Consumer headwinds are forecasted to intensify in the year 2024, according to Fitch's recent report.
Reboot:
The Strong Consumer's Swan Song?
ORLANDO, FL - The golden era of resilient consumers could be drawing to a close, according to a panel at ICR. Fitch Senior Director David Silverman shared his surprise at the consumer's health over the past few years, predicting stormy seas ahead.
"We're grappling with the question of the consumer's tailwinds that have been so strong finally subsiding and actual rising headwinds sticking their ugly heads out," Silverman explained. "We're talking about rising debt levels, dwindling savings, soaring interest rates pinching monthly payments, the cumulative impact of inflation over the past several years, and the new college loan repayments that started a couple of months ago. Although we still believe the consumer is fundamentally healthy, we think they're weakening."
In Silverman's crystal ball, shoppers will start looking for better value deals in 2024. He noted that retail categories generally struggled in 2023, such as home, sporting goods, apparel, and electronics, according to U.S. Commerce Department's monthly retail sales figures. November, for instance, saw a decrease of 7.5% in home goods sales and a 0.7% dip in sporting goods. Electronics saw a modest upturn with a 12% growth, while apparel inched up slightly by 1.6%.
The fickle nature of retail might spell trouble for some companies, especially those that thrived in 2020 and 2021 and expected this success to continue. Refinancing debt could prove challenging in 2024, according to Silverman. The ratings agency has a private list of at-risk retailers, which, as of the fall, included 99 Cents, At Home, Belk, Rugs USA, and Joann.
On a positive note, the supply chain hassles of 2022 are now a thing of the past, leaving retailers with improved margins. Fitch expects more retailers to follow Amazon's footsteps by broadening their business-to-business offerings, like marketplaces, retail media networks, logistics services, and any other services they think have monetizing potential. Doorstep deliveries, thanks to Walmart's GoLocal and other retail giants' offerings, and in-house marketplaces like those from Macy's and Michaels are prime examples.
"Size matters in retail," Silverman reiterated. "And it's becoming evident with some of the larger companies making use of the infrastructure they've built to offer supply chain services and other offerings. DTC (direct-to-consumer) brands are even heading back to these larger companies for help with distribution or logistics infrastructure in this post-DTC revolution."
The coming year, 2024, is likely to be fraught with uncertainty. Regulation, retail theft, generative AI, and ESG (Environmental, Social, and Governance) are some key trends that will influence the industry during an election year.
Quick Facts:
- Fitch Ratings has been tracking rising leveraged finance default expectations for the U.S. and Europe since April 2025[1][4], which could impact retailers indirectly.
- Their corporate rating criteria stress liquidity, operational margins, and market positioning as critical factors for retailers seeking to navigate consumer demand shifts[4].
For a more detailed retail vulnerability assessment for 2024, you may need access to proprietary Fitch Solutions reports [5] or their sector-specific research. The information provided here focuses on overarching methodologies rather than specific retailer lists.
- In 2024, consumers are expected to seek better value deals, according to David Silverman of Fitch Ratings.
- Silverman also predicts that refinancing debt could prove challenging for some retailers in 2024.
- The retail categories that struggled in 2023, such as home goods, sporting goods, apparel, and electronics, are expected to continue facing challenges in 2024.
- The supply chain issues of 2022 have subsided, leaving retailers with improved margins, but this could be overwhelmed by other factors in 2024.
- Fitch expects more retailers to follow Amazon's model of broadening their business-to-business offerings in 2024, including marketplaces, retail media networks, logistics services, and other monetizing potential services.
- In 2024, the industry will be influenced by several key trends, including regulation, retail theft, generative AI, and ESG (Environmental, Social, and Governance), especially during an election year.
- Fitch Ratings has been tracking rising leveraged finance default expectations for the U.S. and Europe since April 2025, which could impact retailers indirectly in 2024.
