Operations

Retail industry is set to see growth this year: report

Moody’s predicts a modest operating profit for many industries.
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Following a “fairly flat 2023,” Moody’s latest consumer products and retail and apparel global outlook reports predict a “modest adjusted EBIT” for the global retail and apparel industry, along with physical retail revenue growth of 1% to 3% over the next 12 to 18 months.

The current consumer spending pullback may impact a large portion of the retail industry, particularly in discretionary sectors. However, this also means food, drug, value, and off-price retailers will likely benefit from cash-strapped consumers looking for deals, the financial intelligence company observed.

In fact, Moody’s predicts “an earnings boost” for off-price and value stores. Meanwhile, the home improvement sector may take a hit, particularly in North America.

Steady but slow: Another area of retail that will likely see slower growth is the beverage category, whose operating profit is estimated to grow 3% to 6% over the next 12 to 18 months.

To consumers’ relief, everyone’s (read: our) favorite sector—packaged food companies—won’t rely as much on raising product prices, according to Moody’s forecast, and are likely to grow operating profit 3% to 5% in the next year and a half. Big international companies are also likely to see more growth.

And while this year might not bring good news for all categories, durable goods will see profits grow 3% to 7% by 2025, thanks to better demand, Moody’s noted.

Still, it looks like retailers should be prepared for “significant risks” this year as consumer recovery could be hindered by factors like high interest rates, inflation, and an unstable global geopolitical environment.

Retail news that keeps industry pros in the know

Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.