The Good, Bad, And Ugly Of The Retail Industry
By Ryan Bradshaw, Adjunct Faculty Member, Retail Management at American Public University
Have you heard of the management technique known as the sandwich principle? It’s a simple communication method I learned from a mentor. In brief, if you have constructive feedback to convey to someone you’re managing, it’s always a good idea to start and end conversations on a positive note. For example, “Billy you do a great job cleaning your department. If you could put a little more focus into getting your in-stock levels up, your department would be that much better. Keep up the good work you’re doing.”
Notice how constructive criticism is sandwiched between two positive comments? Not only is this a good management technique, the sandwich principle is relevant to describing recent trends in today’s retail environment. Last month the U.S. Department of Commerce reported an increase of 0.8% rise in retail sales across America from June to July. This is tremendous news after seeing three consecutive months of declines in the same sector.
The economy has placed a lot of pressure on retailers, with specialty shops, small business retailers, and high end stores feeling most of the pain from a lack of consumer spending. Continued relative high unemployment and surging gas prices affects disposable income and retailers are having trouble adjusting to help meet needs, rather than satisfy wants.
According to the article, US Retail Industry Facing Uncertain Future, many specialty stores (e.g., Sears, The Gap, and Abercrombie & Fitch) are announcing triple-digit store closings, while discount stores are seeing an increase in consumer spending due to a lack of discretionary spending. With news like this we can predict an ultra-competitive holiday environment for Q4.
As the holiday’s approach, consumers can expect “wow factors” from multiple sides of the retail war for the almighty dollar. Big box retailers will be delivering high demand electronics and toys at deeply discounted prices. These incentive items are critical to winning over consumers in the “shop here first” battle. In addition to deep discounts, expect a rise in holiday temporary worker hiring, an increased focus on customer service, and a plethora of creative marketing between now and the New Year.
Another interesting development in recent years is the use of smartphones for comparison shopping via online stores. More specifically, customers will visit a physical store to touch and see the product and then compare prices online against many other retailers. According to the article, Retail’s Future: Price Comparison via Smartphone Apps, 46 percent of shoppers use mobile apps when they cruise retail aisles. Technology has allowed retail super-giants to streamline point-of-sale replenishment and implement new inventory controls, such as RFID tracking. However, technology in the hand of the consumer is putting continued pressure on retailers to be the price leader.
Retailers normally start to recover as back-to-school sales lead up to Q4 holiday sales. With preparation, commitment to service, and price leadership, retailers can hope to be “back in the black” as 2012 comes to a close later this year. At the end of the day, the retail sector faces some good news, some areas of concern, and some hope on the horizon. In other words, for the retail sector this “sandwich” has potential.
About American Public University System
American Public University System, winner of the Sloan Consortium’s 2009 Ralph E. Gomory Award for Quality Online Education and two-time recipient of Sloan’s Effective Practices Award, offers 87 online degree programs through American Public University and American Military University. APUS’s relevant curriculum, affordability and flexibility help more than 100,000 working adults worldwide pursue degrees in subjects ranging from homeland security to management and liberal arts. For further information, visit http://www.apus.edu/.