Saturday, January 31, 2009

Retailers Strategies to Meet the New Economy and Internet

The results from the National Retail Federation's 7th annual State of the Industry Report provides some idea what the retailers are planning. while many of the retailers see the industry outlook as bleak, the ideas and strategies they are considering should benefit those who follow them.

Some of the defensive strategies include:
1. Managing inventories more closely
2. Increase supply-chain effectiveness
3. Increase labor productivity
4. Control operating costs.

Some of the steps they can take to control costs are:
1. Decrease store expansions or postpone the expansions to a later date
2. Decrease spending on information technology
3. Focus on activities that give an immediate return on investment (ROI)

According to the survey the top priorities, in order of importance are:
2. Cost reduction/containment
3. Employee retention and development
4. Product differentiation
5. Supply chain optimization

Some of the statistics that came out of the report include:
1. 69% of retailers said customer satisfaction/retention is a top priority for 2009
2. 12% report headcount decreases in the technology department compared with 3% last year.
3. 22% plan to increase technology headcount this year compared with 33% last year.
4. 90% of respondents to the survey sell products online
5. 60% have 80% of their assortment represented on the Web.
6. 30% report having over 20 million Web site visitors in 2008 compared with 14% that saw that level in 2007.
7. Some retailers have seen 20% of their volume coming from the Web.

The bottom line is retailers are taking immediate steps to survive in this market. Those who have invested their resources into customer-centric practices should have a more hopeful outlook than those who have focused on price and volume. All retailers should seriously review their strategy for using the internet. It is clear that even though the internet has only penetrated the retail market by about 16%, that percentage will grow and those customers who use the internet may become loyal through the internet.

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