The state of the retail industry in 2023

Retail Gets Real Episode 293: NRF President and CEO Matthew Shay on the resilient retail landscape heading into 2023
Sheryll Poe
NRF Contributor

Consumers are eager to get out and shop in 2023 and retailers are ready to meet them in stores and online, according to National Retail Federation President and CEO Matthew Shay.

“I think the return to many of the pre-Covid behaviors of being out shopping, being in stores — we saw that really at the beginning of the holiday season with Thanksgiving,” Shay said on this week’s episode of NRF’s Retail Gets Real podcast. “That five-day stretch really shattered records in terms of our expectations and set the tone. It also shows consumers are going to continue to shop in ways they always have. They’re back in stores, and they love that experience. We all want to be out, and the retail experience is a huge part of that.”

With more than 30 consecutive months of year-over-year growth in sales, the retail industry has been one of the brightest spots of the economy, with retailers overcoming lockdowns, supply chain issues and inflation. “Retailers deserve a lot of credit for finding solutions to the challenges in an inflationary environment and helping deliver goods to consumers in a way that make them still affordable by doing everything they can to hold costs down and deliver value in new ways,” Shay said.

Some of the lessons of the pandemic will continue to play a part in retail, particularly consumers’ “affinity for convenience and seamless, frictionless experiences,” he said.

NRF 2023

Did you miss us in NYC? Take a look at our NRF 2023: Retail's Big Show event recap.

Retailers are realizing they can “deliver a frictionless, seamless experience that’s gotten much better in part driven by the pandemic and the challenges of supply chain issues and store closures and shortages, and consumers really value that,” he said. “That’s one of those behaviors that we’ll see continue to accelerate into the future.”

As for NRF in 2023, Shay said the association will maintain its work on repealing tariffs, improving the supply chain and addressing the broken immigration system that contributes to an ongoing labor shortage and workforce challenges.

“Then there’s the whole category of theft and shrinkage and organized retail crime,” Shay said. “We’ve proposed some legislation at the federal level that will help with preventing the sale of counterfeit goods in online marketplaces and protect consumers there to be sure they know where these goods have been sourced.”

In the meantime, Shay is getting ready for NRF 2023: Retail’s Big Show, which starts on January 15 in the newly expanded Jacob K. Javits Convention Center in New York City. “We should expect energetic, enthusiastic crowds of attendees from around the United States and around the world. I think this event will feel much more like a pre-pandemic event, only better because we’re in a new, expanded facility. The convention center now is really world-class and finally matches the caliber of the event itself.”

Listen to the full podcast to hear more about whether inflation is impacting consumer behavior and how retailers are adjusting, additional advocacy issues NRF will focus on this year, and what to see and do at NRF 2023 as well as Shay’s tips for first-time attendees.

Retail Gets Real logo image

The retail industry impacts everyone, everywhere, every day.

NRF’s podcast features unfiltered, insightful conversations with the industry’s most interesting people. Hear retail executives, industry experts, entrepreneurs and influencers discuss trends, their career stories and the future of retail.

Subscribe to NRF's Retail Gets Real podcast
 Apple | Spotify | Google

Episode transcript, edited for clarity

Bill Thorne:    Welcome to Retail Gets Real, where we hear from retail's most fascinating leaders about the industry that impacts everyone everywhere, every day. I'm Bill Thorne from the National Retail Federation and on today's episode we're talking about the state of retail with NRF President and CEO Matthew Shay. We'll talk about the industry and how it fared this holiday season, what we're looking forward to at the upcoming NRF 2023: Retail's Big Show in New York City and what to expect from the retail industry looking forward into the year of 2023. Matthew Shay, welcome to Retail Gets Real.

Matthew Shay:    Bill, it is nice to be invited once a year. 

Bill Thorne:    <laugh>

Matthew Shay:    Now that you're up to 293 episodes. I'm glad I'm two of the 209, maybe I'm up to three of the 293.

Bill Thorne:    You are present at every podcast. I just want you to know that.

Matthew Shay:    Always with you in spirit.

Bill Thorne:    Always with us in spirit. Oh, we wouldn't be here if it wasn't for you, Matt.

Matthew Shay:    I have thought about you at least 293 times in the last four years.

Bill Thorne:    <laugh> That's very thoughtful and kind. So happy post-holiday. 

Mathew Shay:    Thank you. 

Bill Thorne:    I hope you had a good one.

Matthew Shay:    Very lovely, thank you. You too. Nice to be back and looking ahead to the show. 

Bill Thorne:    Yeah. 

Matthew Shay:    As you said, just another two weeks, less than two weeks. Very exciting.

Bill Thorne:    I think for the staff at NRF and actually our leadership and the folks that attend the Big Show, it's like Christmas is over, now I have something really fun to look forward to, and that's the Big Show.

Matthew Shay:    Yes. We don't want to talk about football <laugh>.

Bill Thorne:    We're not going to talk about football.

Matthew Shay:    But it's like the playoffs are over and now it's time for the Super Bowl. 

Bill Thorne:     Yeah, sure. 

Matthew Shay:     Keep it at the NFL level.

Bill Thorne:    Yeah. Okay, I'm down with that. So Matt, let's just say we're coming off a big holiday season with record numbers of shoppers and a resurgence in in-store shopping. What's the headline for retail as we kick off 2023?

Matthew Shay:    Certainly, there's a look back and a look forward. I think on the look back, you see now we've got two and a half, going on three years, of same month-over-month, same-store growth in sales and total retail sales have gone up and I think the strength of the consumer, but the resilience of the consumer record holiday season, I think the return to many of the pre-COVID behaviors of being out, shopping, being in stores. We saw that really at the beginning of the holiday season with Thanksgiving, that five-day stretch really shattering records. 

Bill Thorne:     Yep. 

Mathew Shay:     In terms of our expectations.

Bill Thorne:     Across the board. 

Matthew Shay:    I think that set the tone both for the way retailers would meet consumers in stores and online. But it also shows consumers are going to continue to shop in ways they always have. 

Bill Thorne:    Right. 

Mathew Shay:    And they're back in stores and they love that experience.

Bill Thorne:    You know, it's really interesting. If you think back, Matt, a couple of years ago when we were first getting into the pandemic, everybody was talking about the new normal. How are people, how are consumers going to react once this is over? I think that the new normal is the old normal to a very large degree. People like shopping in stores. People want to be around other people. People like the tactile experience. While things are changing, retailers are innovating, the shopping experience is important and people really showed that this past holiday season, I think.

Matthew Shay:    Yeah, I think that's right. We never go back in time. The nature of human evolution and development is, we always change and go forward learning from whatever the recent experiences were. I think that still embedded in those experiences are the foundation of the in-store. I mean this is, we're social people. We enjoy the interaction. We like the opportunity to be out doing things. We're going to see that at the convention in New York in a couple of weeks. We see it across the economy in terms of travel, hospitality and dining. We all want to be out. The retail experience is a huge part of that. It's a social experience. It certainly, it drives commerce and it drives the economy, but a big part of the experience is just being out socially doing things. I think that's what the holiday season told us this year, especially in, it's hard to think back now to holiday of ‘21, but it was a much different environment a year ago, 13, 14 months ago. There's a lot of pent-up demand.

Bill Thorne:     For sure.

Matthew Shay:    I think that's what we saw on display too, people wanted to resume, as you said, some of those behaviors that they haven't been able to for a couple of years.

Bill Thorne:    Right. Doing it in a big way. You know, Matt, inflation has been in the news. It is a concern. Consumers are feeling it. Everybody's talking about it. How has the retail industry fared with these record levels of inflation?

Matthew Shay:    Well, the industry has been driving the economy. We've seen more than 30 consecutive months of year-over-year growth in retail sales. That's the part of the economy that's really been a bright spot. 

Bill Thorne:    Yeah. 

Matthew Shay:    Fueled by pandemic savings. But I think also retailers deserve a lot of credit for finding solutions to the challenges in an inflationary environment. 

Bill Thorne:    Right. 

Matthew Shay:     Helping deliver goods to consumers in a way that make them still affordable, doing everything they can to hold costs down to deliver value in new ways. We've still seen growth year-over-year, and forecast, and we'll know in a few weeks, 6-8% growth for the holiday season. That same range, for last year, for 2022, and that's on top of 13 or 14% both last holiday and last year. 

Bill Thorne:    Right. 

Matthew Shay:    And 7% in 2021. Now we're on three consecutive years of real growth. There wasn't a lot of inflation in ‘20, and really there wasn't in ‘21 until about second, third quarter, it really started to tick up. But through 2022, in a highly inflationary environment, we still saw consumers out shopping. We still saw year-over-year increases in the monthly retail sales numbers. We saw retailers still finding ways to deliver solutions. I think it's pretty remarkable. 

Bill Thorne:    Yeah, you know, there isn't anybody – I'm going to say this pretty unequivocally. There's nobody that has the interaction that you have with CEOs of some of the largest, most iconic retail brands in the world. I'm curious, what are they saying about the consumer? How do they feel about it?

Matthew Shay:    We are, at NRF, very privileged to represent these brands, these companies, to work with these leaders. It's really a remarkable group of executives and their teams and it's fun to interact with them. We learn a lot. And of course, they're represented on the board and in other leadership positions. Then they're clearly friends of the NRF and friends of the industry from every segment. I think because we represent such a diverse group, it's always interesting to hear all of the range of perspectives. 

Bill Thorne:     Yeah. 

Matthew Shay:    Someone that's in luxury, someone that's in home, someone that's in specialty, someone that's in general merchandise and someone that's in grocery, you get a lot of different looks at things. I think they've consistently seen consumers staying engaged and out shopping and interacting.
It's also clear to them that there's stratification. That households at lower income levels, of course, are facing greater challenges because of inflationary pressures because that puts more pressure on those family budgets. And it's crept into the higher income levels, that you see higher income households sort of trading into new categories, trading into new brands, looking for different experiences, all in search of value to help stretch the monthly family budget. That's been true across the board. I think the other big thing that we saw not quite a year ago, but in late spring, early summer of last year, of 2022, was the quick pivot consumers made when inflation really jumped up and got high.

Bill Thorne:     Right. 

Matthew Shay:     There were lots of goods that had been in transit, that had been delayed at the holidays, that hadn't arrived. There was a lot of expectation that some of those categories would continue. Then consumers made a very quick pivot back to necessities and away from less discretionary and then into necessities as other expenses drove pressure. I think everybody saw that to a certain extent. The other thing I would say is about general behavior. That it's true, in addition to value and price, that consumers through the pandemic have demonstrated a real affinity for convenience and seamless frictionless experiences. A world in which, you've talked about this before, we were saying there was this convergence occurring between all these channels. We were saying that years ago. 

Bill Thorne:     Yeah, for sure. 

Matthew Shay:     We were a little bit ahead of the curve. 

Bill Thorne:     Yep. 

Matthew:     But I think that's what retailers say that they're really seeing, is they're able to deliver frictionless, seamless experience that's gotten much better in part driven by the pandemic and the challenges of supply chain issues and store closures and shortages. Consumers really value that. I think that's one of those behaviors that we'll see continue to accelerate into the future, is consumers looking for that from everyone with whom they do business.

Bill Thorne:    Yeah. It's interesting Matt, when you think, you've been at the NRF going on 13 years. I've been at the NRF going on 11 years. We got to see what the consumer was doing toward the end of the great recession. We got to see what the consumer is doing post-pandemic. It's amazing to be able to be a part of not only just watching what the retailers do in order to keep that consumer engaged, keep their associates safe, continue to build their business, but how the consumers responded as well. It's, I think it's not a question, it's just –

Matthew Shay:    <laugh> It's an observation but it's very valid.

Bill Thorne:    It's pretty amazing. 

Matthew Shay:    Very valid. 

Bill Thorne:     So, I'm excited. Here we come. <laugh> The Big Show. 

Matthew Shay:    Super Bowl, time for the Super Bowl. 

Bill Thorne:    Our Super Bowl for sure. Tell us a little bit about what we should expect at this year's Big Show at the Javits Center in New York City.

Matthew Shay:    We should expect energetic, enthusiastic crowds of attendees from around the United States and around the world. I think this event will feel much more like a pre-pandemic event, only better. We're in a new facility, expanded facility, the convention center now.

Bill Thorne:    It's unbelievable.

Matthew Shay:    I think is really world class. 

Bill Thorne:     Yeah. 

Matthew Shay:     Finally matches the caliber of the event itself, which is very exciting.

Bill Thorne:     Yeah. 

Matthew Shay:    We weren't able to really showcase it last year because we were still dealing with the omicron variant and the challenges we had, so people couldn't get here in the same numbers. This year I think there will be lots of energy in the building. We've got great sessions planned, lots of terrific speakers, John Furner from Walmart and Marvin Ellison from Lowe's. We could go down the list, there's really an amazing group of leaders from all kinds of businesses, Rodney McMullen from Kroger and Anish Melwani from LVMH. We sort of got people in every category. 

Bill Thorne:    Yeah.

Matthew Shay:    Global leaders and really world-class brands, so that will be exciting. The exhibit floor is going to be full, really driving all kinds of conversations about solutions for retailers and how they serve customers and improve their operations. Our Innovation Lab, I think is an exciting place. We got a Startup Zone to showcase new businesses. Every time I walk through, I get so excited.

Bill Thorne:    It's fantastic.

Matthew Shay:    You see these new technologies. 

Bill Thorne:    It’s unbelievable.

Matthew Shay:    These new approaches, truly cutting-edge solutions that is speeding the pace of commerce and helping with issues related to the supply chain and sustainability. And improved processes, improving quality of life both for customers as well as for the people that do these jobs. It's really going to be an exciting event and cannot wait to get there and welcome everyone.

Bill Thorne:    Well, you've mentioned the Innovation Lab and we've been doing it for a number of years now, but I remember the first time we did it and how much that has grown. If nobody has ever met Matt Shay before, they'll have an opportunity. Matt, you can meet yourself because you'll be greeting people at the Innovation Lab with your hologram. <laugh> I'm very much looking forward to seeing that.

Matthew Shay:    That will be interesting.

Bill Thorne:    I told the team, I want a video of you actually meeting yourself for the first time at the Innovation Lab.

Matthew Shay:    Hologram that's sort of like, just Leia and ‘help me Obi-Wan you’re my only hope.’ 

Bill Thorne:    Yeah, but better. <laugh>,

Matthew Shay:    Little grainy image. Fading it out.

Bill Thorne:    Lots of, yeah—

Matthew Shay:    Help me Obi-Wan!

Bill Thorne:    Technology of the future was not as good as our technology of —

Matthew Shay:    We'll see.

Bill Thorne:    Today, I think. Our mission at the National Retail Federation is pretty well defined. It is to advocate, is to educate, and it's to communicate and to tell a great story. When it comes to advocacy, all of those elements come together. It's a new Congress and it's a Democratic Senate, Republican House, Democrat President. We're getting into the presidential election cycle, but we have issues that we need to focus on and we need to be engaged with. What are some of those that you're anticipating for 2023?

Matthew Shay:    We're going to continue to talk about the battle against inflation. Obviously, the main driver in many ways of fighting that fight is the Federal Reserve, what the Fed does with interest rate setting and bond purchases and all those things. At the macro level, the Fed plays a role, but policymakers have a role to play also. We've talked before about our agenda on inflation, whether that relates to improvements in the supply chain, which would help drive down costs for consumers, whether that has to do with shipping. And we were able to get the Ocean Shipping Reform Act passed and into legislation.

Bill Thorne:    Yep. 

Matthew Shay:    Signed by the President, last year. 

Bill Thorne:    Bipartisan 

Matthew Shay:    Bipartisan, which was coming together to provide a practical solution. That was a great approach. We could repeal the tariffs on consumer goods that we’re importing from China. That's a markup that costs American families $1,200 at least on average per household, that with the stroke of a pen, the administration could rescind all those. We continue to speak to the administration about that. Obviously, one of the big areas in which we see a lot of inflation that continues to be persistent is in the labor market. We don't have enough people in the market today. We've lost millions of workers for a variety of reasons — early retirements or disabilities or long COVID or they're home caring for members of the family. But if we could fix immigration and at least begin to address the shortage of workers we have here, that's a near- and a long-term challenge, is both in the near term we can't fix the things that are wrong with our economy, but in the long term we've got a real problem if we don't have enough workers to power our economy. That's another area we could be focused on. Then there's the whole category of theft, shrinkage and crime. 

Bill Thorne:    Horrible. 

Matthew Shay:    And organized retail crime, community-level crime, the things that we see happening in many cities across the country, in stores, in certain locations. We've proposed some legislation at the federal level that will help with preventing the sale of counterfeit goods in online marketplaces and protect consumers there to be sure they know where these goods have been sourced. That's helpful. There's some other things that we're doing that provide some relief but really this is a solution that's going to have to be achieved through coalitions, through partnerships at the state level, at the local level, at the community level and it involves state legislators, local and municipal leaders. It involves law enforcement. It involves prosecutors. There's a whole group of stakeholders that need to play a role here. If this were a retail problem, the retailers we represent are smart, creative and resourceful, I think it would be solved by now. 

Bill Thorne:    Yep, for sure.

Matthew Shay:    It's not a retail problem. 

Bill Thorne:    No, it's not. 

Matthew Shay:    What we see happening with theft, shrinkage and crime occurring in and around retail stores is not about retail. It's about all these other factors that have created an environment in which this kind of behavior is really presenting itself. Retailers alone can't solve it, need help, want help, are trying to provide realistic solutions. 

Bill Thorne:     Yeah. 

Matthew Shay:    I think that's going to continue to be a priority, I know for our members and we'll continue to talk about that throughout the course of this year.

Bill Thorne:    Matt, I'm going to ask you two questions that aren't necessarily about retail per se. You've had an extraordinary career since college.

Matthew Shay:    Am I retiring?

Bill Thorne:    <laugh>

Matthew Shay:    This sounds like a goodbye—

Bill Thorne:    Not before me.

Matthew Shay:     Speech. 

Bill Thorne:     No, it's not a speech. It’s a question. The question is, through that journey, you've gotten a lot of really good advice, career advice. If you were to define, if there's one nugget that you've gotten through the years, what would that best piece of advice be?

Matthew Shay:    I think one thing that sticks is aim high. Hold yourself to high standards. Have high expectations for yourself. Have the confidence to believe you can achieve things at a high level. Don't sell yourself short. Don't give up too easily. There's a whole series of things that flow from aiming high, part of which is if you aim high and you strive to accomplish something, we all know that even when you don't get that high lofty goal you set for yourself, you still make progress. You learn other things. You gain experience from the journey. The notion of aiming high, in general is a nice way to sort of distill down a little lesson that has all kinds of other big lesson attached to it. That in the process of aiming high, you'll hold yourself to high standards. You’ll work hard, you won't sell yourself short, you'll believe in yourself. All the things that go with aiming high, I think is a good way to sort of encapsulate a manner of thinking. 

Bill Thorne:     Yep. 
Matthew Shay:     I think if I'd gotten that advice when I might've been too immature and irresponsible to take it, even if I had gotten it when I was younger, but if I could go back to talk to my 17- or 22-year-old or maybe older than that self. If I'd have thought about aiming high — the truth is we all think we're doing that all along the way. 

Bill Thorne:     Sure. 

Matthew Shay:     Right. It's not until you get a little older, you realize maybe you weren't really doing everything you could have, but I'd say aim high.

Bill Thorne:    Very good. And then my last question, I’m the first timer at the Big Show. What piece of advice would you give me?

Matthew Shay:    Have fun, but have a plan. The show floor is so big now that if you don't — and you don't have to, you can say, ‘listen, I've got three days here, so the first day I just want to walk around without a plan.’ That's perfectly fine. I think you can make really good use of your time if you have a plan. There are all kinds of resources available at the show to help you think through. Now it's almost like, what kind of a bike ride do you want to do on the stationary machine? Do you want to do a hill climb? Do you want a gradual? Do you want a beach? Do you want a city? You can get to the show and you can get guidance on what kinds of companies, what kinds of exhibitors do you want to see. You can do, in a morning you can do these things, and then you can take a break and in the afternoon do this. You can think about how to use your days. You can also, sort of jump into the mosh pit, just throw yourself out into the trampoline, the ball pit. That's fun. It could be a little overwhelming if you don't really know what you're looking for.  

Bill Thorne:     Yeah. 

Matthew Shay:    I think if you have an objective in mind, you would like to see these vendors that have solutions related to supply chain management. I want to see these that have to do with last-mile delivery. I want to see these that have to do with inventory fulfillment. You know what I mean? You can kind of go in and think through, or marketing or whatever the digitization of … You can fill in the blank for yourself of what it is you want to see. 

Bill Thorne:    Yep. 

Matthew Shay:    Then you can create a customized pathway for yourself that'll make sure you see these exhibitors in these locations.

Bill Thorne:    Yeah. Make sure to bring a lot of business cards and rubber-soled shoes.

Matthew Shay:    Comfortable shoes is a must.

Bill Thorne:    Totally. All right. So, in closing, Matt Shay, as always, it is a pleasure talking with you and getting your insights.

Matthew Shay:    My pleasure to be here, always. I hope I'm back by 393.

Bill Thorne:    <laugh> 

Matthew Shay:    A hundred more episodes, maybe you'll invite me back.

Bill Thorne:    You just say the word, you're on.

Matthew Shay:    <laugh> I've heard that, but I don't want to be there for that reason. I mean that takes the fun out of it.

Bill Thorne:    Yeah. We want you, when you have something to say.

Matthew Shay:    I want it to be merit based, okay.

Bill Thorne:    All right. 

Matthew Shay:    Not just, you know, gratuitous.

Bill Thorne:    We'll work on that. Thank you all for listening to another episode of Retail Gets Real. You can find more information about this episode and others at I'm Bill Thorne, this is Retail Gets Real. Thanks again and until next time.

Related content

DE&I as a state of success — not a checkbox
Mecca Mitchell at the 2024 NRF Foundation Honors.
Retail Gets Real episode 352: Burlington Store’s Mecca Mitchell on the power of leading with passion and authenticity.
Read more
The think tank for retail industry talent leaders
Individuals networking.
Retail Gets Real Episode 351: Adam Lukoskie discusses talent acquisition trends and the growth of NRF’s TAG.
Read more
Comfort, collaboration and imaginative innovation at Crocs
Retail Gets Real episode 350: CMO Heidi Cooley on the strategies behind Crocs’ emergence as a pop culture powerhouse.
Read more