Hi, I’m Jack Plunkett. Today we’re going to talk about the retail industry. Now, the retail industry is tougher than it’s
ever been before. Competition is intense at all levels from bargain
stores to luxury stores and everything in between. It’s relatively easy to set up a new
retail company or go open a new store, and the competition just becomes more and
more intense, not only through physical stores, but the
growing, growing market share all over the world of e-commerce. This is creating
really tough environments for retailers. Meanwhile, consumer attitudes are
changing dramatically. Surveys consistently show today that consumers
are very interested in paying down debt and increasing their savings. That means less
purchases at retail or changed attitudes about how they purchase or
retail. Consumers in the United States for instance are less likely than ever to put retail purchases on credit cards. They’re more likely to use cash or
debit cards. They don’t want to make big monthly payments on regular everyday
retail purchases. So today’s consumer around the world is generally more
focused on buying things that are high quality and have lasting value. When today’s
consumers do part with their money, they want to feel like it’s been well and
wisely spent. That means, they’re investigating prices, product quality,
product features on the Internet frequently at the same time they are
shopping in a store because they have their smartphones or before they ever
go to the store, and retailers are having to react dramatically. Among the trends in
well-managed retail companies, are cutting costs as reasonably possible. For
instance, opening slightly smaller stores than they did in the past; reducing total inventory compared to
what they used to have in the past; getting more inventory in quickly;
selling it quickly by responding to consumer trends and market trends, and
having fewer markdowns. One big problem for retailers is in many cases,
particularly in clothing, they pretty well trained consumers to wait
until items go on sale. New piece of clothing comes in the store, couple of weeks later it starts to go on sale. Consumers know very well that sale marked down process is going to continue
for several weeks until whatever is left may be very inexpensively
priced indeed. This changing environment has been very hard on many types of
shopping centers including big malls. Now shopping centers having to evolve and
respond by becoming more digital in nature, using all kinds of technologies and apps, and location-based advertising within mall-based stores, to appeal more to the
digital mobile consumer of today, and shopping centers and malls are becoming
more entertainment based, so what we call entertainment-based retailing. That means
making sure they have nearby a great mix of restaurants, maybe movie theaters,
maybe things that are more interesting than that like nightclubs, or jugglers, or
other entertainers walking up and down the center of a mall or a big, open
strip center. We’re seeing store operators work with mall owners and
shopping center owners to make sure that there are ways to
engage the consumer; make them want to come spend a long time at the shopping location. It’s a
difficult task but it works very well when it’s well executed. The world’s biggest retail
chains, like Wal-mart, have been very excited about moving into emerging
markets around the world, where the middle class has been growing rapidly and
there’s been a rising amount of consumerism. So you’ll see today many of
the world’s biggest retail brands in large numbers of places in China, in
Brazil, in Russia, even in places like Indonesia and Thailand are seeing great
growth in the number of retail outlets. The next frontier in retailing of all
types is going to be Africa. Recently, we saw Wal-mart buy a major discount
store chain in South Africa. It’s going to be a long, long term thing, but Africa
is the far distant frontier of retailing. We’re also seeing greater power among
consumers to have impact on the social ideas and social practices of retailers
and their suppliers. A good example is the huge consumer backlash to the
horrible conditions in certain apparel manufacturing plants in Asia, where
plant conditions have been so bad, buildings have literally collapsed
killing hundreds of workers within them, or wages have just been miserably low or
some people have even been forced into terrible work contracts and certain
factories in certain places. Consumers hate this, particularly in the United States
and Europe, and they’re having great influence on the way retail companies and their suppliers
must operate. In fact, there is a movement known as LOHAS, L-O-H-A-S, which is
Lifestyles of Health and Sustainability that’s having a great influence on
retailing, boosting things like organic foods in supermarkets and more
sustainable products of all types including in apparel. That’s a brief look at
the retail world today. For really great, in-depth information about retailing, be sure to see Plunkett’s Retail
Industry Almanac and our retail segment at Plunkett Research Online. Thanks.