Ever since 2020, retail has been hit with a constant whirlwind of changing consumer trends, inflation-driven prices, and new technologies. Placer.ai released a white paper discussing the halfway point for retail in 2023 and includes information on the retail trends that have prevailed so far this year, which industries and brands are finding success, and more.
Using location intelligence, Placer.ai evaluated the impact of the heightened demand for health and wellness across categories; analyzed the ongoing strength of value-focused retailers; looked at the location analytics behind some major retail real estate takeovers; and revealed the connection between return-to-office trends and local retail patterns.
Summer Sun Is Out and So Are Shoppers
Despite its fair share of success stories, retail in 2022 was greatly impacted by inflation and soaring gas prices, according to the Placer.ai data-driven report. And although 2023 started off strong relative to the Omicron-impacted early months of 2022, retail visits fell in April and May as consumers continued to struggle with high prices and tighter budgets. But June offered some reason for optimism as year-over-year (YoY) foot traffic turned positive.
Beauty and Fitness Foot Traffic
In recent years, self-care has taken on a more central role in consumers’ routines, making beauty and fitness two of the biggest winners of 2022. Placer.ai’s location intelligence suggests that the trend has continued in the first half of 2023 as shoppers are still looking for affordable luxuries and pastimes, and YoY visits to both categories far outpaced the wider retail average.
Ulta Beauty and Bath & Body Works Deliver Experiences
The increased demand for beauty and self-care drove significant YoY visit increases for two of the largest beauty retailers – Ulta Beauty and Bath & Body Works. The jump in visits relative to the already strong first half of 2022 could indicate that inflation-strapped consumers are prioritizing experiences and favoring retailers where the visit itself provides value. In-store shopping allows visitors to try out fragrances, test new makeup, and get the input of store staff, making a trip down the aisles a sensory journey worthy of an in-person trip.
Fitness Chains Provide a Cost-Effective Fix
Also in the self-care sector, fitness clubs were another retail category that experienced strong visit growth in the first half of 2023. And many chains, including LA Fitness, 24 Fitness, and EōS Fitness also experienced increased visit frequency.
In addition to the renewed social appeal of returning to the gym after a pandemic hiatus, gym-goers in the first half of 2023 likely viewed their fitness hobby as a budget-friendly pastime in light of the current inflationary climate. Since most gym memberships grant unlimited access to the facilities, an additional workout or extended visit to the steam room allows fitness consumers to spend time out of the house without breaking the bank.
Grocers Promote Total Health Beyond Food
Leading grocery players are also leaning into the heightened interest in health and wellness. H-E-B – the dominant grocer in Texas – found continued success in the first half of 2023 as it developed its fleet of primary care clinics and nutrition services. The company – one of the growing number of grocers that have integrated health services into their brands – launched its nutrition and clinical services “H-E-B Wellness” platform last year. The platform offers consultations with dieticians and physicians, lab testing, and vaccines at various price points based on either a monthly membership or single visit fee scale.
Comparing visits to H-E-B locations with wellness services with visits to the chain overall in the first half of 2023 revealed that stores that offered clinical or nutritional consultations attracted visitors with a higher median than those that did not. H-E-B stores with these services also had greater YoY visits per venue growth than H-E-Bs without these programs.
Off-Price and Dollar Stores Seized the Day
Discount and dollar stores as well as off-price retailers also came out on top in the first half of 2023 as inflation-impacted shoppers – including regular consumers of the category and those who traded down from other retailers – flocked to these chains in search of value.
Ollie’s Bargain Outlet and Five Below
Ollie’s Bargain Market and Five Below have been expanding their store fleets and seeing YoY visit growth for quite some time. And diving into the psychographic makeup of these brands’ visitor base highlights the variety of value-conscious shoppers and the diversity of the Discount & Dollar Store category.
Trade area analysis of Ollie’s and Five Below using the Spatial.ai: PersonaLive dataset revealed that, in the first half of 2023, Five Below had a greater share of visitors from Upper Suburban Diverse Families and Young Professionals, while Ollie’s claimed a higher share of Rural Average Income and Rural High Income visitors.
Off-Price Power
Along with discount and dollar stores, off-price retailers – among them T.J. Maxx, Marshalls, Burlington, and Ross Dress For Less – capitalized on the growing demand for value in the apparel and home goods spaces in the first half of 2023. And as demand grew, many of these brands continued to up their store counts, which likely also played a part in the YoY visit growth of off-price retailers.
And as consumers continued to favor experiences and retail visits that offered something extra, the treasure-hunt atmosphere that awaited consumers in-store may have also helped drive foot traffic. With plenty of new merchandise available to off-price sellers, consumers had ample motivation to visit off-price stores for attractive finds at steep bargains.
Return-to-Office and the Retail Impact
The final stop of Placer.ai’s report is an exploration of the impact of employees’ return-to-office (RTO) on retail visits. Foot traffic to U.S. office buildings hovered around 60% of pre-pandemic levels for most of the first half of 2023 as flexible work models persisted, but some business centers are experiencing higher shares of on-site workers than others. These patterns have far-reaching effects on the planning and service of transportation networks and on the businesses that hope to attract employees during their workday.
Analysis of YoY office and retail foot traffic for several shopping districts in the first half of 2023 revealed the correlation between workplace attendance and retail foot traffic in nearby shopping districts. In broad strokes, the shopping districts with a larger increase in YoY office attendance were more likely to have greater YoY retail foot traffic growth – signaling the recovery of commercial and employment hubs and offering further evidence of the close relationship between workers and area businesses. Shopping districts could benefit from investing in co-working spaces with the potential for daily traffic from different groups of workers on their respective on-site work days.
The First Half of 2023 In The Books
The current economic landscape is not without its fair share of challenges for both retailers and consumers. But the first half of 2023 revealed the many sectors and companies that have proven their ability to thrive in a dynamic market.
As businesses continue to recover from the pandemic and inflation begins to ease, brands can take the lessons learned from recent years and chart a path forward for ongoing success.
