PERSPECTIVES

From The Co-Founders

rss

Tips, Tactics & Strategic Insights and Commentary
from The ROI Co-Founders, Pat Johnson and Dick Outcalt
Outcalt & Johnson: Retail Strategists LLC; Retail Turnaround Experts

COVID-19 thumbs/ConsumerSpndg.png
Consumer Confidence Up Smartly, But...
  • "Consumer confidence rose sharply for a second straight month, hitting the highest level since the pandemic began," according to the Conference Board Consumer Confidence Index. 
     
  • "Economists believe that the rising consumer confidence will bolster overall economic growth as consumers, who account for 70% of economic activity, step up their spending as lockdown restrictions are eased." *

This is welcome news for many retailers, as consumer confidence has been a key leading indicator of retail sales.

However, a note of caution: retail sales are not the sole component of consumer spending.

  • "As more businesses and cities reopen, consumers will have even more places to spend the savings they've accumulated during the pandemic." **

This pent-up demand for spending on an array of "normal life" activities is something we all can identify with.

  • Visiting family and friends
  • Enjoying sit-down dining at restaurants
  • Attending sporting events, theaters, museums, concerts
  • Perhaps sending their kids to summer camps.

Engaging with other people however one can is an exciting prospect for many. And each of those long-deferred activities mean retailers have more competition than ever for consumer attention and share of wallet. 

But here is the key thing to keep in mind: there are wide-eyed shoppers out there, who have been looking at merchandise only on small screens for months and months.

What a great opportunity for you! Your stores, your assortments and presentation can make these shoppers feel like the proverbial kid in a candy shop. 

How many ways can you engage with them, and impress and "Wow!" and surprise and delight them? 

The fun could be coming back! But to be sure that your stores are part of it all, remember that you have unprecedented competition. Not just from other retailers. But from all of the attractions of that "New Normal."

Go get 'em!! 

---
* US Consumer Confidence Returns to Pre-Pandemic Levels. Martin Crutsinger, Associated Press Economics Writer, April 27, 2021. 

** Consumer Confidence in U.S. Climbed in April to Pandemic High. Payne Lubbers, Bloomberg.com, April 27, 2021.
 

Related Articles

  • MasterChart3v2.png

    Consumer Confidence Dropped. Now What?

    As we follow economic indicators that particularly affect retailers, our primary focus always is consumer confidence. And the reports coming out this week give us pause. 

    • "The Consumer Sentiment Index fell by 13.5% from July, to a level that was just below the April 2020 low of 71.8," notes Richard Curtin, chief economist for the University of Michigan's Surveys of Consumers.*
       
    • "The extraordinary surge in negative economic assessments reflects an emotional response, mainly from dashed hopes that the pandemic would soon end."

    The highly transmissible Delta variant and the vaccine hesitancy of many have changed the momentum. Covid fatigue is back. This affects consumers. 

    And with it, more challenges for retailers. Decisions and policies may be needed regarding vaccinations, both for your staff and your shoppers. Meanwhile, consumers are likely taking another pause. Will schools reopen? Will offices reopen? 

    So, what's a retailer to do? What you always do: deal with it! 

  • COVID-19 thumbs/celebrate.png

    Increased Consumer Spending...on What?

    Spring is in the air.  More places are lifting Covid restrictions. Daylight savings time starts this coming Sunday, extending the evening hours. 

    And, for the first time in years, we can expect to celebrate Easter, Mother's Day, Father's Day, graduations, weddings with few restrictions. All promise a renewed air of celebration! 

    There is widespread anticipation that consumer spending will be very strong. But...spending on what? Before you place all those merchandise orders, consider this.

    • We expect that the second quarter burst of consumer spending will be weighted towards services more than consumer goods. A big surprise for many.
       
  • COVID-19 thumbs/ProfitCompsPic.png

    Hats Off to 2021! But Caution Advised for 2022

    You've gotten through the Holiday season, likely enjoyed some vacation time, and perhaps even have your own financial statements in hand. 

    For many retailers, 2021 proved to be a very profitable year. Congratulations!

    In fact, go here to check out the pre-tax profit trends for the past two years for the median performers in 50+ retail segments. To borrow a phrase,  everybody (almost) is above average!

  • Call us contrarian, but...

    Maybe you noticed this (see "Retailers Lay Out a Downbeat Outlook"*) but the big national retail chains, despite better-than-expected quarterly earnings this week, still are looking at a year of low to no growth, citing reduced spending by lower income groups, the loss of covid relief money, the effects of inflation, etcetera.

    • "This week, retail executives presented investors and analysts with downbeat outlooks for the first quarter and the year ahead, forecasting that sales growth, if any, will be much smaller than in years past."*
       
    • "Ross Stores expects sales to be flat for its fiscal year; Kohl's expect its net sales to decline 2 to 4 percent; Macy's said its comparable sales would be down 2 to 4 percent; Best Buy expects same-store sales to fall 3 to 6 percent."

    But, here is the key observation, and an important reminder:

    • "To be sure, while there are worries about the outlook, the data so far don’t necessarily suggest that the economy is in or hurtling toward a downturn."  

    How to reconcile this doom-and-gloom from the big national retailers with our still-strong economy, which is 70% driven by consumer spending? 
     

  • But, we must take exception....

    We're sure you'll agree. Misinformation can be very harmful. Retailers surely don't need more harmful anythings!

    Just last week, we came across the proverbial straw that broke the camel's back. It was a post on the Intuit Quickbooks site*, titled "Inventory Turnover Ratio." And the explanatory article was accompanied by an "Inventory Turnover Calculator."

    What do we take exception to? The misleading and/or incorrect information it provides. For example, their "Inventory turnover calculator" requires two entries. 

    • First, "enter the total costs involved in selling your products."

    We must take exception. "Total costs involved in selling your products" is NOT the same as Cost of Goods Sold. Nor do they specify that it should be for a 12-month period of time. 

    • The second entry they request: "Average inventory cost."

    We must take exception. What they surely meant to say is inventory @cost. 

    • Plus, they simply refer to "12 months of ending inventory balances," without specifying that it should be for the same 12 months for the previous entry.
    Only the Beginning
    Turns out, this is only the beginning of the misleading information.
  • BTS.jpeg

    Spoken Like a Retailer, But...

    It's back-to-school season! 

    We were struck by these comments from folks for whom "back-to-school" is more than a season. Look what a state superintendent of public instruction* had to say about the upcoming school year. 

    • "The sheer burnout of the last two years caught up with everybody."
       
    •  "But out of that came a genuine assessment of what matters most."

    Lots of retailers can identify with those comments, don't you agree?

    Or, these observations about the disruptions and uncertainties of the pandemic:



Comments are closed.
To get your own MEMBER ACCESS,  just go to the SUBSCRIBE page and make your choice.

Incredible value! 👀