Economic trends in Arizona: Where are retailers heading?
Arizona has faced its share of problems before and after the pandemic, but fortunately, it seems that the state is in for a bright future. Record spending is likely to develop into next year, even as the recession approaches, but is bound to slow down once it actually hits.
Economy Watchers Forecast a 2023 Slowdown
On November 2nd, 2022, The Federal Reserve pumped up its benchmark interest rate hike by three-quarters of a point for the fourth time. In the Wednesday press release, Christopher Waller stated that more interest rate hikes would occur in the future to get inflation down.
However, there will be an attempt to tamp down the range to 50 basis points instead of 75. The Federal Reserve would typically tackle inflation and job growth at the same time, but due to the continuing rates of low employment, they’re focusing on lowering inflation for the time being.
The gradual slowing of the economy could raise unemployment rates even more and lead to unaffordable housing in the state. Waller describes this as the “slowing expansion phase.”
What May Happen to Arizona Retailers in 2023
While these economic predictions seem grim, Arizona is still the 3rd fastest growing state in the US and has a promising future. With that said, retailers need to look out for the following things.
A Lack of E-Strategy Will Bankrupt Businesses
According to Openings24, there are still plenty of grand openings happening in the US, but their success relies on a stable e-strategy. The vast majority of purchases will still occur online in 2023, so physical stores have a choice to make: go digital or close their businesses for good.
Online retailers must open up physical stores to compete with brick-and-mortar retailers. On the other hand, physical stores should develop shop-in-shop locations or wholesale partnerships.
Retailers Will Own or Outsource Supply Chains
Experts agree that supply chain issues will continue into 2023, which has led to some retailers offering supply chains as a service. For example, Gap Inc. and American Eagle now orchestrate the execution of contract manufacturing, storage, or transportation of other brands’ goods.
However, some retailers have started to completely outsource their supply chain, so they can move resources, capital, and talent to customer-facing functions, like commerce and marketing.
Paid Partnerships Will Be Plenty, But Not Lasting
Influencer and affiliate marketing is still going strong, but many startups aren’t using it correctly. This started a trend of retailers grouping together for a limited-time offer, followed by a total disconnection from one another, confusing loyal brand customers and new prospects alike.
To avoid this trap, retailers have to explain why their customers should sign up for a product or service and stick with their programs. Otherwise, there’s a high chance they’ll lose money.
Automation Will Tackle Labor Shortages
Arizona could hit a 6% unemployment rate in 2023, and most retailers can’t afford to be so detrimentally understaffed. For this reason, businesses are investing heavily in automation and easy-to-use software that eliminates tedious tasks, increasing productivity and ROI.
However, the future tech economy shouldn’t be a cause for alarm for the majority of workers, as automation will lead to nearly 100 million more jobs, which is 15 million more than it replaces.
Arizona Businesses Won’t be Negatively Affected
In the US, businesses are effectively too big to fail. Even the smallest of small businesses could take out loans or benefit from government programs during the pandemic, which kept them afloat. Tax deductions, automation, lay-offs, and stagnant wages also help mitigate most costs.
The bottom-line impact may be noticeable for some massive retailers, but they aren’t going bankrupt. In fact, the US market could double from 2021 to 2024 if we maintain our course.