February 15, 2023
The consumer is the engine of the U.S. economy and the resolve and ability of the U.S. retail consumer to spend should not be underestimated.
This was a major lesson of the previous year and a key discussion point when Mastercard U.S. Chief Economist Michelle Meyer spoke with Vera Bradley President Daren Hull during the National Retail Federation (NRF) Big Show in New York, an annual retail event that brings together over 35,000 retail professionals. During a wide-ranging discussion, Meyer and Hull shared their views on the current state of the economy and the partnership between Mastercard and Vera Bradley, providing the audience with some major takeaways:
- The economy should be the key factor when planning your business strategy – Coming off 2022, there is continued uncertainty facing businesses and consumers. “We saw a large increase in inflation and a big shift from what we have been seeing from prior decades,” said Meyer. While planning for the risks associated with the macro-economic cycle has been challenging for many retailers, there is good news — data suggests we are past peak inflation and are now seeing deflationary forces and reduced cost pressures.
- The consumer is the engine of the US economy – An easy way to think about the resolve of the consumer to spend is to break it down into three categories that affect purchasing power: the labor market, consumer savings and consumer access to credit. By taking into consideration these three factors, companies can focus on how to best stock their products, operate their retail stores and streamline processes to operate more efficiently and effectively.
- Understand your customer profiles – Hull underscores the need for an organization to understand what drives customers and their behaviors in order to have a two-way conversation. Identify the concerns or questions the customer may have, either while they’re interacting with your business or purchasing a product. Make sure that, no matter what happens, you can continue to re-engage.
- Find the right partner – Leaders in retail are inundated with data that can create fractional narratives that could move them in many directions. It can be difficult to tease out the important pieces. Hull and Meyer discussed the importance of finding a partner that can provide context behind the numbers, leading to better data and ultimately smarter decisions faster and more efficiently. With a solid partnership in place, retailers can leverage public and proprietary data to understand shifts in real time at a hyper-local level.
- Push the culture of “test and learn” – Big shocks can be unexpected, but when they happen, turn to data for help with next steps. No one can fully anticipate the impacts of a hurricane, but with the help of data, teams can move with agility, test, get to market and find a way to make good decisions and move things forward. “In times of volatility in your data, the ability to work with a company with a larger data set than our own helps us normalize the results, move faster and gives us an ability to control the things we can control,” states Hull. By removing the noise, retailers can exhibit the ability and flexibility not afforded to those armed with only their own data.
Meyer and Hull ended their discussion with direct guidance to all industry leaders: Work through uncertainty. When resources are tight, cut the losing propositions. As a leader, to make good decisions and move your business forward, make a decision based on data and have a good narrative that people can understand. After all, doing something is almost always better than doing nothing.
