Market Place

Retailing in 2010

It’s only 13 years away, but some consultants in the retail industry forecast big changes for 2010.

Steve Johnson and Jeffrey Laker of Anderson Consulting delivered a presentation at a meeting of the National Retail Federation in New York City this spring on the changing face of retail. A excerpt of the presentation was published in the newsletter Inside Retailing.

The consultants presented four scenarios of what could happen if supply and demand evolve in various possible combinations. Some of their predictions are:

  • Mass merchandisers will become “mega-retailers.” Department stores and discount stores will grow into stores four times the size of present locations to offer an all-in-one shopping experience. The stores will be wildly popular as families have less time and more demands than ever before. They will continue to keep their focus on fair pricing for cost-conscious customers, but will also continue to add upscale fashion merchandise to attract sophisticated consumers as well. Stores will operate on predictability – keeping price fluctuations and sales to a minimum – while providing reasonable prices, convenience and possibly entertainment.

  • Main Street will focus on specific needs and demographics. “By 2010 Main Street rules,” the consultants predict, as shoppers become more disenchanted with unsafe and impersonal malls, and as more people work from home and shop locally.

Stores on Main Street will reflect the demographics of the community, and even chain stores will vary according to the demands of the region. Retailers will use computer databases to personalize the customer’s shopping experience and will tailor products and services with such addi-tions as babysitters for shoppers, fashion advisers and in-store classes.

Merchandise will be customized according to long-term customer relationships and a deep understanding of local needs and buying habits.

  • Consumers will use technology to shop anytime, anyplace. Almost everybody will own a computer by 2010, say Johnson and Laker, and a new generation of shoppers raised on video games will be able to order almost anything – prescription drugs, clothing, groceries, dry cleaning service – and have it delivered without leaving their homes. Retailers and manufacturers will build up their brand identities so consumers are comfortable ordering products without seeing them first. Successful retailers will make shopping an experience with value-added services (weekly fashion shows, for example) and entertainment.

  • Retailers will reach consumers by several channels simultaneously. Dubbed the “Retail Web” by the consultants, the channels through which retailers distribute their product will expand, and retailers will continue to search for new outlets. They will sell through stores, neighborhood kiosks, train stations or office buildings, toll-free numbers, catalogs, TV shopping, the Internet – alternate channels that will reach several categories of shoppers at the same for sellingout

If you’re considering selling your business, now’s the time, says The Kiplinger Washington Letter, a newsletter published in Washington, D.C. Downsized executives and managers are looking for entrepreneurial opportunities and banks and lenders are providing excellent financing. The newsletter suggests several things to consider:

  • Sell when your business is going well, not when sales are down.

  • If you have an interested potential buyer, continue to search for buyers in case your sure thing falls through.

  • Keep careful records of such information as sales, profits, payroll and inventory to show to potential buyers. Tell potential buyers all negative information about a business up front.

  • Find a business broker, who can usually get a better price than you can on your own. The newsletter suggests contacting the International Business Brokers Association in Reston, Va., at (703) 437-4377, fax (703) 435-4390.

  • Set a realistic price after consulting with appraisers and brokers. Consider assets but also reputation and service.

  • Keep negotiations confidential from customers, suppliers and others to save potential sales and business relationships.

  • Seek foreign investors, who may be willing to pay a higher price to start doing business in the U.S.

  • Consider selling to your employees through an Employee Stock Ownership Plan.demand for gold falls in unlikely places

Gold jewelry production in industrial countries – the historical centers of such production – fell during 1996, resulting in a disappointing increase in gold demand from the jewelry industry.

According to the Gold Fields Mineral Services Ltd. annual report Gold 1997, gold jewelry fabrication increased by only 42 metric tons last year, a modest increase compared to the 157-metric-ton increase from 1994 to 1995. Worldwide jewelry production consumed 85% of the world’s gold in 1996, similar to levels over the past four years.

Propelled by the uncertainty of economic well-being throughout Europe in 1996, total jewelry production in Italy – which manufactures 59% of the continent’s jewelry – declined 1.6% last year. Italy’s domestic demand for jewelry was at its lowest level in nearly a decade, due to weak economic growth, industrial restructuring and increased unemployment, the survey says. Demand for Italian exports also declined by 333 billion lira (US$216 million).

The use of gold also dropped off in Germany by 4% due to unemployment and bankruptcies. In Switzerland, the amount of gold used by the watch industry declined 15% from 1995. Slight or flat growth in production in Spain, France and the United Kingdom, combined with a decrease among major manufacturing countries, resulted in a total 1.5% decline in European production.

Gold jewelry fabrication in North America increased for the fifth year in a row, by 2.7% over 1995. According to the survey, smaller companies making “standard products” had a more difficult year than larger companies who paid attention to trends, such as the Y-necklace phenomenon. U.S. jewelry exports (including finished jewelry, semifabricated jewelry and components) increased from $490 million in 1995 to $760 million in 1996, accounting for the growth in fabrication demand.

Jewelry production soared in the Middle East from 488.8 to 532.6 metric tons, primarily due to heavy increases in Egypt and Turkey. Better design in lower-karat gold and a heavy tourist market was the reason for the 27% increase in fabrication demand in Turkey. Egypt is also catering to rising tourist demand, and is steadily moving from 21k gold to 18k gold to cater to young couples and tourists looking for fashion accessories rather than investments.

Rains sufficient to boost agriculture on the Indian subcontinent were a primary reason for the increase in fabrication demand there by 5.3%. Weather was not so kind to Indonesia and China, where gold is a symbol of affluence in rural cultures: floods hit the countries during the summer months, resulting in a drop in domestic demand. The political situation between Far Eastern countries, including a confrontation between Taiwan and China and an austerity program in effect in China, further affected local demand for jewelry. The survey also credits the increased use of platinum in the Hong Kong jewelry market with the drop-off in gold use. Overall, gold fabrication demand for jewelry decreased in the Far East by 5.2% and in China by 9.7%.