connected wellness, fitness and beauty is the antidote to hyper-connectivity
- Boundaries blurred between clinical care, holistic care, and pharmaceutical retail
- Medical tourism
- Legacy vs challenger brands
Source: McKinsey, Forbes, Mintel, The Global Wellness Institute
Home Improvement & Furnishings
Category sales growth peaked in 2021.
SALES UNDER PRESSURE WITH SOFTENED HOUSING MARKET
- Slowdown in DIY remodeling and optional projects; growth in PRO
- Focus on energy efficiency, expanding outdoor space, and home offices
- Digital sales growing through reviews, UGS, AR to help buy online
- Influencers and the HGTV boom (organization to redecorate/remodel)
- High-end taking long view; no promotions to preserve brand and model
- Baby Boomers lead home improvement spending
Source: Forbes, Architectural Digest, Hook Agency
DTC and DNB
Direct-to-consumer and digitally native brands are now more of a launch strategy than a successful, holistic business model.
MIX OF STRATEGIES FOR PROFITABILITY
- Online-only brands face bankruptcy without a physical store strategy to access all shoppers
- Lost early online advantage to established brands
- Traditional retailers benefitting from DTC and DNB acquisitions and partnerships to stay relevant and capture new customers
- 2021 IPO wave provided view into financial performance and lack of profitability
- The "DTC Darlings" account for up to 20% of mall stores
Source: RetailDive, The Mann Report, Forrester, eMarketer
Please contact us to learn more about Madison Marquette's Retail Services, Research and Thought Leadership.
Meghann Martindale
Head of Retail Research
Gavin Farnam
President, Retail Services COPY BIO HERE AND DELETE GAVIN & HEATHER
Heather Almond
EVP, Retail Services
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