Retailers' Focus for 2011: More Stores, Better Service
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."
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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.
"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."