The Current, delivered daily.
Welcome to a new week. We’ve got a quick look back at the NRF Big Show to kick things off. Then, this week brings plenty of opportunities to gain insight into the state of the consumer. Colgate Palmolive, Johnson & Johnson, Kimberly-Clark and Levi Strauss will report earnings. Meanwhile, new economic data will offer a look at GDP and inflation.
NRF Big Show takeaways
Industry events are taking a breather this week after the NRF Big Show and Winter Fancy Foods Show kicked off the tradeshow year with high energy. With this week providing a chance to reflect and catch up following all of the activity, we’ll take a moment to share three takeaways from the NRF Big Show:
What does omnichannel mean now? The pandemic brought the spike in ecommerce, and last year featured the return to stores. Technology that connects the two is still called omnichannel, but a lot has changed over the last few years. Think: Googling "In stock near me," Buy Online, Pickup in Store. Building technology for in-person shopping that has digital touchpoints feels more important. Should we still call it omnichannel?
Profitability over growth. With a tougher economic environment expected this year, there's more priority on building loyalty with existing customers, and tightening up operations. We've had three years of swings and adjustment to huge changes. This year, there's an opportunity to pick which of the new approaches stick, and fine-tune to make them work for the long haul.
Composable commerce is everywhere. Retailers used to build custom ecommerce systems. Now, more technology is being built that allows them to choose the best pieces for their needs. Composable commerce is growing not only for customer-facing functions in the shopping experience, but also on the fulfillment and supply chain side. Leaders believe this technology must be built to allow for continuing change as new advances are developed.
The Current will continue to roll out interviews and analysis from the Big Show for the rest of January. Subscribe to The Daily Current newsletter to get the latest in your inbox.
Gross Domestic Product: The U.S. Bureau of Economic Analysis releases the Q4 2022 growth rate of GDP, which is the top measure of economic activity. This includes consumer spending, and any growth or decline is a primary indicator of whether demand for goods is remaining strong. In Q3, GDP grew 3.2%. 8:30 a.m., Jan. 26
Durable Goods Orders: The U.S. Commerce Department releases data for December on manufacturer orders and shipments of goods that are meant to last three years or more. This is an indicator of demand for larger-ticket purchases. 8:30 a.m., Jan. 26
Personal Consumption Expenditures: The U.S. Bureau of Economic Analysis releases data on consumer spending, savings and inflation for December 2022. This is the measure of inflation watched by the Federal Reserve and many economists.
Consumer Sentiment: The University of Michigan releases final data on consumer buying plans and economic expectations in January. In the initial reading, sentiment rose to its highest level since April as more people see inflation beginning to fall.
Trending in Economy
Labor disputes on the West Coast could cause further disruption heading into peak season.
When the first half of 2023 is complete, imports are expected to dip 22% below last year.
That’s according to new data from the Global Port Tracker, which is compiled monthly by the National Retail Federation and Hackett Associates.
The decline has been building over the entire year, as imports dipped in the winter. With the spring, volume started to rebound. In April, the major ports handled 1.78 million Twenty-Foot Equivalent Units. That was an increase of 9.6% from March. Still it was a decline of 21.3% year over year – reflecting the record cargo hauled in over the spike in consumer demand of 2021 and the inventory glut 2022.
In 2023, consumer spending is remaining resilient with in a strong job market, despite the collision of inflation and interest rates. The economy remains different from pre-pandemic days, but shipping volumes are beginning to once again resemble the time before COVID-19.
“Economists and shipping lines increasingly wonder why the decline in container import demand is so much at odds with continuous growth in consumer demand,” said Hackett Associates Founder Ben Hackett, in a statement. “Import container shipments have returned the pre-pandemic levels seen in 2019 and appear likely to stay there for a while.”
Retailers and logistics professionals alike are looking to the second half of the year for a potential upswing. Peak shipping season occurs in the summer, which is in preparation for peak shopping season over the holidays.
Yet disruption could occur on the West Coast if labor issues can’t be settled. This week, ports from Los Angeles to Seattle reported closures and slowdowns as ongoing union disputes boil over, CNBC reported. NRF called on the Biden administration to intervene.
“Cargo volume is lower than last year but retailers are entering the busiest shipping season of the year bringing in holiday merchandise. The last thing retailers and other shippers need is ongoing disruption at the ports,” aid NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “If labor and management can’t reach agreement and operate smoothly and efficiently, retailers will have no choice but to continue to take their cargo to East Coast and Gulf Coast gateways. We continue to urge the administration to step in and help the parties reach an agreement and end the disruptions so operations can return to normal. We’ve had enough unavoidable supply chain issues the past two years. This is not the time for one that can be avoided.”