Compounding years of high inflation are impacting consumers’ purchasing decisions, but strong U.S. wage growth may provide some relief this year, Walmart U.S. President and CEO John Furner said during the National Retail Federation’s 2024 State of the Retail and the Consumer event, which took place virtually on 20 March.
“Certain discretionary items have seen some deflation, like general merchandise … but in general, [inflation] has left a lot of consumers to be more mindful with the things they buy,” Furner said.
As a result, the NRF said it expects 2024 retail sales in the U.S. to grow between 2.5 percent and 3.4 percent year over year to reach somewhere between USD 5.23 trillion (EUR 4.81 trillion) and USD 5.28 trillion (EUR 4.86 trillion).
“The nagging problem is stubborn food inflation that has been high over the last few years,” Furner said. While food inflation has recently “moderated some,” Furner acknowledged it has remained high overall. Around the retail industry, this has put a strain on the market for luxury products, including some seafood items, Furner said, while a surging market for convenience-focused products has emerged.
“The trend of convenience is here to stay,” Furner said.
Furner said Americans are becoming more willing to trade off prices for things that are more convenient.
“[Consumers] are looking for inspiration [and] innovation. For the parts of the service and retail sectors that find more innovative ways to serve people in a way that saves them time, takes friction out of their lives, and lowers some of the decision-making they have to go through, those are the companies and parts of the economy that will continue to win,” Furner said.
Providing some consolation for domestic producers and manufacturers, Walmart plans to buy more products from U.S. companies, with the company currently in the middle of a USD 350 billion (EUR 321 billion) commitment to increasing the sourcing of products made in the U.S. Furner said that already, two-thirds of the products the company sources are made, grown, or assembled in the U.S.
Regardless of the challenges, Furner remains optimistic about the future of retail and the supply chain as a whole.
“It appears that most of [the impacts of Covid-19] are behind us; it appears that supply chains are much better. We are able to serve customers more flexibly. As customers demand more flexible options, we serve them how they want to be served,” Furner said. “There are a lot of objective reasons to believe we are in a great spot.”
