Colliers International‘s Ann Natunewicz and KC Conway know retail.
Natunewicz, national manager|retail research, and Conway, executive managing director of market analytics, worked together to draft Colliers’ latest retail white paper, an in-depth look at the retail sector across the country.
And their assessment of retail? It’s getting better. But it’s not improving fast enough to make anyone happy.
“As Americans, we tend to be optimistic about things,” Natunewicz said. “But the growth mode in retail will remain painfully slow for the next several years. Every time things begin to look up, we say ‘This is great!’ Then some new bad news comes along and brings us down. This is the way we should expect things to be for the next several years.”
Natunewicz’s point was made just last week, when the national unemployment numbers came out and showed that unemployment rose in May to 8.2 percent. This rate only rose a bit — from 8.1 percent the month before — but May marked the first time in 11 months that national unemployment rose.
That doesn’t inspire consumer confidence. And if consumers aren’t confident, they’re not going to spend as much at their local Target or Sears.
“Success in this sector is so tied to consumer sentiment and consumer spending power,” Natunewicz said. “If your income isn’t growing, you can’t spend the way you have in the past.”
Retailers also face a threat from changing technology. Amazon and other online retailers have become true powers. A growing number of consumers prefer to do most of their shopping online.
But this doesn’t have to be a negative for brick-and-mortar retailers. These retailers just have to adjust their business model.
As Conway says, the growth of online retailers is forcing the smart brick-and-mortar shops to focus more heavily than ever on customer service.
“This change in technology is driving retailers to be more service-oriented than selling-oriented,” Conway said. “Anyone can go online and find a coupon and a better deal. The differentiator is service and training. Why do people go to the Apple store? It’s because they receive more service. They work with people who have been better trained. It’s a different experience. This is what retailers have to do today.”
In the long run, the rise of online retailers should be good, too, for the traditional brick-and-mortar retail industry, Natunewicz said. Those retailers who survive in today’s online world will be far more efficient and customer-friendly.
It’s the only way, after all, for these traditional retailers to compete.
“E-commerce today is weeding out those weaker retailers and business models that no longer work,” Natunewicz said. “That has been happening forever. Only the strong survive. And that is a good thing. The surviving retailers will be the ones who realize how they, too, can harness the Internet. There are some retailers already who are doing quite well by partnering with and channeling the growing interest in online retailing.”
– Dan Rafter