Bracing for an Unknown Economy
Bracing for an Unknown Economy. Online shopping jumped 77% year over year just months into the pandemic, accelerating the innovation and adoption of digital commerce by half a decade. But now the economic outlook forces ecommerce businesses to brace for a sluggish economy plagued by inflation concerns. Total retail sales have increased, but the climb is expected to be slow. Companies are worried about the risk of inflation and its impact on growth, leading to cost reduction efforts and plans to increase product prices. Given the uncertainty, companies are preparing for a potential recession in the coming year.
This trend originates from the report:
Shopify - Commerce Trends 2023
While commerce growth is slowing, total retail sales in 2022 have climbed 15% since 2020,5 and they’re projected to reach more than $31 trillion in 2025. But it will be a slow climb. The World Trade Organization became less optimistic about trade growth volume as 2022 progressed.
The organization’s estimate for 2023 was a growth rate of 3.4% in April. By October, the forecast for the year had plummeted to a dismal 1.
0%. As commerce growth slows down, worries around inflation are ramping up. Business owners aren’t the only ones with higher costs on their minds.
The average person is 208% more concerned about inflation than the coronavirus, which has dropped down the list of global worries while inflation rose to the top. Worry about rising prices isn’t likely to go away in 2023. Although some say the recession fear is overdone, let’s face it—even the possibility of a recession affects how businesses spend, how venture capitalists invest, and how people shop.
How bad do companies think it will be? 83% Are very concerned about the risk inflation poses to company growth. 82% Say high inflation is forcing them to reduce company costs. 81% Have plans to increase product prices due to inflation.
71% Say their company is preparing for a recession next year. So companies think a recession is unlikely, but are still bracing for impact..