An annual retail outlook study of more than 250 senior middle market retail executives conducted by CIT Group found cautious optimism among respondents. Fifty-five percent of executives anticipate their total holiday sales will increase by 6% or more in 2014, as compared to only a third last year. In addition, more than 60% of respondents expect their annual sales will increase by 6% or more this year, as compared to only 42% in 2013. The online study, conducted by Harris Poll, concluded in October 2014.
“Looking toward the upcoming holiday season, middle market retailers are cautiously optimistic as U.S. consumer confidence continues to rise,” said Jon Lucas, President of CIT Commercial Services. “Retailers are also adapting to the changing attitudes of the American consumer through investments in new products, expanding their digital strategy and utilizing social media to maximize the consumer buying experience.”
Burt Feinberg, President of CIT Corporate Finance, Commercial & Industrial, added, “Our study shows that most respondents do not believe a brick-and-mortar-only store strategy is sustainable in the long-term without a focus on building a complementary e-commerce and digital strategy. In addition, nearly half of the respondents were skeptical as to the economic viability of the ‘American Mall’ over the long-term due to reduced foot traffic resulting from the increased popularity of e-commerce and the lackluster performance of certain anchor tenants.”
Other insights from the CIT Retail Outlook include:
- Online Holiday Shopping Reigns Supreme: A majority (53%) of retailers expect online shopping to have the biggest incremental impact on holiday sales, while 43% expect in-store and online discounts to have a notable impact.
- Holiday Season Starting Earlier: Over the past five years, 64% of retailers have moved their holiday promotions earlier, for most by two weeks or more.
- Holiday Staffing Expected to Increase: More than half of retailers plan to increase staff during the holiday season – 60% expect to increase the number of hourly employees and 54% expect to increase staff specific to internet/mobile sales channels.
- Investments Focused on Innovation, Marketing and Online/Mobile: Retailers remain focused on making investments to increase sales, including new product development (56%), marketing (49%), online presence (48%) and social media (46%).
- Made in America’ Important to Consumers: A majority of retailers (55%) indicated that U.S. consumers care more than ever about buying products that are exclusively ‘Made in America.’
- Financial Condition Healthier Today: Eighty-two percent of retailers indicated that their company’s current financial condition was “healthy” or “very healthy” as compared to seventy percent in 2013.
- Online Shopping Driving Growth: Retailers indicated that their revenue is growing from website traffic (73%) even more so than in-store sales (57%) and catalog sales (27%). Many believe the top uses by consumers for online/mobile channels are for comparing prices (82%) and shipping items (70%). However, the top uses for brick-and-mortar channels are viewed as purchasing items (72%) and making returns (67%).
- Mobile Apps Provide an Edge: More than 80% of retail executives (81%) believe that those who have mobile apps have an advantage over retailers who do not. Today, on average, about 6% of retailers’ sales are generated via mobile. Only 9% of retailers today say mobile generates over 15% of their sales, while 26% of retailers anticipate that over 15% of their sales will come from mobile in one to three years.
- Social Media Important to Brand Awareness: Seven in ten retailers believe social media is important to building their brand awareness (71%) and customer loyalty (70%). Among retailers, 32% consider themselves “advanced” and 21% consider themselves “expert” when it comes to social media strategies. Last year, the majority classified themselves as “intermediate” (42%) or “beginner” (16%).
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