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Survey: CFOs remain optimistic about retail industry

BY Katherine Boccaccio

Norwalk, Conn. — A report released Wednesday by GE Capital found that the majority of retail CFOs are fairly optimistic about their industry, even though the outlook for the economy has soured.

According to the GE Capital Middle-Market CFO Survey, 58% of retail CFOs believe their revenues will increase in 2011. However, that has dropped from 80% in the first quarter. Less than half – 42% — expect to increase capital expenditures, up from 38% in the first quarter.

“Although the optimism we saw six months ago has tempered a bit, CFOs are confident in their ability to manage operations through changing market conditions,” said Jim Hogan, senior managing director, GE Capital, Corporate Retail Finance. “After completing over $2.1 billion in retail finance volume this year, we continue to see an increase in retailers with stable cash flows, lean operations and clean balance sheets shifting from survival mode to seeking finance to rebuild inventory and expand conservatively in new or existing markets.“

In other key findings, 58% plan to increase the cost of their products, a sentiment that remained consistent with the previous survey. Forty-six percent expect the availability of consumer credit to improve marginally in 2011, down 10 percentage points since the first quarter of 2011. Most (72%) see discount spending as the segment of the market that will likely grow the most in 2011. Twenty percent believe luxury spending will grow.

A majority (68%) expect their financing needs to remain the same compared with 2010. And, although slightly down from the first quarter of the year, 68% indicate they plan to make additional hires in next 12 months.

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Maturing Consumers: What Retailers and Manufacturers Need to Know About Their Older Customers

BY CSA STAFF

By Martin Walker and Xavier Mesnard, A.T. Kearney’s Global Business Policy Council

The fastest-growing age group worldwide in this century will be people over the age of 60. What must retailers and manufacturers know to adapt to this older consumer group? In the first-ever international survey of consumers over the age of 60, A.T. Kearney interviewed 3,000 people in 23 countries to find out what mature consumers want. The short answer: prices and labels they can read, packaging they can open, and more places to sit down in stores.

In 1998, the number of people over age 60 overtook those under age 15 in the G7 (developed) countries. Based on current worldwide demographic trajectories, in five years, there will be more people over the age of 60 than under 5; in 30 years, there will be more people over 60 than under 16. When today’s newborn babies reach college age in 2030, 36% of Germans, 30% of the French, 22% of Americans and even 30 percent of Chinese will be older than 60. Longevity is not just a rich-world phenomenon.

What do retailers and manufacturers need to know about their older customers?

  • The cult of youth is over. For the past 60 years, marketing and advertising strategies and much of our popular culture have been driven by the cult of youth. That made sense in the 1960s, when 37% of the world population was under 15, but it is no longer the case. The under-15 age group is now 26% of the global population, and heading down to 20% by 2050. Marketing strategists will need to rethink.
  • Mature consumers have power. There is power in cash and numbers, and mature consumers have both. Individuals over the age of 50% own 80% of U.S. financial assets and are responsible for 50% of discretionary income. Last year, they spent $87 billion on new cars, compared to $70 billion spent by those under the age of 50. Worldwide, consumers age 60 and older spent more than $8 trillion in 2010; by the end of this decade, they will be spending $15 trillion.
  • The nature of aging has changed. People are active and healthy well into their 70s and 80s. They travel abroad, dine out and spend more as a proportion of their income on food and drink than people under age 60.
  • Technology counts. Mature consumers are entering the electronic age faster than expected. In the United Kingdom, for example, “silver surfers” (individuals older than 55) are the fastest-growing age group for Internet adoption.
  • The image of “old” is changing gradually. The longer we live, the longer we stretch the definition of “old.” Stars such as Meryl Streep and Helen Mirren illustrate how even Hollywood’s age parameters for female beauty are changing. Yet, while mature consumers want manufacturers and retailers to recognize the realities of aging, they do not want to be treated as “elderly.”

Already, some manufacturers and retailers are adapting to these new dynamics. Automakers Mercedes, Ford and Volkswagen are mimicking the physical limitations of aging as they design certain vehicle models. Hospitals are using the Disney philosophy to train staff in customer-service techniques for mature patients. Retailers such as Wal-Mart are hiring older employees, and Carrefour offers electric shopping carts. This is not just good business — it is also self-interest.

For retailers, aging may mean a paradigm shift in the design of stores and retail chains. Today, the central idea in retail design is to improve efficiency for shoppers. It is generally thought that consumers are busy working and raising their families — so they want to get in and out of stores as quickly as possible. Larger stores outside city centers, lots of parking spaces, and short queues with focused, efficient cashiers are all designed for less frequent, big-basket shopping.

However, mature consumers, who represent up to 30% of spending power, have an entirely different outlook on shopping. A trip to the store is often a source of physical activity and social interaction, an opportunity to investigate nutritional guidelines, and, in general, a place for enjoyment. Shopping trips are planned during weekdays, take place several times a week (or even daily), and with increasing age, are accessed less by car and more by foot.

Mature consumers spend more time in stores. As such, they want personal attention from friendly, talkative cashiers — not speed. They want to sit down and have a cup of coffee — not being brushed through by checkout personnel with laser scanners. They want smaller stores closer to home, not large and faraway ones. They want a clear, organized assortment of goods, with high-quality products at good prices, not unlimited choice or cheap, low-quality products.

For branded marketers, responding to the aging phenomenon will require a far-reaching rethinking of product design, particularly in labels and directions, legible prices, and easy-to-open packaging. Mature consumers want nutritious food and will take their time to get informed about dietary information while at the store, so they need easy-to read information in larger font sizes. Above all, branded marketers will need to work closely with their customers in the retail sector to coordinate an effective response to the changing consumer market.

We will all be mature consumers one day, and some of us will be very mature indeed. Within 25 years, individuals older than 85 will represent more than 8 percent of the population in Japan and between 3% and 5% in Europe and the United States. Adapting to the radically different requirements of mature consumers can have extensive consequences for retailers and branded marketers. As this customer group grows and gains purchasing power, smart companies will adjust their strategies accordingly to gain a competitive advantage.

Martin Walker is senior director of A.T. Kearney’s Global Business Policy Council, based in Washington, D.C. ([email protected]). Martin Walker is a partner in the consumer products and retail practice, in the Paris office ([email protected]).

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NEW elects five new board members

BY CSA STAFF

CHICAGO — The Network of Executive Women has elected five new members at large to its board of directors.

New board members are Mike Byron, president of supplier diversity for Supervalu; Sarah Chartrand, SVP diversity, talent management and organizational development for Ahold USA; Marnette Perry, SVP Kroger; Suzanne Sears, VP global market development at Kimberly-Clark; and Karen Stuckey, SVP merchandising and general merchandise manager of the home division for Walmart Stores.

"Inside their own companies and throughout the greater CPG/retail industry, these industry leaders have proven their commitment to gender diversity and inclusion," stated NEW president and CEO Joan Toth.

Byron has served Supervalu in a variety of roles, including district bakery sales manager, division sales manager, regional director of sales, corporate director of bakery sales, national bakery product manager, supplier diversity manager and corporate director of supplier diver­sity. He is active with Supervalu’s Corporate Diversity Council and African-American Business Re­source Group. Byron also serves on the board of directors for the Midwest Minority Supplier Development Council, the Conference Board of Supplier Diversity Professionals, the Food Marketing Institute’s Food and Beverage Education Commit­tee and the Council of Urban Professionals.

At Ahold USA, Chartrand is responsible for training and development, management development and succession planning, diver­sity and inclusion, staffing, organization development and internal communications. Prior to assuming this role in 2008, she served in several management positions with Stop & Shop, including VP opera­tions strategy and planning, senior director of training and HR planning, and business improvement manager. Previously, she was a change management consultant with Accenture/Andersen Consulting. She is a governing body member of the Human Resources Leadership Summit, a group founded in 2011 to encourage networking and development of HR professionals in the Boston area.

Perry is responsible for eight of Kroger’s supermarket divisions: Columbus, Delta, Dillon Stores, Jay C, QFC, Fred Meyer, King Soopers-City Market and Michigan. Throughout her career with Kroger, Perry has played a role in shaping several of Kroger’s trademark customer offerings, including developing the company’s floral department into one of the largest florists in the nation and directing the initial rollout of natural food departments in stores. She also is credited with helping to streamline purchasing and merchandising operations for the company’s produce division. Since joining Kroger in 1972 as a part-time cashier in her hometown of Portsmouth, Ohio, Perry has held a variety of positions with increasing responsibility. She has served in a number of management roles, including several merchandising director positions, VP merchandising for the Delta Division, president of the Michigan Division and president of the Columbus Division. Perry is a founding donor of the Appalachian Scholars Program at Ohio Uni­versity, a program designed for high school students living in the 29-county Appalachia region of southwest Ohio who wish to pursue higher education at Ohio University. She serves on the board of trustees at Ohio University, Athens, and is a member of the board of directors of Kroger Personal Finance with the Royal Bank of Scotland.

Sears is re­sponsible for driving global growth of the Kimberly-Clark professional business through the development of global marketing strategies and customer management strategies, including global national accounts and new and expanded channels of distribution. She recently served as president of the global do-it-yourself business, where she increased sales and profits through the introduction of new products into major home improvement and automotive retailers and global market expansion into new markets, channels and geographies. Previously, Sears served as VP marketing for Unisource Worldwide. Prior to joining Unisource, Sears was director of worldwide product development in the business-to-business market for Scott Paper. She is a member of the American Marketing Institute and the National Association of Women Business Owners, and serves on the board of the Media Youth Center, in Media, Pa. Sears is past president of the University of Delaware Parents Board and serves on the university’s executive board of the Alumni Association. She was recently nominated for the 2011 Hall of Fame at the University of Delaware, which recognizes outstanding professional and public service achievement.

At Walmart Stores, Stuckey is responsible for merchandising, product development, design, brand portfolio and strategy for the retailer’s home division. She joined the company in 2004 and has held the title of SVP general merchandise manager in home division product development, ladies’ apparel and softlines. Prior to joining Walmart, Stuckey was president of Hanes Casualwear (Sara Lee) and VP merchandising at Cato Corp. She also served as national merchandise manager at Montgomery Ward and a buyer for Target Corp. She is the chair of the Walmart Women’s Officer Caucus and is treasurer of the Boys & Girls Club of Benton County. She is past chair of Novant Health Systems and the Women’s Center Forsyth Hospital.

NEW board chair Michelle Gloeckler, SVP home for Walmart US, thanked five outgoing directors for their Network service: Chelle Moore of Walmart Stores, John Saguto of Nestlé Purina Petcare, Gail Jordan of Monarch Janus Associates, Michele Murphy of Supervalu and Caroline Cotten of Mass Connections.

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