Strategic Forecasting for the Remainder of the Decade

Consumer spending on services will start to slow: Fully expected, knowing that we are still seeing growth due to the complete shutdown during the pandemic in areas such as travel and dining out. But we know it won't last forever. The pace of recovery should start to slow and is projected to plateau in 2023. Consumer spending in this sector accounts for approximately 45% of the US economy, so this slowdown could tip the US into a recession.

Rising Interest Rates: The Federal Reserve will continue to fight inflation by raising interest rates, directly impacting the housing market and auto sales. It also affects stock prices which tend to decline when interest rates rise.

• This reduces households' net worth and spending.
• Labor Shortages will persist: Due to several factors, which include the pandemic, Baby Boomers retiring, and millennials going back to higher education, there is a significant labor shortage in the US.

So how do these three things correlate? In the next five to 10 years, the tight labor market will continue to push wages higher, and the resulting price pressures will force the Fed to keep interest rates higher.

This has created an economy where significant job growth and low inflation cannot coexist. It is either one or the other because the considerable expansion of employment in a super-tight labor market will accelerate wages and prices. In such an environment, we should expect slow economic and job growth for the rest of the decade.

Having a planning software solution that is integrated into both a long-term strategic plan (3 – 5 years) and a way to implement that plan into a short-term actionable plan (1 – 2 years). This is vital to maintaining the visibility of the supply chain and inventory health in today's retail space.

Remember not so long ago when we were asked as planners to keep this year, next year, and NEXT, next year's plans?! If we weren't lucky enough to work for an organization with a planning system that could plan for the future, it was all in Excel, and nothing rolled up accurately to the company level. It was a lot of "swagging"; well, "swagging" will no longer take your business into the future with healthy KPIs. The one thing we know for sure is that business changes constantly, and one single world event can take YOUR business in a completely different direction for the next decade. Will you be ready?

So how do you plan for this responsibly in your business? What do your 3 to 5-year strategic plans look like? The margin for error is growing smaller, and today's retailers must plan further out as the consumer's wallet share becomes more volatile.

Author: Janelle Pierce

Janelle is a Business Consultant with exceptional operations and strategy acumen, offering 20 years of retail industry success.