Retail 2004: Boring It Was Not

Discussion
Dec 28, 2004
George Anderson

By George Anderson


With just a few days left before the calendar flips over for a new year, here’s a recap of some of the prominent stories and issues that affected the retailing industry in 2004. Say what you will about the year, but 2004 certainly wasn’t boring.


  1. Everything Costs More From Abroad – Rising oil prices and a sinking dollar
    cost American businesses and consumers in the import dependent U.S. economy.


  2. Haves and Have Nots – Dollar store executives lament the hard time their core
    customer is having making ends meet (see #1) while luxury goods retailers
    are celebrating all the way to the bank.


  3. Breathing Takes Dollars – The high cost of health care insurance remains a
    major issue for employers and employees alike. Medical insurance costs were
    up 11 percent in 2004 and studies indicate that workers have paid for much
    of the increases in recent years. According to the Lewin Group, the average
    worker in the U.S. with private health insurance has seen the costs for premiums
    increase 35.9 percent between 2000 and 2004 while the size of their paycheck
    grew only 12.4 percent.


  4. Obesity – This becomes the number one health issue on the list of many within
    the medical community because of the toll it exacts (personal and societal)
    and because it is largely preventable through simple changes in diet and exercise.
    Manufacturers, retailers, restaurants and schools have been encouraged to
    play a constructive role in addressing the issue.


  5. A Nation Divided – The recent Presidential election saw Messrs. Bush and Kerry
    receive more votes than any other person ever previously elected to the office.
    Retailers played a more visible role in the past election with most for Mr.
    Bush (Wal-Mart being the most visibly linked). Mr. Kerry, however, had strong
    support from Costco and others. Since the election, groups have called for
    supporters to patronize businesses that share their religious and political
    values while boycotting those who appear to have other priorities.


  6. Businesses Unite – Kmart/Sears, May Department Stores/Marshall Field’s, etc.


  7. Mother Nature Strikes Back – Blame it on God, global warming, a butterfly
    flapping its wings in South America. Whatever the reasons, natural disasters
    took a devastating toll in 2004.


  8. Niche Players – As Ryan Mathews and Fred Crawford pointed out in The Myth
    of Excellence
    , great companies don’t get to be great by trying to be the
    best at everything. In 2004, retailers seemed to take this advice to heart
    by opening stores targeted to specific consumer constituencies defined by
    income, ethnicity, lifestyle and/or other factors.


  9. Convenience Rules – Everyone’s said it, “There aren’t enough hours in the
    day.” Whether convenience (i.e. time savings) comes in the form of a breakfast
    bar, smaller stores, self-checkouts, online shopping, etc., consumers don’t
    really care. They only know they want more of it.


  10. Everybody Sells Everything – Have the channels blurred beyond recognition
    yet? Drugstores want to be convenience stores for women. Supermarkets are
    looking to be toy stores, dollar stores and anything else they can think of
    to keep customers from going elsewhere. Convenience stores are getting larger
    so they can compete with foodservice and supermarkets for consumers who want
    what’s sold in those formats but want to do it in less time. Foodservice operators
    are opening convenience stores. Sears thinks selling food is a Grand idea.
    Almost everybody sells gas.


  11. Litigate, Litigate, Litigate – Location is said to be the most important thing
    in retailing. As Wal-Mart and others can attest, a good lawyer might be number
    two.


  12. iRetail – Evangelists are hailing the coming of a brighter day with the development
    of technology from self-serve kiosks to radio frequency identification (RFID)
    tags.


  13. Safety/Security – Tommy Thompson says the food supply isn’t truly safe from
    tampering. A nation dependent on exports only inspects a minimal number of
    items brought into the country. How long before the next Mad Cow scare or
    report of the bird flu? Terrorists focus on soft targets such as retail stores
    abroad. Shoppers and store employees are too often the victims of violent
    crime.


  14. The Right Thing – Martha Stewart wears an orange jump suit. Former retail executives go off to jail or await trial. Shareholders and employees wonder why companies that had so little value they needed to seek Chapter 11 protection, find that real estate is the biggest seller for the business after it emerges from bankruptcy. Just what were those violations of company rules that got top executives fired?

Moderator’s Comment: What do you believe were the most
important retailing-related issues of 2004?


George Anderson – Moderator

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