NRF says ‘resiliency of consumers’ will power retail economy in 2024

Who’s afraid of the US consumer? Not the National Retail Federation, it seems.

The industry group is forecasting retail sales will rise between 2.5% and 3.5% in 2024, as “the resiliency of consumers continues to power the American economy,” NRF President and CEO Matthew Shay said during the group’s annual State of Retail & the Consumer event.

That range would fall slightly below the 3.6% rise reported in 2023, and the group does expect the tight labor market and wage gains to cool this year, but NRF Chief Economist Jack Kleinhenz noted that “consumer balance sheets and debt servicing levels remain in good condition.”

There is a caveat, however. For retailers to be successful, they need to offer products to consumers “when, where and how they want to shop with prices they want to pay,” Shay added.

This may sound like a somewhat obvious prescription for business success, but it speaks to a deeper set of challenges facing the industry. To keep up with changing consumer dynamics, retailers are fine-tuning everything from store format to checkout options to in-store tech.

This pressure to mix it up comes as retailers face a new normal in the wake of the acute crises that rattled the industry over the last few years. As John Furner, president and CEO of Walmart US, put it during the NRF virtual conference on Wednesday: “It’s a very interesting time. It’s really hard to compare the last few years, what we’ve been through, and where we are now to some point in history.”

One particularity of the current moment is that consumers are more “choiceful,” Furner said, using a buzzword of recent vintage in the industry. He added that “the nagging problem is stubborn inflation,” particularly in food.

In other words, retailers are working extra hard for their sales, and the NRF expects that trend to continue into 2024.

“The economy is primarily supported by consumers who have shown much greater resilience than expected, and it’s hard to be bearish on the consumer,” Kleinhenz said. “The question for 2024 ultimately is, will consumer spending maintain its resilience?”