The Perfect Storm: Inflationary Pressures Cast a Dark Cloud Over Retail
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CLICK HERE to read "The Perfect Storm: Inflationary Pressures Cast a Dark Cloud Over Retail," a knowledge report by Alvarez & Marsal. |
After two long years of intermittent lockdowns due to the Covid-19 pandemic, the retail sector in Southeast Asia (SEA) and Australia appears to be bustling with life again. Indeed, the retail sector is said to be one of the recovery plays as we transition out of the pandemic phase of Covid-19.
However, retailers are faced with a new challenge—sweeping inflation. While the official inflation rate is hovering around three percent, domestic food prices in developing Asia have increased about 10 percent, and oil prices have seen increases of up to 40 percent over the course of the year. A consumer study by Alvarez & Marsal’s Consumer and Retail Group in October 2022 revealed that 60 percent of consumers have cited price as their No. 1 barrier to spend today, a measure that is up 20 percent from the same time last year. As consumers become more value conscious, trading down, particularly within price-sensitive categories, will become increasingly commonplace.
Our latest A&M report talks about the various steps retailers can take to survive in a high-inflation environment.
