In the face of an economy on a slow rebound and shifts in consumer behaviors, the winners among retailers since the Great Recession are those that are adapting their business models and keeping their brands relevant and their value proposition appealing to consumers.
These are some of the views expressed by Burt Feinberg, President of CIT Corporate Finance, Commercial & Industrial, a division of CIT Group Inc., a leading provider of commercial lending, leasing and advisory services, in “Retail's Changing Landscape”, the latest piece of market intelligence in the CIT Executive Spotlight series of in-depth executive Q&As.
“While e-commerce and digital strategies are the major overriding themes in retail today, competition from challengers still causes retailers to rethink their business, merchandising and inventory models to maintain market share”, said Feinberg.
“While e-commerce and digital strategies are the major overriding themes in retail today, competition from challengers still causes retailers to rethink their business, merchandising and inventory models to maintain market share,” added Feinberg.
Companies were met with tight competition during the Great Recession, including big box discounters, traditional supermarkets and young adult/teen/specialty apparel stores. Dollar stores took market share away from the big box discounters.
Traditional supermarkets came under attack from both high-end groceries for more affluent customers and big box players at the lower price end for bargain hunters. In the apparel world, fast fashion players like Zara and H&M took significant market share away from well-known branded national retailers in recent years.
According to Feinberg, many retailers have adjusted appropriately, making changes to their business models to put them back on track. Big box discounters have reacted and created some smaller footprint prototypes.
Traditional grocers are now focusing on fresh and organic produce and prepared foods and meats; improving store appearance to attract high-end customers; focusing on better, localized assortments; and investing in pricing on certain products so that the experience is more personalized for traditional middle to lower income customers.
Fashion retailers are rethinking their business and inventory models by taking shallower positions on styles so they take less inventory risk.
The retail sector is in the midst of more changes. Feinberg indicates some trends to watch for in the near term:
Consumer Confidence Is on the Rise: Consumer spending is at pre-recession levels, and disposable personal income on a per capita basis is up as well. Additionally, consumer debt is gradually increasing.