📈#019: After slowdown, where retail spend is headed in 2024

Welcome to yet another issue of Market Mosiac, where our goal is simple: obsessively equip you with actionable intelligence to beat the hardest competition and make the smartest decisions for long-term growth with consumer evolutions in view. 📈

In this week's edition, we dive into the global consumer spending outlook and what it signals for various retail categories over the next 12-18 months. We also analyze which categories may withstand or even benefit from budgetary pressures versus those bracing for more demand impacts.

Read further and come along with us to dive into these golden insights together.

— Insights Team, Rwazi

Our Edition this week:

• Data Spotlight

• The Pulse

• Sector Scan

• Our Competitive Watch

DATA SPOTLIGHT
The great beverage slowdown

One discretionary retail segment bracing for particular economic headwinds is the beverage category. Our data analysis indicates operating profit growth of just 3-6% over the next 12-18 months as consumer beverage demand cools down.

Higher costs and supply chain constraints have limited beverage makers' profitability over the past year. As consumer wallets tighten further, premium beverage brands may experience accelerated trading down to value segments.

Key Insight: Beverage companies must brace for a consumption dip by rightsizing costs, innovating affordable product lines, and bracing for private label competition amid consumer belt-tightening. 

THE PULSE
Featured Chart: At a low consumer price increase of 3%, global FMCG inflation will be felt in 2024

SECTOR SCAN
Modest growth ahead for retail

The next 12-18 months present a mixed outlook for the global retail industry as consumer spending power wavers. Our latest data analysis also points to adjusted Earnings Before Interest and Taxes (EBIT) growth of just 1-3% for physical retailers during this period.

While a relatively muted projection, modest profit expansion is expected to be fueled by pockets of opportunity. Value, off-price and essentials-focused retailers could see a boon as cash-strapped consumers pursue discounts and prioritize non-discretionary spending.  

Key Insight: In an environment of budgetary pressures, consumers will gravitate towards retailers offering the best value propositions - favouring models like off-price, dollar stores and private label products.

OUR COMPETITIVE WATCH
Big food brands are insulated

While much of the consumer products landscape braces for economic challenges, the global packaged food industry appears relatively well-insulated. Our analysis is predicting an operating profit growth of 3-5% for major food brands through 2024.  

This favourable outlook is driven by food's inelastic demand nature as an essential household necessity. Established legacy brands also wield substantial pricing power - enabling them to propel revenues by responsibly passing through higher input costs to consumers.

While our data points to relative consumer spending strength ahead, the macroeconomic environment still signals turbulence on the horizon for retailers as households become more cash-constrained.

Key Insight: Pricing power and inelastic category demand will help big food companies endure inflationary pressures and escalating interest rates without severe margin erosion compared to discretionary players.

WHAT IS HAPPENING AT RWAZI?
Registration now open for our upcoming Rwazi CEO Forum

Our most-anticipated premier and flagship event, Rwazi CEO Forum 2024, is a global convergence of industry leaders and innovators through thought-provoking discussions, insightful keynotes, and exclusive networking opportunities.

We cannot wait to share our expertly curated consumer trends report – a strategic blueprint that puts you ahead of the curve with in-depth analyses of the latest consumer trends, market opportunities, and actionable insights tailored to your business needs.

More details will keep coming in the coming weeks, so stay tuned to our socials and newsletter.

Register here now and watch out.

Thank you for reading and joining us on Market Mosaic this week. We hope this edition provides valuable, actionable insights for deciding with data. 📊 

You can read the more extended version of this newsletter edition with detailed insights here.