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Retail and Consumer Products: A Less Stable Environment Ahead

Jeffrey Edelman
McGladrey LLP
May 2012


By all indications, 2012 will be another year of lethargic growth, store closings and increased focus on everyday low prices by several major retailers, all which will have a significant impact on the entire retail landscape. Multichannel is key to survival for many. Online retailing also threatens existing store economics, measurement systems and incentives. As a result, financial metrics are changing, too. Online retail has altered the business model, either because of lost volume from the store or through increased costs of multichannel development. Enhancing the shopping experience is integral to a retailer's success; however, this becomes more difficult for those that are poorly positioned.

In addition, retailer consolidation will likely continue, if not intensify. Marginal formats, brands and secondary store labels are becoming less relevant. Market share will be an integral part of vendor and retailer sales growth. Differentiation, whether it is a point of view, service, selection or a variety of other factors, may become a key traffic driver. Want rather than need is most critical in driving consumer purchase decisions.