The Advantages Of Brand Enterprises With Slowing Inflation

Jack Kleinhenz, chief economist of National Retail Federation (NRF), said, "There may be more and more voices about whether we are still in the 'economic recession' in the future. In the end, we expect that the economy will only decline and will not be so serious as to decline. ” In the NRF monthly economic review in February this year, Jack Kleinhenz said that "the proactive measures taken by consumers to avoid the impact of inflation and high interest rates may slightly boost the economic growth in 2023. Although inflation is slowing down, it may face more challenges before it improves. ”

At the beginning of the year, the Global Economic Outlook report released by the World Bank sharply lowered the growth expectation of the global economy this year. The bank predicted that the global economic growth would slow to 1.7% in 2023, lower than the 3% predicted in June 2022. This will be the lowest growth rate in nearly 30 years after 2009 and 2020.

According to NRF data, in 2022, the US consumer spending will grow by 2.8%, falling by 0.2% and 0.3% respectively in November and December of the same year, of which the overall retail sales will decline by 1.1% in December. In addition, due to the sharp decline in gasoline prices and automobile sales, the overall holiday sales also performed poorly.

It is worth mentioning that although the total holiday sales in November and December were several percentage points slower than expected, they increased by 5.3% compared with 2021. After two consecutive quarters of negative growth, the U.S. gross domestic product (GDP) in the third quarter grew 3.2% year on year, and slowed to 2.9% in the fourth quarter. From the perspective of the whole year, it still grew 2.1% over 2021.

On the one hand, the longer cycle fluctuation trend of the overall consumer market can be seen through the longer cycle macro data observation; On the other hand, the unstable situation of holiday sales, which used to be regarded as an important marketing node, may also send a signal to the brand that the holiday bonus coming with the flow of people may continue to shrink for some time in the future, and the traditional discount promotion will not be enough to attract the increasingly cautious consumers to start a "hoarding war", The following may be the comprehensive upgrading of online and offline business models - such as social retail innovation, digital experience innovation, improvement and upgrading of the service system, etc.

In addition, excluding volatile food and energy prices, NRF pointed out that the personal consumption expenditure index (the preferred inflation measure of the Federal Reserve) increased by 5% in December, lower than 5.5% in November, and the slowest annual growth rate since 2022.

At present, people usually characterize the negative economic growth since two quarters as economic recession, and Jack Kleinhenz said that, "Whether the economy will fall into 'slow growth' or 'sharp decline' depends mainly on whether the Federal Reserve can achieve an appropriate balance between interest rates and inflation. The current slowdown in inflation may pave the way for a reassessment of future interest rate increases or reductions. However, interest rates may remain in the 'restricted range' for the rest of this year."

He also said: "Although I think the economic situation in 2023 may still be in a state of 'zero growth', the good news is that under the current economic downturn, the balance sheets of enterprises and households are showing a relatively good situation."

In addition, it may be easy to see from multiple data surveys that, for luxury brands that continue to focus on high net worth groups, there is little possibility of the future market dilemma continuing to intensify, but there is still growing competition. How to ensure differentiation and improve competitive advantage in the multi legged high-end market is still a long-term issue; For popular fashion beauty brands, despite the mixed market performance in the past, it is more important to constantly observe the changes in consumer behavior preferences and social life patterns in the new market environment in the future, and use this as a basic reference for product innovation, research and development, marketing communication, and to speed up market recovery as much as possible, In this way, we can ensure our profitability and viability.

Sarah Wolfe, economist of Morgan Stanley, an international financial services company, was in Jacob K., New York in January Speaking at the NRF "Big Show" conference held by Javits Center, he said: "We predict that there will be no economic recession in the future. However, in 2023, our economic growth rate will indeed decline to about 0.3%, which is far lower than the 1.7% growth rate we originally predicted. Moreover, compared with the strong economic growth in the past two years, this year's growth performance is very slow."