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Nothing is immune to change, and that is especially true in the highly competitive world of retail. With fads and shopping trends constantly evolving, retail chains are doing whatever it takes to stay one step ahead of their customers — and each other.
“Changes in this industry occur at breakneck speed,” said Dr. Mark Dotzour, chief economist with the Real Estate Center at Texas A&M University. “Shoppers’ attention spans are shorter, and fads are coming and going faster. Shoppers do not have the luxury of leisurely shopping as they have had in the past. To compete, retailers must continually change their products and presentation, offering shoppers a ‘new’ experience.”
Dotzour said customers also want assurance that retailers are offering a “value proposition.” In other words, each retailer and shopping center must feature something that compels people to shop there.
“If retailers do not have a value proposition, they become nothing more than a commodity,” he said. “And in the commodity market, sellers must run as fast as they can to earn even a small profit.”
To this end, apparel companies are struggling to differentiate themselves by offering designer brands that cannot be found at other stores, in addition to their own private labels.
For example, JCPenney is successfully battling its competition, thanks in part to its link with beauty retailer Sephora, which has helped the retailer attract a different client base — younger customers with spending power. Since 2000, the company has done a good job of repositioning itself to be “hip” and attractive to young clothing shoppers, Dotzour said.
Of course, heated competition is not exclusive to the apparel industry. Supermarket chains are engaged in a pitched battle, with Wal-Mart currently the dominant player. The company opened 55 supercenters last January alone. Even Home Depot wants in on the action and may open convenience stores by 2010.
“Other supermarket chains are finding it difficult to compete with Wal-Mart on price,” Dotzour said. “Dollar Stores are adding food and pharmaceuticals. Convenience stores are expanding food inventories. Meanwhile, dining out is growing as fast as dining in.”
Another factor changing the retail landscape is increased Internet use. Many catalog-based companies, such as L.L. Bean, are seeing sales from their website surpass their catalog sales. As a result, big retailers have greatly improved their Internet capabilities, and catalog distribution is likely to decline. However, Internet sales amount to only 6 percent of U.S. retail sales, meaning customers are still doing the bulk of their shopping at brick-and-mortar stores.
That is good news for cities, many of which rely heavily on sales tax revenue to pay their bills. In the past, developers found it difficult to navigate the maze of city government regulations, but, now that cities are making retail development such a high priority, all of that is changing.
“As mayors, we have to remove the obstacles for development to let the market take its course,” said Michael Coleman, mayor of Columbus, Ohio, at the International Council of Shopping Centers meeting earlier this year.
St. Louis Mayor Francis Slay added, “Giving tax incentives for retailers involves taking some risks and creating opportunities for other retail developments to come into the area.”
© Copyright 2005-2008 by Kaufman County Online
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| Last Updated: Jan 4th, 2009 - 18:57:55 |
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