Much of retail works on demand forecasting based on the immediate past.

But the last ten years have been nothing but aberrations in consumption behavior. Every DTC IPO tells you that story. The shoes we bought from StockX, the watches we bought from Hodinkee, and the "investments" we made on Rally are all aberrations*. They are economic artefacts of the times of free-flowing cash.

‍* I didn't buy, pinky swear.

‍The last two years too were different but in a different way. Even for 'Stable Retailers' who know what to stock for which season and what sells – down to units at a specific store location – it was like suddenly discovering the portal to another dimension that was dark and yet euphoric.

We couldn't travel for fun or wear ridiculously overpriced and tacky clothes to work. We ended up spending on electronics and home improvements instead. And then, we forgot about COVID and walked out to the streets, rubbing shoulders. Clothing and Accessories became fashionable again.

But from Q4 of 2022, there has been a slowdown in traffic for sites that sell unique, expensive food for annoying people like me – vegans who won't eat mushrooms or soy or drink regular milk or coffee – the 'Dizzy Retail', as I'd like to call them. But, there is 'across-the-board' weariness much like how 'Eleven' feels, right after unleashing her superpowers. The weariness does not differentiate between the dizzy and the stable. The contagion spreading to stable retail just means we are entering the next phase of whatever it is.

During the recently concluded Amazon Prime Day Sales,

1. Consumers spent more (Average order size increased by $7.51 YoY)
2. But 42% of the orders were below $20 per order
3. Orders under $10 increased from 5% in 2021 to 18% in 2022
4. 29% of consumers ordered Home Essentials and Food items, up by 2%
5. More than 25% of the consumers surveyed told that they bought items that they'd anyway have bought during weekly grocery runs.

Meanwhile, another stable retailer, Target, is feeling the heat as consumers flock to the chilled aisles more than where the latest hot gadgets are.

Target in its recent earnings report has attributed the fall in its earnings to a shift in consumers' preference from high-margin products such as kitchen appliances and TV to basic grocery items.

Target and Walmart have built up inventory post-pandemic that is skewed towards quarantine-friendly categories. Both Walmart and Target have called out for Q2 and Q3 as a time frame where the excess inventory would be sold at a discount.

In a way, a couple of quarters of wobbly assortment planning and demand forecasting is not bad. As the market cools down, stability in consumer preferences will return and that world belongs to stable retail.

While the last few years have been framed as the reinvention of retail and brand building, the next two or three years would be the best of times for affordable retailers like Dollar General, WinMark, and the likes. It's the period of selective and deliberate growth – profitable stores, selective eCommerce, rigorous inventory management, and hopefully, a shorter queue at the BOPIS counters.