NRF 11 Tuesday Session
SPEAKING:
Mark Larson KPMG
Bruce Besanko EVP, CFO, CAO, OfficeMax
Herman Nell VP, CIO, Petco
Synopsis:
Key to retailers’ success in a prolonged difficult environment is insight into their competitors’ future strategic plans. In this session, a panel of retail executives discussed findings of the ninth annual state of the industry survey conducted in Fall 2010 in a conversation led by study partner and sponsor KPMG. The session covered a study of what hundreds of retail executives in nine functional areas revealed about key initiatives for the coming year. Panelists dissected key findings of thousands of specific data points in areas from customer insight to eCommerce.
NRF and KMPG Retail Horizons Report – Key Findings:
- Despite sluggish demand, retailers stanch losses, stabilize profitability
- To protect margins, retailers continued to focus on efficiency and process improvements
- With the worst behind them, growth and expansion top the agenda for 2011
- The battle for wallet share means marketing is getting more personal
- Providing a semaless online and offline experience is a major focus
- Good talent matters more than ever
Benchmarks for 2010
Cautious optimism and introspection
Sustainability and Efficiency: Retailers turned their focus to sustainability and efficiency, leveraging improvements and technology that would pay off in the long run. They gained awareness of the reality that some large investments turn out to be cost-savers in due time, especially when applied on a large scale.
Internal Restructuring: While retailers worked harder to stimulate demand on the front end, most took the opportunity to get their internal house in order; streamlining systems and processes, consolidating platforms, and integrating data across channels. With these internal improvements at the forefront of retail mindsets, inventories were aligned, productivity was improved, efficiency and value was key.
Customer-Centric Business: With fewer buyers in the stores, competition for the share of wallet intensified. To win shoppers the industry focused on improving customer interactions. Because buyers were more fragmented and product proliferation was on the rise, the quality of the customer experience quickly became a key point of differentiation.
Customer Data Gathering: Refined data gathering methods were put in place to monitor customer satisfaction.
Social Media: With the web’s growing influence on buyer decisionmaking, retailers also made wider use of social media like Facebook, Twitter, and Social sharing components in their eCommerce stores.
Talent: While smaller retailers continued to employ fewer people in 2010, larger companies added staff
Forecasts for 2011
Having steadied the ship, retailers face 2011 with renewed confidence
Expansion: For the first time in several years, expansion is back on the agenda.
New Store Concepts: Retailers are also ready to begin experimenting with new brick-and-mortar concepts, hoping to appeal to shoppers interested in buying for “wants” instead of “needs,” after years of belt tightening, but it is expected that the behaviors of value, responsibility, and frugality will likely remain.
Spending: Retailers will also loosen the grip on their own wallets, particularly in mission-critical areas, like IT, where headcount and budgets are expected to increase.
Improving Economy: Having made progress stabilizing balance sheets over the last 12 months, the industry seems well poised to take advantage of an improving economy.
Talent: More hiring is expected for 2011, especially in core business functions like IT.
2010 Stats
- Average gross margins rose by a modest 0.7%
- The number of companies reporting operational losses shrank by 11% year-over-year
- The number of companies reporting average sales per employee of greater than $75,000 jumped 12% over last year
- 65% of marketing and advertising executives (one-fifth more than last year) stated that increasing customer insight and data gathering was a high priority in their 2010 initiatives
- 50% of respondents spent 20% or more of their advertising budget on direct-to-consumer marketing in 2010
- A majority of respondents stated that they now match prices and make 80% of their merchandise available online
- 18% more organizations than last year ranked integrating their online presence with social media and other channels a high priority
- 59% of respondents to make social media their key focus for 2011
- 75% of respondents said customer service would be a top priority for 2011
- 75% of respondents advertise with links on Facebook, Twitter, and related sites (25% more than last year)
- Nearly 80% of respondents have “fan groups”
- 80% of respondents said leadership development would be a top priority in 2011
4 Key investments for 2011
- IT: Retailers plan to loosen their wallets, particularly in mission-critical areas, like IT, where headcount and budgets are expected to increase
- Data integration: 74% of respondents in 2011 will increase their consumer insight and data gathering initiatives
- Social Media: 69% of respondents identify m-commerce and e-commerce as a strategic initiative
- Growth and Expansion: 41% of respondents plan to increase domestic store expansion, 25% plan to expand overseas
You can purchase the full Retail Horizons report, or sections of the report from NRF HERE»
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