FINANCE

Retailers using pent-up cash; 58% plan to increase capital spending, with IT No. 1 priority

BY Marianne Wilson

New York— Retail executives have more cash, are adding employees and enjoying stronger revenue, but they remain quite guarded longer term, not seeing a complete economic recovery until 2014 or later, according to the 2012 Retail Outlook Survey by audit, tax, and advisory firm KPMG LLP.

In the recent survey, 77% of retail executives indicate that their companies have significant cash on the balance sheet – up from 72% in KPMG’s 2011 survey – and 56% say their companies’ cash positions have increased from last year.

In addition, 64% say revenues are up from prior year (compared to 47% percent in 2011), and 52% say they have increased the number of U.S. employees. Interestingly, 22% indicate that their company’s headcount has returned to pre-recession levels – compared with just 18% in 2011.

Despite the positive sentiments in the report, caution remains the watchword of the day.

"The retail sector has experienced some positive momentum in the past year, but executive leaders aren’t about to throw caution to the wind," said Mark Larson, KPMG global retail leader. "In this year’s survey, executives have pushed back their estimated timeline for economic recovery to 2014 or later, with concerns that decreased consumer confidence and continued high national unemployment are hindering a full retail recovery."

While waiting for the recovery to take the hold, 58% plan to increase capital spending over the next year. The highest priority investment area is information technology – including data analytics and digital marketing channels – cited by 51% of the executives in the KPMG survey. Other significant areas of investment for retailers are new products or services (43%), geographic expansion (33%), and advertising and marketing (24%).

When asked about digital marketing channels, retail executives in the 2012 KPMG retail survey indicate that online shopping (59%), social media platforms (58%), and email campaigns (49%) are having the most significant impact on their businesses. Additionally, executive indicate that the incorporation of mobile technology is also having a significant impact, specifically mobile shopping (36%), mobile promotions (28%), and mobile payments (21%).

Executives also say that the use of data analytics is playing a larger role in their strategic decision making – including areas such as customer insight, brand and product management, pricing decisions and market expansion.

"With consumer behavior, spending and demographic profiles changing rapidly," Larson said, "a key to success will be investing in technology to harness the vast amount of data that resides in a company. That data can drive the insights that will allow retailers to interact with consumers more effectively and capture more ‘wallet-share.’ It may also reveal information on new markets, new strategies and new operating models that will ultimately generate growth and profitability."

Lack of customer demand, pricing pressures and labor costs were ranked as the most significant barriers to revenue growth, according to the survey. The most significant barriers to profit margins: discounting practices, input costs and decreased sales volumes.

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REAL ESTATE

Simon Property Group acquires 50% ownership of Florida outlet center

BY Staff Writer

Indianapolis — Simon Property Group announced that it has acquired 50% of Silver Sands Factory Stores, an outlet shopping destination located in Destin, Florida. Howard Group, developer of the center, will remain 50% owner of the center. Simon will assume primary responsibility of leasing and management duties.

The 465,000-sq.-ft. Silver Sands center is home to over 100 stores including Ann Taylor Factory Store, Coach, Cole Haan, J.Crew, Kenneth Cole, Michael Kors, Nike and Saks Fifth Avenue Off 5th.

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STORE SPACES

Pan-Oston Receives 2011 Domino’s Pizza Teamwork Award

BY Staff Writer

Bowling Green, Ky. — Pan-Oston was awarded the Domino’s Pizza Teamwork Award for 2011 at its annual Supplier Summit. The award was in recognition of Pan-Oston’s teamwork and execution of the New Image Counters, which the supplier engineered, manufactured and delivered within 90 days to six stores.

This is the second award given to Pan-Oston by Domino’s Pizza, the first award being the prestigious Partner Award for 2007.

“While we are pleased to receive another award from Domino’s, we are most proud of our long-standing relationship with their company. It is an immense pleasure to work in a true partnership where we are able to support the success of the Domino’s franchisees. Pan-Oston is looking forward to witnessing the new vision of Domino’s come into complete focus and to celebrating the success to come with Domino’s positive store count in the U.S. and fast-paced growth internationally,” said Jim Vance, president of Pan-Oston.

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