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Retail Industry Growth

Fast-moving growth predicted in retail sector

Retail executives will be focusing on accelerated growth this year, according to new research by the National Retail Federation Foundation and BearingPoint, Inc.

The majority of retail executives- 71 percent – cite growth as a priority initiative in 2006, according to “Retail Horizons: Benchmarks for 2005, Forecasts for 2006.”

“While cost reduction and cost retainment continue to be business imperatives for retailers, growth has moved to the forefront as top priority,” said Scott Hardy, a managing director with BearingPoint, a leading global management and technology consulting firm. “Many retailers are refocusing their efforts on growth initiatives in order to drive up their comp store and incremental sales.”

Other key findings of the study include:

  • 41 percent of respondents are making 11 to 40 percent of their purchases through private label sources, with plans to increase that number to 49 percent in 2006
  • Retail companies with an online presence nearly doubled to 94 percent in 2005, up from barely 50 percent in 2004
  • Customer-focused decision-making continues to gain momentum, as 13 percent of respondents had more than a quarter of their field management compensation tied to customer satisfaction results.Within the next 12 months, nearly a quarter of respondents plan to add e-training and one-fifth plan to implement hiring technologies and self-service kiosks.

“In today’s increasingly competitive environment, retailers understand that there is a heightened importance on accelerated growth and differentiation in order to set themselves apart from the pack,” said NRF President and CEO Tracy Mullin. “We are now seeing retailers refocus their efforts on growth initiatives in an effort to increase sales, expand their consumer base and retain customer loyalty.”

The study suggests several approaches retailers can use to provide competitive advantage and generate robust prospects for profitability:

  • Differentiate through compelling and relevant assortments that exceed customers’ expectations
  • Understand customers and provide the right combination of products and services in right locations to earn customer loyalty
  • Integrated personalization on Web sites is essential in order to obtain and retain the more valuable multi-channel shopper
  • Invest in emerging information technology

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