In this week's SN, you'll find a major survey of many topside retailing executives about what they see for the economy this new year.
In the main, executives polled by SN reflect the growing consensus that a broad-based economic recovery is under way, and that an upwardly moving economy will lift the economic fortunes of food retailing. Of course, every silver cloud has a dark lining, so opinions vary.
Let's take a quick look at some of the key findings, by topic, to distill some of this thinking and to find out what factors may make or break retailers' results this year. Take a look at the news feature, referenced on the front page, for more and to find out who is saying what.
Job growth: This may be the make-or-break factor. Many retailing executives who see the economy improving acknowledge that overall job growth isn't returning with much strength. Clearly, it will take some time before that happens, given that job growth is a highly localized event.
One retailer with stores in rural areas said job growth there hasn't happened. Another in an area dependent on the chemical industry said such jobs are declining because of the high cost of natural gas. And so on it goes.
Labor: Several executives mentioned the challenge of labor in one way or another. Some were focused on the need to keep and attract good employees, others on the increasingly high cost of doing so. One said, "Generally speaking, one of the industry's biggest challenges is to find good employees. It is more critical than ever that companies hire, develop, and retain highly qualified and talented people." Said another, "We need to work with employees to find better solutions to control [labor] costs. The outcome of the strike in Southern California will be significant to the industry. This is not an employer-employee problem or a union-non-union issue, but one that involves everyone in the U.S."
Costs: In addition to the cost of labor, numerous executives mentioned the paramount need to keep price points low, which necessitates that virtually all operational and product-acquisition costs must decrease. It will cause little surprise to cite that Wal-Mart Stores came up repeatedly in this context. Said one executive, "The biggest threat out there is how retailers adapt to Wal-Mart. They are marching like Sherman through Atlanta."
Volatility: Finally, one executive made the excellent point that all the sage predictions in the world could be rendered moot in an instant since the economy remains an exceedingly fragile thing indeed.
Here's his outlook: "The unique volatility of the world today makes it imperative for retailers to be prepared for a downturn at a moment's notice. No one could have predicted through looking at market cycles and various other economic indicators what would have happened after 9/11. But one day in time created an economic downturn that lasted quite some time, so we all have to be ready for the next downturn whenever it may come, whether it's cyclical or immediate. I think if there's a lesson to be learned there, it's that we should resist the temptation to let our guard down during [good] times."