If you’re a retail executive, you might want to consider boosting your online presence in 2013. The National Retail Federation’s economic forecast projects retail sales to rise by just 3.4 percent this year, while Shop.org, NRF’s digital division, predicts online sales to top 12 percent. The forecast somewhat mirrors 2012, which saw holiday retail sales grow 3 percent and online sales jump 11 percent.
Retail industry sales, as defined by the NRF, include auto parts and accessories stores, department stores, grocery stores, and specialty stores. Also included are non-store categories and discounters. Excluded are sales at automotive dealers, gas stations and restaurants.
“What we witnessed during the holiday season is an indication of what we are likely to see in 2013,” said NRF President and CEO Matthew Shay. “Consumers read troubling economic headlines every day and look at their bottom lines at the end of the month, and they don’t like what they see. Pushing fiscal policy decisions down the road will lead to even greater uncertainty, and will continue to impact consumers’ desire and ability to spend on discretionary items. The administration and congress need to pursue and enact policies that lead to growth and economic expansion, or it could be another challenging year for retailers and consumers alike.”
The key to survival for retailers will be in tighter inventory control and giving consumers more for their money. “Retailers will compensate for the drag on household spending this year by managing inventories and focusing on providing value for their shoppers through unique promotions in stores and online and exclusive product lines,” said Shay.
NRF’s 2013 economic forecast was driven by a number of factors. These include a less than robust labor market; modest income growth “ball and chained” by more and higher taxes, rising costs for utilities, groceries and healthcare; and a general malaise in consumer confidence. The NRF does expect consumer confidence to improve as the recovery gains momentum in the second half of 2013.
“While it’s too early to know the full effect of higher payroll taxes, there’s no question that many consumers will feel some kind of impact from the change in their paychecks,” said NRF Chief Economist Jack Kleinhenz. “That said, consumers have in the past shown a resiliency in the face of uncertainty, and we expect those impacted to adjust to smaller budgets by trading down or simply cutting back on certain items. Overall we foresee some improvements in the second half of the year should the outlook for job creation and income growth improve.”
To survive and profit in 2013, retailers will have to be where the action is—online. They will also have to keep a tight rein on inventory with better, more efficient controls. Above all, they must give today’s tax-battered consumers more value for their ever-shrinking dollar.
Image courtesy of winnond / FreeDigitalPhotos.net
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