What's in 'Store' for 2004? With the U.S. economy revving up, all indicators point
to a good retail year in 2004. Estimates of U.S. economic growth in the
new year range from 3.8 to 4.3 percent.
Economic analysts predict slow but steady improvement in Michigan’s economy. Unemployment remains the biggest concern, but Jeff Williams, vice president and economist for Public Sector Consultants, a Lansing-based research firm, predicts employment growth of 0.1 percent in Michigan in the next year. Williams also expects President Bush to introduce another economic stimulus package in 2004, which should further help the economy in advance of the November national election.
Confidence is high among both consumers and small business
owners. A survey of 200 small business owners in Michigan, conducted by
Lansing-based Public Policy Associates, shows that 37 percent planned
to increase investment in their operations during the next year, compared
to 30 percent a year ago. Michigan retailers’ plans for the new year reflect
their optimism—tempered with caution, as always—that 2004 will
be a healthy year for retail. Some will take the opportunity in the slower winter months
to get a facelift. William D. Nord Jewelers in Kalamazoo, for one, is
planning to remodel beginning in January. “We needed an image for the store,” said manager
Jennifer Chambers. “We’re going with an old-world, colonial
look. We’ve been planning it for almost a year, so it’s good
to be going forward with it.”
Several retailers said they will analyze their 4th Quarter
data before deciding to adjust their product mix or increase inventory. Ann Michel, owner of Amy’s Apparel in Detroit, reported
that after several years of having leaner inventory, she has ordered slightly
more inventory for this spring. At Michel’s 35-year-old store, “spring
is just as important as the holiday season, because of Mother’s Day
and Easter,” she said. Michel’s optimism reflects her reaction to recent
favorable economic news. She believes the recovery will be gradual, but
that the retail industry is headed into a good period. Others are investing in new technology that can improve
inventory management. Fred Miller, at Tyner Furniture in Ann Arbor, says
his store will be using a new computer system that will allow the store
to track purchases for a five-year period. “We’ll be able to bar-code inventory on the
floor, which will affect our inventory plans as well. Hopefully, we’ll
be able to better control inventory flow” he said. His investment,
which is “not inexpensive,” is an indication of his optimism
regarding the upcoming year. Miller also plans to increase the sales education his staff receives. “We’ll have vendor representatives come in, training from my general manager and possibly some road trips,” Miller said. David Russell, owner of Bannan’s TV & Stereo
in Saginaw, has similar plans. A few retailers are planning celebratory events for 2004.
Azar’s Oriental Rugs in Birmingham will celebrate its 25th year in
business this March with a sale and events featuring good food and music. “Many of our vendors are helping us with the planning.
Having been here this long, we know that there are ups and downs in retail,
and we are looking forward to a better year in 2004,” said owner
Azar Alibazeh. At the same time, Azar’s Grand Rapids location, which
has been open for 16 years, will be closing in 2004, due to the manager’s
retirement. Retailers are also acting on information they’ve
learned through customer feedback. Gregg Yaeger and Joel Whalen, owners
of Yaeger’s Shoes in Monroe, asked clients at their second location
in Toledo, Ohio, what brought them in, and they discovered valuable information. “We’re looking to spend more money on advertising
and spend it more aggressively. We delved into television advertising
in 2003, and it has paid for itself very well, from what we’ve heard,”
Whalen said. Yaeger and Whalen will also scale back on other forms
of advertising that haven’t been as successful, such as print ads
in telephone directories. E-commerce continues to be a hot retail issue. Carol Brawley,
of the Mole Hole in Sault Ste Marie, says her store’s website did
better than she expected in 2003, so she plans to make more items available
on that site. Her move is in keeping with a general national trend to
“integrate bricks and clicks.” Increasingly, consumers are researching
their purchases on the web, even if they go to a physical store to make
their purchase. Smaller online retailers face tougher competition from
the majors. Multi-channel retailers (those with catalogs and websites
as well as “bricks and mortar” venues) now account for 67 percent
of all online retailing, up from about 50 percent two years ago, according
to a new study from The Boston Consulting Group and Shop.org. Other trends among the major retailers have the potential
to affect the whole industry. Wal-Mart’s plan to use radio-frequency identification
(RFID) tags is expected to further reduce the mega-retailer’s inventory
management costs. Wal-Mart gave its top 100 suppliers a deadline of January
1, 2005, to use RFID chips on all pallets and cases. (RFID tags on merchandise
still aren’t on the horizon, due to consumer privacy concerns). Another national trend could hit Michigan in 2004: “big
boxes” are opening new locations in urban spaces. Manhattan, Chicago
and Los Angeles all have major retailers in urban settings. Target, Wal-Mart, Home Depot and TJ Maxx have found ways
to overcome the obstacles to locating in urban settings. This trend may
impact the way retailers think about retail traffic, real estate and land
use. Whether large or small, most retailers are happy to leave the last year or two in the past. They look forward to 2004 as a profitable retail year. |
Ready, Set, GO...2004 is fast approaching. Are you ready to take advantage of a better economic climate? Here’s a quick checklist for how to make the new year more profitable. • Tax time: Time is short, but you can lower
your tax bill by donating excess inventory before December 31. Call the
National Association for the Exchange of Industrial Resources to donate
new, overstock or discontinued products or to get more information: 800.562.0955
or donor@naeir.org. |
