As the holiday season draws nearer, more than a third (37%) of middle market retail executives believe their holiday sales will increase over 2011, while 42% believe their sales will increase in 2013. These are some of the findings in the research study “Taking Stock in Tough Times: U.S. Retail Sector Outlook,” (cit.com/retailoutlook2012) produced by CIT Group Inc. (NYSE: CIT) cit.com, a leading provider of financing to small businesses and middle market companies, in association with Forbes Insights. The study, which was conducted in August and September 2012, analyzes the insights of more than 250 middle market retail executives on the U.S. economy, as well as the opportunities and challenges they are facing.
Burt Feinberg, Group Head of CIT Commercial & Industrial (Photo: Business Wire)
“Now a full three years removed from the Great Recession, we’re seeing moderate consumer confidence despite the sluggish economy as evidenced by increased retail sales and decent comps,” said Burt Feinberg, Group Head of CIT Commercial & Industrial. “Although retail executives still have concerns about the overall U.S. economy, they have been optimistic about the upcoming holiday season, however some are now concerned that the impact of ‘Superstorm Sandy’ may cause late delivery of some items by Black Friday. Beyond the holiday season, while the election is settled, uncertainty about tax rates, anxiety with regard to the ‘fiscal cliff’ and an uncertain regulatory climate are prompting a more cautious approach to 2013.”
Mr. Feinberg added, “This year’s survey showed more caution than our past two surveys so perhaps the continued slow growth in GDP, and the stubborn employment numbers, coupled with European economic concerns, are curbing retailers’ enthusiasm. It seems that the sting of the Great Recession still affects the psychology of retail executives and growth initiatives are more focused on maximizing business through technology versus major expansion.”
Key Findings from the Study:
- U.S. ECONOMY REMAINS CHALLENGED: Respondents indicated there were several factors still weighing on the recovery of the U.S. economy, including an uncertain political climate (55%), uncertainty in tax rates (45%) and an uncertain regulatory climate (38%).
- RECOVERY STILL MONTHS AWAY: Nearly 61% of survey participants expect the financial crisis to bottom in 2013 (40%) or 2014 (21%). In the 2011 survey, 57% expected the financial crisis to reach bottom either in 2011 (11%) or in 2012 (46%).
- GROWTH IS THE GOAL: Survey participants are undertaking an array of initiatives intended to preserve margins and spur growth. The most frequently implemented steps include expanding product selection (45%) and implementing/improving customer loyalty programs (42%). Over a third (37%) said they will invest in their business in the coming year – with 6% indicating significant new investment.
- INTEREST IN SOCIAL MEDIA AND MOBILE MARKETING: Respondents are pursuing innovation, such as the implementation of new technologies to control/reduce costs (39%) or expanding the use of social media, with 51% saying they are either very active (21%) or active (30%) in the space. Among those active in social media, 94% say they are undertaking social media campaigns and 31% are offering discounts (e.g., Groupon). Forty-three percent of respondents say they are very active (15%) or active (28%) in mobile marketing ― 63% have created mobile applications featuring their company’s products or services and 47% have implemented texting campaigns.
- PRESIDENTIAL ELECTION RESULTS WILL LIKELY SPUR CONTINUED CAUTION: Pre-election, 60% of executives said their businesses would be significantly impacted by the outcome of the presidential election, with 22% gauging the impact as very significant. Issues impacting businesses include the cost of healthcare, tax rates, energy development costs and the general regulatory climate, all of which play a profound role in the economy at large.
- TAXES A TOP CONCERN FOR RETAIL EXECUTIVES: Seventy-one percent of respondents said they would favor a change in tax policy, substituting lower tax rates for the current system of detailed tax write-offs. Lower tax rates with fewer write-offs, the survey shows, would in turn spur companies to increase hiring, as well as to invest in new product development and new manufacturing.
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About the Study
The insights and commentary found in the study were derived from both a survey instrument and personal interviews. The survey, which was conducted in August and September, 2012 was completed by 269 middle market retail executives from companies with annual revenue between $25 million and $1 billion. Industries represented include consumer electronics (17%), sporting goods/recreation (16%), apparel and accessories (16%), home furnishings (7%), furniture (5%), housewares (5%), and books (5%).
About Forbes Insights
Forbes Insights is the strategic research practice of Forbes Media, publisher of Forbes magazine and Forbes.com, whose combined media properties reach nearly 50 million business decision makers worldwide on a monthly basis. Taking advantage of a proprietary database of senior-level executives in the Forbes community, Forbes Insights’ research covers a wide range of vital business issues, including talent management, corporate social responsibility, financial benchmarking, risk and regulation, and doing business in emerging markets. forbes.com/insights
Founded in 1908, CIT (NYSE: CIT) is a bank holding company with more than $33 billion in finance and leasing assets. A member of the Fortune 500, it provides financing and leasing capital to its small business and middle market clients and their customers across more than 30 industries. CIT maintains leadership positions in small business and middle market lending, factoring, retail finance, aerospace, equipment and rail leasing, and global vendor finance. CIT also operates CIT Bank (Member FDIC), BankOnCIT.com, its primary bank subsidiary, which offers a suite of savings options designed to help customers achieve a range of financial goals. cit.com
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