January 18, 2012
NRF: Retailers and Suppliers Upbeat About 2012
Everything is good in retail land. Off a strong 2011 holiday selling season and expectations for more in 2012, the industry is feeling pretty good about itself. At least that was the consensus of attendees RetailWire spoke with at the National Retail Federation’s (NRF) Big Show over the past couple of days.
An unscientific survey of 154 attendees found that 34 percent were much more optimistic about the industry’s prospects for the coming year while 56 percent were somewhat more optimistic. Only three percent had negative responses, saying they were somewhat less optimistic.
Technology vendors, who make up the vast majority of exhibitors at the show, pointed to increased investments being made by retailers. A much higher number than we can recall in many years attending NRF predicted record years for their own companies.
While economic factors are still a concern, most believe that retail will remain vibrant and growing. NRF projects that retail industry sales will grow 3.4 percent in 2012. That’s on top of the 4.7 percent increase retailers saw in 2011.
"Our 2012 forecast is a vote of confidence in the retail industry and our ability to succeed even in a challenging economy," said NRF President and CEO Matthew Shay in a press release.
BrainTrust
Recent Discussions
Discussion Questions
Discussion Questions: How confident are you about the retail industry’s prospects for 2012? What internal and external factors do you think will be most important in retail performance over the course of the year?
Poll
I spoke with several dozen tech vendors at the show and most of them were optimistic, although not wildly so. Virtually every exhibitor I spoke with took the strong attendance and traffic flow at the show to be a good sign for the overall state of retailing. However, several noted that while retailers are investing in technology, they remember recent difficulties all too well and want to see payback on investment within a year or 18 months at the most, vs. double that previously.
We certainly hope the best for retailing in 2012 — but we do not expect 3.4% growth off the back of anything other than price inflation.
Vendors are more optimistic that retailers will spend money in 2012. Spending plans are fluid. The first quarter will be critical to confidence.
Look … they are coming off a great holiday period into an election year where the installed masters of the economy are going to do everything they can to make things hum, at least until November.
So … there is some room for, as Al puts it, limited optimism.
That said China is still a wild card as is the net impact of the downgrade of many of the EU nations.
Additionally, there are other storm clouds on the horizon including potential variances in global oil supply should the Iranians actually be crazy enough to try to cut off the Straits of Hormuz.
That said 2011 wasn’t a bad year and retailers, by nature, are optimists, but optimists who are always attentively listening for the sound of that second shoe dropping.
Good retailers that are well run, well managed, well planned, and the ones with good, approachable leadership, will have a successful year to come. The others will not have a good year and the shortcomings will be erroneously attributed to a slow economy. In other words, the opportunity for success does exist, however, the competition for this achievement is tighter than before.
I think the barbell shape continues into 2012. Retailers at the low end (dollar stores) or high end (luxury) of the consumer will do well and the middle continues to be inconsistent.
Small business has not recovered and can’t get enough credit to move the middle forward.
The December BIGinsight Consumer Intentions & Actions (CIA) Survey offers some revealing comparisons to prior years. In 2012, retailers would be wise to watch consumer payment methods by various product categories. With necessity items, consumers have stepped back to credit and debit — a promising opportunity. With discretionary purchases, cash is up — some continued challenges for certain restaurateurs?
They also will want to look closely at the segmentation of their audiences. Boomers remain more cautious in terms of consumer confidence and spending patterns (plans to spend MORE, the SAME, or LESS in the next 90 Days). Yet 18-34 year olds are opening up the wallet and purses a bit faster. And, the 35 -54 year olds have some buying power that positions them to spend time in retailers’ stores.
View the BIG ticket purchases, as well, even if you don’t sell those particular items, as they show patterns that consumers are following. Technology spend should be solid for all age brackets. Furniture sales are likely to improve among 35 – 54 year olds, but what is marketed to adults on the other sides of this bracket will have to be different merchandise/promotion.
Jewelry will be OK, but at more modest prices, as the boomers aren’t going to be big buyers. Consumers will invest in their homes at a slightly higher rate, which spells a solid 2012 for home improvement chains. And, the travel category will be showing improvement, so tie in with American’s wanderlust.
2012 will be a better year, but retailers will have to work hard to spot the niches. One simple plan-o-gram isn’t going to cut it.
In talking to a number of technology vendors at the NRF Show, it is indeed true that their mood is buoyant relative to the prospects for the retail trade. Many were flashing the thumbs up sign, when asked what they thought 2012 held for the retail industry. Many noted that retailers, after a significant pause in investment during 2010 and 2011, were now serious about investing in technology and all aspects of their infrastructure. They reported that meetings last year were exploratory in nature and all the vendors got was a “thank you” for the input and a business card; this year, in contrast, retailers came to meetings with specific agendas to make an investment and in many cases set up followup meetings at HQ.
In addition, technology suppliers indicated that retailers were showing a much enhanced interest and greater sophistication in getting on board with new technology, not only for outreach to shoppers, but also to associates. Many, in fact, were at the point of seeking to combine many different points of technology applications under a single provider/manager.
This is all great news for everybody, but we are dealing with the cutting edge of retailing, which may naturally be supported strongly by retailers no matter what the economy may be doing just to stay competitive and cut costs in doing so. The final acid test will be the assessment of merchants’ mood at conferences more oriented to merchandise, such as FMI, NACDS, GMDC and others.
Not sure if the NRF Big Show attendees were asked if they plan to increase their spending habits in 2012 because of their optimistic outlook, as that would be more of an interesting statistic. One can assume optimism will lead to more spending, but it’s better to ask than infer. Behavioral Commerce company, SteelHouse conducted a survey similar to NRF, but directed the questions to shoppers. Similar to NRF’s survey, they also asked people about their economic outlook for 2012 and found that 49% of the 312 people surveyed felt more optimistic, which definitely coincides with the NRF findings. But SteelHouse dug even deeper and also found that 58% of these “optimistic” individuals said because of their optimistic outlook, they’ll feel more inclined to buy goods online this year. This is great news for retailers, especially if they have an accessible online store and are actively reaching out to the online shopper community.
Will retail in 2012 be flat, up 2%, or up 4%? I don’t think any of us know. The one thing we all seem to agree on is that any increases will be modest.
As a result, business fundamentals will continue to be important. The plan won’t be as important as how it’s executed. Keep inventories lean. Stay liquid. React and chase as opportunities present themselves. Execute, execute, execute.
More Discussions
How Timely Is the Planned Lowe’s Website Renovation Focusing on Personalization?
Is Lowe’s being timely with its website reno, and is it right to be placed as…Should Costco Be Opening Members-Only Gas Stations?
Is this the right move for the warehouse club?As Boomers ‘Age Out of Peak Purchasing,’ How Can National Brands Retain Interest With Gen Z?
According to a recent First Insight study titled “Is Gen Z Still Choosing Your Brand,” while…
I spoke with several dozen tech vendors at the show and most of them were optimistic, although not wildly so. Virtually every exhibitor I spoke with took the strong attendance and traffic flow at the show to be a good sign for the overall state of retailing. However, several noted that while retailers are investing in technology, they remember recent difficulties all too well and want to see payback on investment within a year or 18 months at the most, vs. double that previously.
We certainly hope the best for retailing in 2012 — but we do not expect 3.4% growth off the back of anything other than price inflation.
Vendors are more optimistic that retailers will spend money in 2012. Spending plans are fluid. The first quarter will be critical to confidence.
Look … they are coming off a great holiday period into an election year where the installed masters of the economy are going to do everything they can to make things hum, at least until November.
So … there is some room for, as Al puts it, limited optimism.
That said China is still a wild card as is the net impact of the downgrade of many of the EU nations.
Additionally, there are other storm clouds on the horizon including potential variances in global oil supply should the Iranians actually be crazy enough to try to cut off the Straits of Hormuz.
That said 2011 wasn’t a bad year and retailers, by nature, are optimists, but optimists who are always attentively listening for the sound of that second shoe dropping.
Good retailers that are well run, well managed, well planned, and the ones with good, approachable leadership, will have a successful year to come. The others will not have a good year and the shortcomings will be erroneously attributed to a slow economy. In other words, the opportunity for success does exist, however, the competition for this achievement is tighter than before.
I think the barbell shape continues into 2012. Retailers at the low end (dollar stores) or high end (luxury) of the consumer will do well and the middle continues to be inconsistent.
Small business has not recovered and can’t get enough credit to move the middle forward.
The December BIGinsight Consumer Intentions & Actions (CIA) Survey offers some revealing comparisons to prior years. In 2012, retailers would be wise to watch consumer payment methods by various product categories. With necessity items, consumers have stepped back to credit and debit — a promising opportunity. With discretionary purchases, cash is up — some continued challenges for certain restaurateurs?
They also will want to look closely at the segmentation of their audiences. Boomers remain more cautious in terms of consumer confidence and spending patterns (plans to spend MORE, the SAME, or LESS in the next 90 Days). Yet 18-34 year olds are opening up the wallet and purses a bit faster. And, the 35 -54 year olds have some buying power that positions them to spend time in retailers’ stores.
View the BIG ticket purchases, as well, even if you don’t sell those particular items, as they show patterns that consumers are following. Technology spend should be solid for all age brackets. Furniture sales are likely to improve among 35 – 54 year olds, but what is marketed to adults on the other sides of this bracket will have to be different merchandise/promotion.
Jewelry will be OK, but at more modest prices, as the boomers aren’t going to be big buyers. Consumers will invest in their homes at a slightly higher rate, which spells a solid 2012 for home improvement chains. And, the travel category will be showing improvement, so tie in with American’s wanderlust.
2012 will be a better year, but retailers will have to work hard to spot the niches. One simple plan-o-gram isn’t going to cut it.
In talking to a number of technology vendors at the NRF Show, it is indeed true that their mood is buoyant relative to the prospects for the retail trade. Many were flashing the thumbs up sign, when asked what they thought 2012 held for the retail industry. Many noted that retailers, after a significant pause in investment during 2010 and 2011, were now serious about investing in technology and all aspects of their infrastructure. They reported that meetings last year were exploratory in nature and all the vendors got was a “thank you” for the input and a business card; this year, in contrast, retailers came to meetings with specific agendas to make an investment and in many cases set up followup meetings at HQ.
In addition, technology suppliers indicated that retailers were showing a much enhanced interest and greater sophistication in getting on board with new technology, not only for outreach to shoppers, but also to associates. Many, in fact, were at the point of seeking to combine many different points of technology applications under a single provider/manager.
This is all great news for everybody, but we are dealing with the cutting edge of retailing, which may naturally be supported strongly by retailers no matter what the economy may be doing just to stay competitive and cut costs in doing so. The final acid test will be the assessment of merchants’ mood at conferences more oriented to merchandise, such as FMI, NACDS, GMDC and others.
Not sure if the NRF Big Show attendees were asked if they plan to increase their spending habits in 2012 because of their optimistic outlook, as that would be more of an interesting statistic. One can assume optimism will lead to more spending, but it’s better to ask than infer. Behavioral Commerce company, SteelHouse conducted a survey similar to NRF, but directed the questions to shoppers. Similar to NRF’s survey, they also asked people about their economic outlook for 2012 and found that 49% of the 312 people surveyed felt more optimistic, which definitely coincides with the NRF findings. But SteelHouse dug even deeper and also found that 58% of these “optimistic” individuals said because of their optimistic outlook, they’ll feel more inclined to buy goods online this year. This is great news for retailers, especially if they have an accessible online store and are actively reaching out to the online shopper community.
Will retail in 2012 be flat, up 2%, or up 4%? I don’t think any of us know. The one thing we all seem to agree on is that any increases will be modest.
As a result, business fundamentals will continue to be important. The plan won’t be as important as how it’s executed. Keep inventories lean. Stay liquid. React and chase as opportunities present themselves. Execute, execute, execute.