New York Senior retail executives see an improved business picture in 2010 and expect to see even better revenue, profitability and an improving jobs picture in 2011, according to a recent survey conducted by KPMG LLP, the audit, tax and advisory firm.
Almost two-thirds of the survey respondents said overall business conditions in retail were better now than a year ago, in marked contrast to KPMG’s survey last summer when only one-fifth thought so. Nearly half of the executives surveyed expect the retail industry to recover ahead of the U.S. economy as a whole. On average, the retail executives predict an overall U.S. economic recovery in 1.9 years (March 2012).
“While retail executives show more optimism in this year’s survey, the fact they see the expected economic recovery timeline extended suggests they are still cautious about declaring the recession and its impact completely in their rearview mirror. Their caution is understandable given the lackluster June sales results just reported by many retailers and the fact they are coming out of what was a drastic downturn for them,” said Mark Larson, KPMG global retail sector chair.
In response to whether their strategic focus was now on investing for growth or cutting costs, more than half (55%) of the retail executives chose the investment option, but 45% said they were still focused on cost cutting. More than nine in ten senior retail executives in the survey cited “product innovations” and “innovative merchandising strategies” (which includes online and mobile internet shopping) as their biggest revenue drivers over the next three years.
The respondents were still cautious with regard to employment in their sector. Forty percent of respondents said they expect to add headcount – but most estimated the increases to be in the range of only 1% to 3%.
On a related topic, when asked to identify their biggest challenges, 25% said “recognizing/responding to customer trends” and 23% pointed to “discounts driven by market competition.”
Other major KPMG survey findings include:
Asked to identify the factors most likely to hinder economic recovery in their sector, retail leaders most frequently cited continuing high national unemployment (66%), decreased consumer confidence (63%) and a distressed real estate market (28%) as well as limited access to credit for consumers (also at 28%).
The KPMG survey was conducted during April and May 2010 and reflects the responses of 65 CEOs and other C-level suite executives in the retail industry. Approximately 29% of respondents work for retail companies with annual revenues exceeding $1 billion; 26%represent companies with annual revenues in the $250 million-$1 billion range and 45% represent companies with annual revenue below $250 million. Clarion Research Inc. conducted the survey and compiled the data.