It’s the final push of the year to try to hit 2023 targets. Marketers are holding their breath to see how holiday breaks, while the National Retail Federation forecasts spending in November and December to rise a modest 4%. Nobody is expecting to run out of stock, with shoppers slowly starting to holiday shop in October and retailers running a higher inventory-to-sales ratio than they would prefer.
The recession that wasn’t
A marketer’s dilemma this year: benchmarking off the numbers put in a spreadsheet last Q4, when the Bloomberg Economics model was calling the likelihood of a U.S. recession at 100%. Despite analysts never being able to actually predict a recession, this one felt like a sure bet.
Yet, despite fretting in survey responses and consumer confidence sliding to a five-month low in October, consumers are still spending. Despite predictions for unemployment starting to jump this quarter, we’re still gaining jobs. And despite consumers expecting continual price rises for goods and services through 2024, inflation is easing.
Capricious consumers pretended they wouldn’t spend
While macroeconomic whiplash isn’t always throwing us off estimates, marketers are used to getting consumer behavior wrong. Consumers were supposed to double down on ecomm purchasing and other accelerated pandemic behaviors. Like humans do, people went back to what was familiar and convenient.
But customer spending this year felt especially capricious. People said they had too many goods and were ready to splurge on services, but also still bought goods. Then people said they were too worried about inflation and the economy to open their wallets -- but kept swiping their cards for everything anyway.
The art of parsing out what consumers are saying versus what they are signaling takes up most of a market researcher’s day. This year highlighted that forecasting (and market research) is indeed both an art and a science.
A strong economy no one feels good about
What have you learned this year to help adjust for 2024? For starters, we should focus more on signals than survey responses. Consumer confidence is almost decoupling from consumer activity. People were supposed to have spent down their pandemic savings months ago. Boomers are still sitting on plenty of savings and increasing spend this year by more than 2%-3%, per Bank of America.
Whatever bad assumptions you built into the forecast this year, you’re not alone. Whether running above or below targets, marketers should feel pretty good about coming close to 2023 projections.