New survey results reveal that inflation is not just a concern for shoppers — retailers are concerned, too. 

Upside conducted two retailer pulse checks five months apart to gauge how thousands of owners feel about the state of their business and the economy at large. We found that the three biggest challenges retailers face all revolve around cost, led by inflation. Rather than benefiting from inflation — where customers spend more for the same goods — it has been the most common headwind that retailers are battling against. Furthermore, they cite “reducing those increased costs” as one of their three primary objectives over the next six months.  

Read on for the full survey results below. 

Digging into retailer sentiments

Upside surveyed 1,521 retailers in August 2023 and 1,873 retailers in January 2024 to get a sense of changing sentiment as macro conditions evolve.

The big headline is positive news: in both surveys, over 90% of business owners across eight retail categories rated the current health of their business as “good” or better. These retailers felt similarly positive about the future state of their business; in each survey, 84% of retailers felt that their business would get a little better or much better in the next six months.

We then asked retailers about the biggest challenges facing their business right now. 

The top retailer challenge in August 2023 was overwhelming: inflation. 

1. 48% said inflation  
2. 38% said supply chain costs  
3. 36% said hiring staff 

Five months later in January 2024, similar feelings prevailed, with a few shifts. Inflation was still a top concern, but now other concerns were catching up. 

1. 44% said inflation, a four-point decrease from August  
2. 42% said supply chain costs, a four-point increase from August
3. 40% said labor costs, a six-point increase from August 

It’s clear that even as inflation cooled, costs remained a major concern for retailers across all industries. 

To get a sense of the fuller picture, let’s zero in on the responses of retailers from three industries hit hard by inflation: grocery, restaurant, and fuel.

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As illustrated by the chart above, the top concerns on the mind of these grocers are all related to costs. For grocers, supply chain issues were actually more of a challenge than inflation, bucking the overall trend. Not only do grocers consider these rising costs to be a headwind—they cited reducing costs as one of their top three priorities in the next six months.

Compared to the other two categories highlighted here, restaurateurs appear to be particularly concerned about inflation. That may be because diners have reached their breaking point on menu price increases. In addition to being the only category with more than half of respondents saying it’s a challenge, it’s the only category where the percentage increased from August to January. 

Finally, the top two concerns for fuel retailers echo the concerns of their counterparts in restaurant and grocery. But another clear challenge is revealed in their next three answers—managing technology and putting together an omnichannel strategy that attracts and retains customers. 

Across all retail categories, those that said reducing costs was an immediate business priority rose from 42% at the tail end of 2023 to 44% by the beginning of 2024. Inflation and its related cost increases hurt consumers and retailers alike; the overall picture contains much more nuance than many Americans might believe. With costs top-of-mind and margins (especially in industries like grocery) relatively low, many retailers can’t afford to reduce their prices and remain comfortably in business.

Overcoming high costs with Upside

Many retailers have been forced to raise prices to keep up with these rising costs. But more and more, we see that customers are pushing back against these higher costs, also called “cost passing.” 

Upside is helping retailers offset those rising inflation and supply chain related costs by generating a  new, incremental revenue stream for their businesses. Upside’s marketplace offers cash back promotions that drive customers in-store in a way that’s profitable for retailers. So retailers with spare capacity — think empty checkout lanes for grocers, or idle cooks and burners in a restaurant—can put those to use with new, profitable transactions.