What: Inflation and the cost of living crisis limited spending in America as mall retailers and department stores reported sluggish growth in 2022 and set cautious forecasts for 2023.

Why it is important: Middle tier and department store retailers are seeing the biggest impacts from unpredictable consumer demand and limited spending in the US.

Kohl’s reported Q4 revenues of USD 5.8 billion, missing analyst estimates by USD 210 million with the retailer’s full year report being down 7.1%.

However, big box and clothing retailers were able to see more success as Target reported fourth quarter revenues of USD 31.4 billion and Abercrombie reported USD 1.2 billion for Q4.

US consumers are lowering their discretionary spending and being more deliberate and mindful with how they spend their money, looking for bargains and value as their wallets feel the pressure of inflation. Beauty, occasion wear, and higher-end luxury are the higher performing categories while luxury customer trends have proved more difficult.

As the US economy remains unpredictable for the coming year, American retailers are taking a  cautious and conservative approach to their forecasts, with first quarter sales expected to remain flat or see low single-digit change.

US retailers prepare for ‘new normal’ in 2023 after rocky year