What: Deloitte asked 50 leaders about expectations regarding challenges and opportunities in the upcoming year to determine the pulse of retail executives and gauge what traits separate leaders from the rest.

Why it is important: According to Deloitte’s findings, the current sentiment is a bit shaky as retailers continue to deal with volatility after undergoing an immense amount of change in a condensed time frame. Only a third of retail executives told Deloitte they are very confident about maintaining or improving profit margins this year.

The changing consumer will be a key challenge in 2023 as two-thirds of executives say they expect price to be more important than brand or retailer loyalty and 90% say consumers will expect seamless shopping experiences across all channels.

At the same time, retail theft is expected to rise, posing a threat to retailers.

Another key issue facing retailers in 2023 is predicted to be labour issues — cited by 70% of retailers to be the number-one challenge this year with hiring and retaining employees becoming a lingering issue and competition for hourly workers remaining fierce.

At the same time, 70% of retailers say that supply chain disruption will impact growth in 2023.

Nearly all executives surveyed say they expect inflation to pressure profit margins. 60% shared predictions for inflation to raise operating costs. And while it has become the norm to pass higher prices on to consumers, many questioned how long the trend will be able to continue, noting hard times for consumers. Nearly all (80%) of the respondents agreed they anticipate consumption in 2023 to diminish because of rising financial concerns.

When discussing potential growth opportunities, 60% of executives said they expect to see strengthening digital commerce offerings with another 60% anticipating consumers using social media platforms to purchase products directly.

Deloitte reveals retail industry outlook for 2023