In 2020, retailers were caught off-guard by the COVID-19 pandemic. In 2021, the industry was caught off-guard by tangles in the supply chain. In 2022, inflation led consumers to prioritize what they had to buy instead of what they wanted to buy, leading to fattened inventories of clothes and electronics. As 2023 dawns, one would think retailers would be preparing for yet another worst-case scenario. But as cautiously optimistic sentiment prevails despite consumer struggles, analysts say many retailers aren’t seeing the one thing everyone else is worried about: An economic downturn.
“They’re definitely not planning for a recession,” said Quo Vadis Capital analyst John Zolidis, who follows retailers ranging from Walmart Inc.
to Lululemon Athletica Inc.
to Starbucks Corp.
“I haven’t heard a single retailer tell me that that’s how they’re planning their business.” Mari Shor, an analyst at Columbia Threadneedle, said her own conversations with retailers went largely the same way. “Everyone’s trying to plan quote-unquote conservatively, but when you push the companies and you look at what other investors are expecting, no one is expecting a modest recession in their base case,” she said, or a downturn that at worst leads to a slight dip in same-store sales. The main reason? Consumer demand, while strained, could be worse, and retailers generally plan ahead based on present trends. Any benefits from consumer spending will land unevenly across different retailers and different income levels, analysts told MarketWatch. Despite the rabid inventory decluttering that retailers underwent this year, it’s unclear whether prices will actually end up lower than before the pandemic next year. And prices for some products — like handbags, beauty products …