Industry Update

Continued Growth Despite Supply Chain Woes

COVID-19 pandemic has had a permanent impact on consumer buying behaviors, and in 2022, unique factors continue to impact the industry despite e-commerce spending normalizing as well as continued improvements in overall foot traffic.

Up until the start of this year, consumers were spending more than anticipated, often due to stimulus, leading to retailers ordering excessively in order to have product on shelves. As inflation rose throughout the year, consumer spending, particularly on discretionary items, shifted downward, leaving retailers with too much inventory as consumer demand declined.

Technology innovations and solutions allow retailers to connect digital and physical shopping experiences and there has been a push to implement more streamlined services and capabilities (e.g.augmented reality, self-checkout kiosks, enhanced logistics).

Surges in gas prices resulted in significant year-over-year growth in the subsector, amplified by the fact gas prices and demand were muted in 2021.

The multiple expansion seen in early 2021 has largely reversed back to pre-pandemic levels across each of the major retail subsectors into Q1 2022, as EBITDA and profitability metrics normalized.