New York – How bad is the retail climate right now? One of the first graphics for the National Retail Federation conference session “Weathering Retail’s Storms: How to Navigate a Turbulent Economy” depicted a huge image of Grumpy the Dwarf from Snow White.
Grumpy, sadly, paints an accurate and ongoing reflection of the U.S. consumer—and many U.S. retailers, said Carl Steidtmann, chief economist, consumer business for Deloitte Research during Monday’s session. “No industry will be more affected than retail.”
But, he said, there are signs of optimism. Hourly wages are up in the past year, and fuel prices are down. Deleveraging, or reducing debt by rapidly selling assets, will continue, Steidtmann said.
Since 2001, there has been more deleveraging by U.S. companies than in the 40 years before. “We literally went on an orgy of debt,” he said. There usually is a return to simplicity during a recession, he added. “There will be a dramatic role of government spending, smaller homes being bought, and a change in consumer behavior.”
Retail bankruptcy, which has been a common theme in the past year, will also continue, Steidtmann said. “And more companies won’t come out of bankruptcy. The implications for retailers are less expansion, more malls going dark, and less retail space being built. And there likely will be higher levels of inflation.”
In the past decade, Steidtmann warned that there was no increase in retail employment nationally. This doesn’t bode well for many businesses in the future “because we lost a generation of potential leaders.”
Stacy Janiak, Deloitte’s vice chairman, national sector leader, retail, said all retailers will be entering “uncharted waters” in 2009 and the future. Three things that retailers need to focus on are: customer centricity— merchants must work harder at finding out who their customer is—strategic IT investments, and brand relevance. What’s more, it’s time for retailers to invest in their employees to accelerate growth strategies.
One are that seems poised to take off in the near future is mobile technology. “The whole mobile aspect of marketing will continue to grow,” said Mike Boylson, executive vice president/chief marketing officer of general merchant J.C. Penney, during a taped interview. “Time is [customers’] most precious commodity.”