Retail distress experts at Grant Thornton LLP's Corporate Advisory and Restructuring Services (CARS) say as many as 10,000 retail stores are expected to close by the end of 2009. To be among the survivors, companies should focus on financial management and process improvement. In a recent report, the CARS group reveals the five recession-driven trends transforming the retail sector, along with tips to capitalize on them.
In summary, these trends are:
1. Buyers are choosing clicks over bricks: Consumers may not be buying much, but online sales have suffered less and, in certain categories, grown more than in-store sales.
2. Private labels are gaining ground over name brands: Private labels are growing in popularity and are especially successful in the grocery sector. Nine percent of consumer packaged goods are now private-label brands.
3. Going green is bringing in the green: With consumers focused on the environmental impacts of their consumption, sustainability continues to influence customer behavior.
4. A loyal customer is the best customer: Loyalty programs produce long-term benefits, and many retailers are inviting customers to wine tastings or fashion shows, providing rewards and discounts, or offering free shipping.
5. Improving processes lowers costs, boosts satisfaction: Retailers have vast potential to cut costs and are experiencing increased efficiency in customer-facing and back-end processes.
"Although there's high risk in the retail industry, now is the time for companies to fine-tune their business and take advantage of new opportunities," says CARS Principal Scott Davis. "The winners will be the disciplined companies investing the time, effort and resources to reexamine their strategies and position themselves for growth."
Grant Thornton's full report, Reviving Retail, is available through the National Retail Federation or by visiting www.GrantThornton.com/retail.
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