Industry Update

2022 Results Inform 2023 Trends

Consumer behaviors are in flux, and we are in the midst of a transformation within the retail sector as a result. Prototypical brick-and-mortar retail footprints are becoming less prevalent as retailers transition towards virtual, online, and even “meta” store locations.

January 2023 retail sales grew moderately across each subsector versus December 2022, indicating a more “spread-out” holiday spending pattern, as consumers pulled purchases forward to Black Friday and Cyber Monday in November.

As the Fed initiated a series of rate hikes in Q1 and Q3 2022, and moved to accelerate quantitative tightening, equity valuations across retail sectors generally declined.

Given the inflationary and rising interest rate environment, there exists uncertainty in future retail performance, however, given continued levels of consumer spending, valuation multiples rebounded through Q4 2022.

Total U.S. jobs have eclipsed pre-COVID-19 levels with similar recoveries / normalizations in real disposable income and personal consumption metrics. The onset of the pandemic three years ago resulted in a significant shock to the global economy, with a particular impact on the retail sector.

As of April 2020, the unemployment rate was as high as 14.7%. Since then. the unemployment rate has steadily recovered to 3.4% as of January 2023.