Key Requirements for Retail Industry Analysis

Retail Industry -

There are nine retailing sub-industries in the S&P 500 Consumer Discretionary sector, and three within the S&P 500 Consumer Staples group. Six of these 12 sub-industries have 24 years of price history extending back to 1990, as do the two sectors and the S&P 500 itself. The other six sub-industries have from seven to 23 years of history.

Highly Correlated with the Economy-

The key data in retail industry analysis - is comparable-store sales (comps), as it excludes sales at newly opened and closed stores.

·        Improving job market,

·        Lower gas prices,

·        Consumer Confidence Index,

·        Inflation.

·        Clearance discounts boosted consumer sentiment.

Consumer Confidence Index- High tells us consumer spending going forward. Housing market, stock prices gaining momentum and improving labor market conditions played vital roles to help the consumer confidence.

The retail industry is rapidly evolving with a dramatic change in consumer buying habits. Satisfying customers and enriching buying experience require new strategies from retailers today. Modern retailing, interestingly enough, is a new game with new rules. Key needs for expansion experiment, differentiate, optimizes and transform.

·        Social media and mobile technology- are having a significant impact on retail businesses as consumers increasingly utilize these channels for shopping, coupons, online promotions, price checks, product comparisons, and information.

Technology is rapidly driving transformation having the most significant impact on their businesses.

·        Data and Analytics- are proving to be increasingly valuable in getting to know customers better and when making pricing decisions.

·         Realizing the benefits of cloud-  Cloud Computing- The practice of using a network of remote servers hosted on the Internet to store, manage, and process data, rather than a local server or a personal computer.

·        What factors are most likely to hinder Retail industry growth?

                               I.            Consumer confidence.

                             II.            National unemployment.

                          III.            Government regulation- healthcare reform requires the greatest focus from retailers (sets a minimum ratio of direct health care spending to premium income, provides more subsidies to enable the poor to buy insurance. Expect industry cost will increase by almost 3% extending coverage to employees who are currently ineligible for coverage in an employer-sponsored plan), expecting it to have a significant impact on the industry.

Labor and immigration laws are also garnering attention, as indicated by 41percent of the retail executives surveyed. Tax policies.

                          IV.            Uncertainty in the credit markets –Dodd frank act.

                            V.            Decreased investor confidence.

                          VI.            Distressed real estate market.

                       VII.            Threats to U.S. business from Asia and abroad.

                     VIII.            Limited access to credit for consumers.

                          IX.            Turmoil in the Middle East/North Africa

The retail industry continues to face a demanding market environment that requires companies to adjust and actively manage change that may impact sales and performance. At the same time, advances in technology and in capturing and analyzing data are helping companies drive growth, streamline operations, and engage better with consumers.