Another Year, Another List

Discussion
Dec 29, 2005
George Anderson

By George Anderson


It’s a consistently repeated phrase in retailing circles that the only constant is change. That said, looking back on 2005 we find that many of the issues that were high on the list to be addressed in 2004 were the same ones pretty much everyone was saying had to be dealt with in 2005. Here’s a brief overview (in no particular order) of some of the top issues of the past year. Anyone willing to bet whether they will still be on next year’s list?


Heat or Eat – The high cost of energy may not be making much of dent in the consumer spending in the land of the affluent, but for many others the high cost of filling
gas tanks and heating homes is a serious issue.


This Will Hurt – Medical insurance costs continue to go up and workers are picking up a greater piece of the healthcare tab as companies find they can no longer afford
to offer the comprehensive benefits of the past. In an attempt to keep costs down, Scotts Miracle-Gro (see RW 12/20/05 –
Marketer to Seed Ad Budget with Healthcare Savings
) has even said it will fire workers that do not take part in the company’s smoking cessation program.


Mother Nature Isn’t Messing Around – One word… Katrina.


Location x 3 – Edward Lampert has opened investors’ eyes to the ability of a company’s real estate to increase its value. The year 2005 saw McDonald’s, Wendy’s and even
Mr. Lampert’s Sears Holdings under pressure from investors to make use of real estate holdings to drive up share prices.


Public or Private – Buy.com backed away from its IPO to go that route another day. Meanwhile, Toys R Us, Linens ‘n Things and others are being taken private by investment
groups.


Dealing for Dollars – The Albertsons’ deal didn’t happen but plenty of others in the land of consolidation, where bigger is supposed to make better, did.


The Great Conspiracy Theory – Marketers have to be at fault for the number of severely overweight adults and children in society – right? It couldn’t be a matter of personal
responsibility, could it?


Wal-Mart Facts/Wake Up Wal-Mart – The world’s largest retailer has addressed criticism about its business practices with concrete actions and an unprecedented public relations
campaign. Its critics say the wolf may be dressed like grandma, but that doesn’t make it a kindly old lady.


Spanish, English or Spanglish – Okay, we get it already. The Hispanic consumer market is big and growing more so every day. But are most companies any closer to understanding
this highly diverse group of consumers than they were last year?


Boycotting for Dollars – Righteous indignation from groups of all religious and political persuasions gets turned into a seemingly unending call for consumers to forego
spending their dollars at one retail store or another.


The Last of… – Grocery and department stores have been on the endangered species list for some time as new predators (namely Wal-Mart) ascend on the retailer version
of the Darwinian or intelligent design scale.


The iLife – Consumers and businesses continue moving to the web for information and commerce.


Lifestyle Rules – From Safeway’s new store format to the new urbanism movement, store and development design is focused on bringing back a little of the idyllic Main Street
USA to consumers’ lives.


Moderator’s Comment: What other issues not on this list do you think are worthy of mention from 2005? What do you think will be the big issues in retailing
next year?

George Anderson – Moderator

Please practice The RetailWire Golden Rule when submitting your comments.

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10 Comments on "Another Year, Another List"


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Art Williams
Guest
Art Williams
15 years 2 months ago

I think the biggest issue in the new year will be the continued and probably accelerated consolidation in the grocery industry. Large chain retailers like Albertsons, Safeway, Winn-Dixie and Marsh will continue to struggle leading to their either being sold in total or in pieces. The beneficiaries of this will be the Wal-Marts, Targets and the remaining grocery chains like Kroger and Publix that seem to better understand how to remain relevant to today’s consumers.

I agree with Al’s point about globalization. In this country, we seem to be overly concerned with more trivial matters and are not seeing the big picture. This appears to be a perfect opportunity for large global retailers to enter or expand in the U.S. and take advantage of some of the weakest links.

Tom McGoldrick
Guest
Tom McGoldrick
15 years 2 months ago

I agree with Al. Globalization will be a key trend. The current population of the US is roughly 12% of the combined populations of China and India. In addition, the middle class is growing in both China and India while it is shrinking in the US. If I were in the business of designing and selling consumer products, I know which market I would want to build a long-term business plan around. It will not happen next year but, at some point, the needs of the US market place will no longer be the major driver of consumer product development.

Santiago Vega
Guest
Santiago Vega
15 years 2 months ago
I agree with Mark that innovation is absolutely absent in the retail environment. Take, for example, apparel specialty retailers and department stores that claim over and over again to have recognized that they need to differentiate themselves from their competition by offering a “unique experience” or “unique merchandise mix,” but are failing to deliver. Do they really believe that offering colorful spring merchandise right after the holiday season, or adding more private label merchandise that looks exactly like others out there, and that lacks a compelling and different value proposition, will set them apart from their competitors and make them clearly identifiable and unique in the eyes of consumers? Part of the problem is that merchandising and buying processes have become so automated that there is hardly room for buyers to be innovative, or even a little bit bold. Has their reasoning become automated too? (I need X amount of this and that product to fill my quota for this season; or, a certain product category is “too complicated” so I’ll just steer clear of… Read more »
Robert Craycraft
Guest
Robert Craycraft
15 years 2 months ago

My comment to retailers: Accept that your brick-and-mortar facilities are evolving into showrooms for your web sites. Service is so bad in your stores that I will happily pay shipping to avoid your personnel, let alone traffic.

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
15 years 2 months ago

Retailers competing for employees? It’ll happen in a big way in 2006 and accelerate in the years beyond. Recent reports tell us two important things: Boomers are retiring at a faster rate than expected, and our healthy economy continues to create new jobs at a prodigious rate. Most retailers indicate they intend to award raises this year to retain employees, and that they’ll also increase entry-level pay.

Al McClain
Guest
Al McClain
15 years 2 months ago

Globalization is an important issue not on the list. The traditional powers like the U.S., Europe, and Russia are stagnant or in slow growth modes, while the real growth is happening in China and India. Meanwhile, in the U.S. we focus on things like what greeting we should use in stores around the holidays. Take a look at the skyline of Shanghai for example, and it’s easy to get the feeling that the economic world is passing us by while we fiddle around. Retailers and suppliers have to spend more time and energy on and in fast-developing countries if they want to build their businesses beyond the very short term.

Richard J. George, Ph.D.
Guest
15 years 2 months ago
For the most part, the list is not year-specific so most of the issues will continue to affect the retail landscape in the next twelve months. A couple that I think will take on additional emphasis are as follows: Internet shopping will continue to expand, augmented by increases in food internet shopping as providers solve the picking and final mile issues associated with on line food shopping. Consumers’ nutritional antennae have been raised with the issues of childhood obesity and diabetes. Parents will be looking for products that address these issues and still provide a tasty alternative. When taste and nutrition collide, taste wins every time. Therefore, it is imperative to offer good tasting, nutritional alternatives – a challenge indeed. One issue that is not on the list (at least directly) which I feel should be (a wish perhaps) is the refocus from Wall Street to Main Street by retailers of all types. Food retailers, in particular, have become Wall Street and “back door” focused. Manufacturers have been the primary source of marginal profitability. I… Read more »
Mark Lilien
Guest
15 years 2 months ago

Profitable retail innovation is at a poverty level. Most retailers focus what they’ve done in the past, and many claim that they’ll do better, even though they’re repeating the same behavior. Breakout profit improvement usually comes from disruptive action. For example, does anyone believe that most supermarkets will take major new actions to escape from the profit depression? Does anyone think that retail advertising will take a great leap forward in effectiveness in 2006? Who would believe that staff performance will show a massive turnaround in the next 12 months? Do you see many retailers adopting a tech breakthrough that will have a meaningful bottom-line bump in 2006? Neurotic behavior is based on repeating failed tactics, yet expecting a different outcome.

David Livingston
Guest
15 years 2 months ago

I think the shrinking middle class will continue to shape retailing in our hourglass economy. We will continue to see the shrinking of plain vanilla retailers like Albertsons, Safeway, A&P, Ahold, Kmart, Sears, etc., and continue to see growth in upscale, strong service retailers along with low priced, limited service retailers as well.

Union labor will also decline as workers see that unions do not provide long term job stability.

Race Cowgill
Guest
Race Cowgill
15 years 2 months ago
These are great topics, everyone. I agree with every single issue you have raised. I would like to look a little beyond the specific topics, however, and see if there is an underlying issue that ties all of these together; some single issue that retailers could focus on that would address all of the specific topics. Innovation, industry consolidation, marketplace and strategy mismatch, globalization, customer focus, health insurance costs, macro-economic turbulence… The list could go on and on. How can a retail operation figure out which of these has or will have the greatest impact for their organization, find a way to effectively deal with the issues as they are or will be, and at the same time handle all the operational and strategic issues that consume an already thinly staffed management structure? Practically impossible. What we are really confronting here, in my view, is that retailers must find a way to scan the interior and exterior horizon for important issues, measure those issues, and integrate the data into operations and strategy; and do all… Read more »
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