Retailers' Focus for 2011: More Stores, Better Service


Now that economic conditions appear to have stabilized, more retailers are planning store expansions and increased initiatives to monitor and serve their customers as they focus on improving growth in 2011. Two reports released this week show that in addition to keeping costs low, the new top priorities for retailers in the months ahead are increasing their use of online technology and social media.

In its recent report on the retail sector, Standard & Poor's Equity Research forecasts a positive year for the retail industry fueled by a 3% rise in consumer spending.

"Perhaps the biggest catalyst for improving retail sales in 2011 will be the extension of the Bush-era tax cuts and the 2% payroll tax cut for all workers for one year," said Marie Driscoll, group head of the Consumer Discretionary Retail analysts at S&P Equity Research. "We think this 'tax holiday' will have a significant impact on spending, as the median income family earning about $50,000 per year will receive an additional $1,000 in its paychecks and those earning $106,800, the current limit of FICA taxes, and above will take home about $2,100 more this year."

The S&P report projects a 10% increase in online retail sales growth in 2011 as consumers continue to seek convenience and value. The report also suggests retailers will look to meet individual consumer demands through increased customer service and marketing, much of which will be accomplished through the use of computer algorithms that analyze shopping activity. Macy's (M) successful use of its My Macy's selling strategy, which allows stores to stock merchandise based on local demand, was sited as an example of retailer innovations likely to be expanded upon in 2011.

The report also predicts companies will rely more on social media "not only by responding to customer complaints, but also to market products and unveil promotions."

Twitter Is Becoming Ubiquitous

Another recent report by the National Retail Federation's NRF Foundation, and advisory firm KPMG suggests that retailers are so optimistic about 2011 that 41% said that their companies intend to increase domestic store expansions this year, up from 25% in 2010. Additionally, 25% are preparing to expand overseas, up from 21% a year ago.

Sponsored Links

The survey of 318 retail executives also revealed that 75% of those polled said improving customer service would be a priority in 2011, up from 56% in 2010, and 74% plan to increase consumer insight and data gathering initiatives in response to significant changes in shopping behaviors. Retailers' use of Twitter also increased last year, jumping to 79% in 2010 from 61% in 2009. An additional 18% said they were planning on integrating Twitter into their e-commerce programs during the next 18 months.

"It's quite obvious retailers are anxious to put the recession behind them and build upon their customer service initiatives, enhance their mobile platforms and even grow their footprint," said Katherine Mance, executive director of the NRF Foundation in a statement. "As we move forward in 2011, retailers will strive to keep costs low, but will also continue to focus on providing positive and unique shopping experiences for their customers."

Get info on stocks mentioned in this article: