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Retail and Consumer Products: Entering a New Era of Growth

AMAC Peer ReviewedJeff Edelman
RSM McGladrey, Inc.
August 2011
www.mcgladrey.com



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Summary:

Slower-than-historic post-recessionary growth and the persistent high levels of unemployment are key issues facing businesses today. More importantly, employment growth and rising income represent opportunities to drive market share and higher sales.

The consumer is responding differently than in past cycles, placing more emphasis on value – from the purchase of more private brands when it comes to basic/commodity merchandise, to cross-shopping among distribution channels. Typical of most cycles, discretionary spending is beginning to gain momentum, outpacing overall retail sales. Consumers, aided by the Internet, are smarter and more demanding shoppers. Winners among retailers and vendors will be those that understand their consumers – what they want, when they want it and at what price they are willing to pay. Those that build and act on that understanding will be the companies that prosper in the new era of growth that is now developing.

This is an opportune time for companies that have:
  • A unique niche or value proposition
  • Realistic growth plans (for the next two to three years)
  • A strong balance sheet and projected cash flow

Those companies have the capability to capture market share. They can’t wait for the environment to improve further; they need to make it happen.

To take advantage of the current environment, companies need to create excitement and the want to buy, rather than the need to buy. Don’t offer the same thing as last season; be different.

Loyal and satisfied customers should translate to higher gross profits per square foot and improved profitability for both retailers and vendors.