Confidence Not A Problem; Shopper Loyalty Is


As retailers gain confidence in the strength of the economic recovery, their worries are shifting, according to a new study from BDO. Consumer confidence, which worried them last year at this time, has dropped way down on the list. But dependency on consumer trends -- figuring out what shoppers want to buy -- has jumped up, and was mentioned as a concern by 87% of stores.

"Worries about external factors, like economic trends where retailers are basically helpless, have subsided," Doug Hart, partner in the retail and consumer product practice at BDO USA, tells Marketing Daily. "They know consumers are spending. The concern now is, 'How do we get our share?'"

The study -- the RiskFactor Report for Retail Businesses, which examines the risk factors listed in the most recent SEC 10-K filings of the largest 100 public U.S. retailers -- shows that chains are "shifting away from the defensive recessionary mode," he says.



Instead, they are focusing more on how retailers acquire, interest and keep customers. Large chains such as Macy's are devoting significant capital expenditures toward online initiatives and social media. "Online has been growing at something like 10 to 15%, and we're seeing a proportionate investment in those areas."

Other investments include private-label lines, which make it more difficult for consumers to comparison-shop, and flash-sales concepts such as Nordstrom's recent acquisition of Haute Look.

Of course, economic pressures are still a big factor, especially for the many stores that cater to middle- and lower-income Americans, who are being disproportionately pressured by super-high gas prices. Many of the first-quarter earnings released recently reflect that, he says -- a trend he expects to worsen in the short term.

"For retailers, costs are increasing, and chains that go after more affluent shoppers -- like Neiman Marcus and Saks -- will have an easier time passing those increases on to their customers," he says. "But Walmart shoppers, struggling to buy gas, will be more resistant to those price increases."

1 comment about "Confidence Not A Problem; Shopper Loyalty Is ".
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  1. Kathy Piersall from A Blue Moon Arts LLC, May 23, 2011 at 1:55 p.m.

    One of the answers to "How do we get our share?" is packaging. The right package design has a significant effect on shoppers' choices, both in-store and online. (And "right" does not just mean "pretty" or "trendy".)

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