It’s not easy being a brick and mortar retailer in the digital age. Shoppers that would once drive to a store to browse a vendor’s selections in their free time are now finding the best deals straight from their couches. With ever-changing market conditions and consumer preferences, the next two years could spell doom for brick-and-mortar retailers that fail to adapt and innovate.
As the critical holiday season approaches, retailers with physical stores should refine their in-store AND digital strategies in order to compete. Recently, Andrew Duguay, Prevedere’s senior economist, shared his 6-month forecast for the retail industry and what retail executives should consider in order to win this holiday shopping season.
How External Indicators Impact Brick and Mortar Retail
Many retailers, especially those with brick and mortar retail locations, tend to rely on historical performance data when forming their holiday strategies and forecasts. While that is a good place to start, there are a variety of factors outside of a retailer’s control that affects their customers’ ability and willingness to buy. All retailers including brick-and-mortar retail can’t afford to ignore these external indicators in their planning and forecasting process.
Inflation, wage growth, and total private sector job openings are three leading retail indicators to watch, says Duguay.
When retail executives understand what is happening outside of their companies’ walls, they can better decide what to include in their stores, how to price and how to promote. Inflation and employment are typically good indicators of the spending power of U.S. consumers, and ultimately, of the performance of the retail sector. Lately, unemployment rates have been consistently under the 5% mark, meaning that more jobs are available to Americans. However, inflation is also rising – and at a faster rate than non-management wage earnings – thus creating a gap that has the potential to hurt spending power.
During a recent webinar, Duguay noted the trajectory of these factors: “The 2017 holiday impact will be minimal, but