Retail 2004: Boring It Was Not
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.
- Everything Costs More From Abroad – Rising oil prices and a sinking dollar
cost American businesses and consumers in the import dependent U.S. economy.
- 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.
- 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.
- 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.
- 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.
- Businesses Unite – Kmart/Sears, May Department Stores/Marshall Field’s, etc.
- 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.
- 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.
- 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.
- 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.
- 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
- iRetail – Evangelists are hailing the coming of a brighter day with the development
of technology from self-serve kiosks to radio frequency identification (RFID)
- 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
- 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