Retail Outlook: Cautiously Optimistic

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Smarter. Leaner. Cautiously optimistic. That’s the picture of the retail industry that emerges from CIT Group’s second annual retail study.

Overall, the report describes an industry transformed by the recession. It makes clear that while retailers believe things are getting better, they are sticking with the strategies that saw them through the past 22 months: Cash is being conserved, inventories are being closely watched, staff levels are lean, and expansion plans are being carefully examined.

But as much as retailers remain conservative in their approach, they also are feeling more optimistic. Sixty percent of retailers say that, over the last 12 months, their revenues have grown (55%) or grown significantly (5%), and two-thirds expect revenues to be higher still in the coming 12 months. Looking ahead to the next 12 months, 68% of retailers expect revenues to either grow (46%) or grow significantly (22%). (The baseline for this growth is 2008-to-2009 sales.)

In other positive signs, fewer retailers are scaling back expansion plans. In 2009, 42% said they would not open the number of stores originally planned. In 2010, that figure dropped significantly to 16%. And nearly 60% of retailers say their current inventory is higher than it was a year ago. But they remain watchful of shifts in consumer demand. Not surprisingly, inventory management has emerged as a top priority as retailers look to track demand and stock more closely, and reduce prices to speed inventory turns.

As for capital expenditure spending, expect the focus to remain on technology, according to the study, as retailers invest in systems and solutions to help them gain control over both their customer-facing and back-end operations. For the next 12 months, expanding Internet channels, maintaining existing stores and funding point-of-sale initiatives ranked as the three top capital spending priorities.

“The general consensus is that, having weathered the economic downturn, most retailers are in better shape today than in 2009,” said Burt Feinberg, managing director and industry group head of retail finance, CIT Group Inc., New York, a leading provider of financing to small businesses and middle-market companies.

That’s a sentiment that retailers share. According to the report, retailers believe that the lessons learned during the recession have positioned their companies for strong and sustained growth once the economy turns.

It’s a proven fact that having the right technology in place can give a chain a competitive advantage. To help retailers stay on top of cutting-edge advancements, Chain Store Age has launched a virtual resource center and learning portal called Retail U.

Sponsored by Microsoft, Retail U is designed to give IT and operations executives—along with their counterparts in such key areas as merchandising, promotions management, supply chain, payment systems, finance, loss prevention, workforce management and real estate—access to the newest and most progressive ideas for revolutionizing retail business processes. And the best part: It’s all just a click away.

Retail U is dynamic and filled with content, including white papers, webinars, Q&As, videos, case studies, special reports, presentations and new product information. So remember: Retail U is now in session—check it out at retail-u.com .

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