With Hurricane Irma approaching our State, the Florida Retail Federation and our merchant program Florida Bankcard Solutions would like to take a moment to remind you of some recommendations to help protect your merchant processing account.
IN ADVANCE OF THE STORM:
AFTER THE STORM:
As always, please call us with any questions or assistance you need. If you are processing credit card transactions with Florida Bankcard Solutions, the customer service number is 800-563-5981 option 2.
Most important, please be safe during this storm as it approaches the state and stay tuned for updates from the Florida Retail Federation as we have staff in place at the State of Florida’s Emergency Operations Center.
By Mark Mathews
As the “retail apocalypse” canard continues to grab the odd headline in the media, the data and the facts are consistently telling us quite a different story: a story of an industry in transition, but still growing. The most recent retail sales figures released by the Census Bureau were up a robust 4.2 percent year-on-year in July. Every month this year has seen a steady increase in sales over the same period last year.
Nonetheless, we keep hearing about record-level store closings and how this portends doom for the retail industry. But we’ve consistently argued that this data is drawn from a biased sample. IHL Group just published a report that offers a thorough and complete debunking of the main false premise supporting the retail apocalypse myth. Their data shows a net increase in store openings of over 4,000 in 2017. In fact, for each company closing a store, 2.7 companies are opening stores.
To dive deeper into IHL's new research, watch their recent webinar: Debunking the Retail Apocalypse.
Across the broad spectrum of retail sectors, IHL Group’s data shows that none are closing more stores than they are opening. Even in the supposedly beleaguered department store sector, just as many businesses are opening stores as are closing them. According to IHL’s data, 751 brands are increasing their store counts versus 278 that are reducing store counts. On a percentage basis, 42 percent are opening stores, 43 percent are holding steady and only 15 percent are showing a net decrease in stores. Some apocalypse we’re suffering through.
As we have consistently asserted, overall the retail industry is healthy. When you look at individual sectors, businesses or regions, there are clearly areas that are challenged. The fallacy occurs when one looks at those exceptions and extrapolates them to represent the norm. Every industry experiences turnover and change and companies are consistently having to adapt their business models to new realities.Retail is no different. It is a dynamic, fast-paced, highly competitive industry that is going through a period of rapid change. Consumer behavior, abetted by technology, is forcing retailers to adjust to this change at a speed that is unprecedented. In this sort of environment, some businesses will struggle but others will adapt and exciting new businesses will spring up to take the place of those that can’t. What remains clear amidst all this noise is that the store is as relevant and important a part of the retail experience as it ever has been. The IHL data makes this case quite clearly — and the consumer is telling us the same thing. Almost 80 percent tell us they are visiting stores as frequently or more frequently than last year. Interestingly, this number goes up by 5 percent when you sample Millennials and Gen Z. Don’t bet your shirt on the death of retail, or you’ll be forced to shop for a new one.
According to a new report from global research and advisory firm IHL Group, U.S. retailers are opening 4,080 more stores in 2017 than they’re closing and plan to open an additional 5,500 next year. The report, “Debunking the Retail Apocalypse,” identified grocery retailers as among the three fastest-growing core retail segments, with 674 stores expected to open.
The other two fastest-growing core retail segments, the report found, were mass merchandisers such as off-price retailers and dollar stores, with 1,905 stores expected to open, and convenience stores, with 1,700 stores.
IHL’s research reviewed 1,800-plus retail chains with more than 50 U.S. stores in 10 retail vertical segments. The firm discovered that for every chain with a net closing of stores, 2.7 companies showed a net increase in store locations for 2017.
“The negative narrative that has been out there about the death of retail is patently false,” asserted Greg Buzek, president of Franklin, Tenn.-based IHL. “The so-called ‘retail apocalypse’ makes for a great headline, but it’s simply not true. Over 4,000 more stores are opening than closing among big chains, and when smaller retailers are included, the net gain is well over 10,000 new stores. As well, through the first seven months of the year, retail sales are up $121.6 billion.”
Other research has pointed to the overall decline of grocery stores, at least in their traditional form, in favor of niche concepts and ecommerce solutions. Additional findings from IHL’s report include:
“Without question, retail is undergoing some fundamental changes,” added Buzek. “The days of ‘build it and they will come’ are over. However, retailers that are focusing on the customer experience, investing in better training of associates and integrating IT systems across channels will continue to succeed.” read more
By REX NUTTING
Retail goods are cheaper, but we’re spending the savings on expensive health car
The brick-and-mortar retail industry is in crisis. For many old-line retailers, sales and market share are plunging fast. The most obvious explanation for their distress is the rise of online shopping, but some analysts mistakenly point to another trend: “Shoppers are choosing experiences over stuff, and that’s bad news for retailers.”
Instead of purchasing a couch, we’re going to Paris! Or maybe buying avocado toast.
One of these hot takes in the media even came with a provocative (and completely erroneous) graphic claiming that experiences now account for 67% of spending, compared with just 3% for clothing.
The reality is more mundane: We are spending a smaller portion of our budget at the mall, but the money we’re saving is mostly going for the most expensive health care in the universe.
It’s probably true that many of us yearn for something more than a pile of possessions that will never love us back, but the cold, hard truth is that Americans are purchasing more things today than ever before — more vehicles, more clothing, more housing, more health care, more financial services, more food and more electronics. More of almost everything, including couches and trips to Paris.
If you’ve heard these stories about the shift away from material things and toward experiences, you might be shocked to learn that retail spending hit a record $1.4 trillion in the second quarter. Retail spending has increased in 30 of the past 33 quarters. We still love to buy stuff.
The problem for traditional retail isn’t that we’ve fallen out of love with filling up our lives and our houses with things. (It’s still true, as comedian George Carlin said, that the meaning of life is finding a place to keep your stuff.)
The problem for retailers is that prices are falling for many retail goods such as clothing, electronics, appliances, furniture, tools, luggage, toys and many other things. That is killing the bottom line for traditional retailers, who get less revenue per unit sale but still have to pay the fixed costs of rent and payroll.
For consumers, on the other hand, falling prices are a godsend, because we can buy even more stuff and still have some money left over to spend on other things.
It would be great if we really could afford to shift our spending from the boring things we need to the fun things we want, but in reality most of the money we are saving due to cheaper clothes and cheaper gasoline is going for goods and services that no one would call fun: hospital bills, financial services, rent, and prescription drugs.
$1 trillion a month
An incredible amount of money is spent on personal consumption — more than $1 trillion every month. A little less than half is spent on stuff at retail stores, and much of the rest is spent on housing, health care, financial services, education, communication and other services.
Over the past 20 years, there has been a revolution in our spending patterns. Since 1997, Americans have shifted a significant portion of their spending from physical things like autos, clothing and petroleum to services like health care, rent and internet access.
Twenty years ago, for instance, 5.4% of total personal consumption expenditures went for motor vehicles and parts, but today that accounts for just 3.6% of consumer spending. Clothing was 4.5% of our budget in 1997; today it’s 3%. We spent 6.6% of our budget on groceries in 1997, but only 5.3% today.
On the other hand, spending on health-care services was 14.5% of consumer spending in 1997 but has grown to 16.9% today. In addition, prescription drugs have gone from 1.5% of spending to 3.4%.
We are spending a bit more on foreign travel, entertainment and eating meals at restaurants compared with 1997, but these categories still represent a tiny fraction of our total spending.
It’s quite true that annual spending on the experience of foreign travel has risen by $104 billion since 1997, but spending on home furnishings like couches and washing machines has increased even more — by $110 billion. And spending on prescription drugs has risen by an incredible $374 billion.
At the margin, we are spending a little bit more on having fun than we did 20 years ago, but most of our money still goes for necessities, not experiences.
A new study (PDF) from Texas-based digital savings company RetailMeNot, Inc., finds almost half (47 percent) of small business retailers struggle to keep up with the latest trends in mobile marketing.
Small Business Retailers Struggling with Mobile Marketing
There is a continued increase in small retailers’ investment in mobile marketing strategies. But often the challenge for these retailers is to quickly adapt to changing consumer demand, reports RetailMeNot’s mobile marketing study titled “How Retailers Are Adapting to New and Evolving Mobile Marketing.”
“Part of the evolution of marketing includes a growing reliance on upcoming technology. Often these advancements are created and adopted by consumers so quickly, retailers often find themselves unable to keep up,” wrote RetailMeNot in a quote from its study.
About nine in 10 small business retailers said they will increase their investments in mobile (92 percent) or social (89 percent) advertising in 2017. However, one in 4 (25 percent) of these retailers said they do not have the ability to tie their mobile marketing efforts to in-store sales. This means they are not able to gauge the true success of their current mobile marketing tactics. They are also missing out on key opportunities to provide customized offers or push notifications to help complete the shopper’s journey.
Mobile Marketing Partnerships Helping Track In-store Sales
One way retailers (53 percent) are overcoming the challenge of tracking or tying their mobile marketing efforts to in-store sales is partnering with marketing companies that have expertise in this area. Partnerships with mobile marketing companies like RetailMeNot are also helping retailers provide mobile offers to customers through owned and partner apps.
“Marketers should not underestimate the influence mobile marketing has on purchases made in all channels — in-store, online and on mobile devices,” said Marissa Tarleton, chief marketing officer of RetailMeNot, Inc, in a release announcing the study. “Equally as important is the ability to attribute sales back to mobile marketing efforts,” Tarleton added.
RetailMeNot’s study was conducted by global insights and strategy consultancy Kelton Global via email invitation and an online survey between April 14 and April 20, 2017. read more
by David William
Good news for retail came out of the Census Bureau yesterday. July turned out to be not just better than expected but also the month with the biggest rebound in retail sales all year, rising 0.6% for the month and 4.2% since July 2016. What’s more, revised data for May and June show a brighter picture than preliminary estimates had indicated, eliminating what had appeared to be a decline in retail sales.
"Finally, retail sales showed some life," Robert Frick, a corporate economist at Navy Federal Credit Union, was quoted as saying yesterday.
So should the commercial real estate industry feel cheered by the news? Well, yes and no.
For those who have a stake in retail properties, there is still reason for caution.
A breakdown of the retail data shows that the July uptick is driven largely by motor vehicle sales (up 1.2%) and e-commerce (up 1.3% for the month – quite possibly boosted by Amazon Prime Day, which took place July 11 – and up 11.5% from a year earlier). Although the success of e-commerce can benefit players in the industrial segment of the commercial real estate industry, given the significance of warehouses and distribution centers for e-tailers, it may not be such comforting news for those with a stake in traditional retail properties.
Somewhat obscured by the big picture, some brick-and-mortar categories did not do as well as overall retail sales might indicate. Sales at electronics and appliance stores, for instance, were down 0.5% from June to July and 0.9% from July 2016.
Other categories showed mixed findings, such as department stores, which were, a bit surprisingly, up 1% for the month (but down 1.3% for the year). Similarly, sporting goods, hobby, book and music stores were up 0.3% for the month but down 4.2% for the year. (read more)
By: Ely Razin
A new survey conducted for NRF shows small retailers have nearly caught up with large merchants in making the switch to chip-and-signature credit cards — even though virtually half say the cards would be more secure if easy-to-forge signatures were replaced with a secret personal identification number.
The survey found that 60 percent of small bricks-and-mortar retailers had installed chip card readers by this spring and another 10 percent expected to have done so by July, bringing the total so far to 70 percent. The number is expected to reach 81 percent by the end of the year. (Online retailers aren’t affected because the chip doesn’t work unless the card is physically present.)
That compares with 86 percent of mid-size and large retailers surveyed last year who said they would have chip readers in place by the end of 2016, with 99 percent planning to do so by the end of this year.
With each chip reader averaging $2,000 when installation and other costs are factored in, small retailers have generally lagged behind larger retail companies with deeper pockets in the changeover from traditional magnetic stripe cards.
Small retailers have made the switch despite concerns the new cards don’t provide all the security they are capable of: Of the 750 surveyed for NRF by research firm GfK, 49 percent said their businesses would be more secure if credit cards required a PIN, which is standard in most parts of the world where chip cards are used. Only 16 percent disagreed, with the remainder neutral.
Nonetheless, 63 percent said their businesses could not afford to risk increased liability for fraudulent transactions, which retailers have faced since a change in card industry rules took effect in October 2015. In the past, banks paid fraud costs when a card turned out to be counterfeit; the cost has now been shifted to retailers if the card has a chip but the retailer doesn’t have a chip reader.
Not all affected small retailers are making the move: The survey found 19 percent have no plans to adopt chip cards, with 55 percent of them saying it is because their businesses are not at high risk for credit card fraud.
The survey results are not surprising. NRF has said for years that chip-and-signature cards are far less secure than chip-and-PIN. The chip makes it more difficult to create a counterfeit card, but counterfeits are still possible and the chip does nothing to prevent lost or stolen cards from being used. As we’ve often said, a chip without a PIN is like locking the front door but leaving the back door wide open. A PIN alone could stop most credit card fraud without the need for a chip — or the expensive new equipment needed to read a chip.
Virtually all U.S. banks have refused to include PINs on their credit cards, choosing to keep transactions on lucrative signature processing networks run by Visa and Mastercard rather than open them up to the dozen or more competing networks that can process PIN transactions.
Beyond the PIN issue, chip cards do nothing to keep card data from being stolen from computer systems. The chip transmits an encrypted code that confirms that the card is not counterfeit, but the actual account number and other card data are still transmitted in the clear.
Despite those shortcomings, the change in fraud liability rules effectively coerces many retailers into adopting chip cards: A coffee shop can afford to lose the cost of a doughnut if a customer uses a counterfeit card, but a jeweler selling rings that cost thousands of dollars can’t take the chance.
Overall, U.S. businesses are being forced to spend $30 billion to switch to chip cards that fall far short of the advances in security that are needed. That’s money that could be better spent on encryption, tokenization and other technologies that actually keep card data from being stolen in the first place. If the card data can be made secure, the physical cards become much less of an issue.
Retailers have been demanding truly secure credit cards for years. It’s time for banks to deliver. read moreBy Mallory Duncan
The retail world will change more in the next twenty years than in all of the history of modern day retailing. This is driven by the seismic shift in consumers’ shopping habits: they’re filling smaller baskets during each trip to the store; different categories drive consumers to different types of stores; and the ability to shop online for groceries is more prevalent than ever before, with the advent of services like Amazon Fresh and retailers boosting their digital fulfillment efforts.
On the retail front, channels are converging. What was once your traditional drug store may now be viewed as a convenience destination. Up against the likes of Blue Apron and Amazon’s filing for a meal kit patent, traditional supermarkets are crafting their own ways to compete in the meal kit game. Big box mass merchandisers are now competing with discount and dollar stores.
As the U.S. grocery industry continues to navigate the complexities of emerging channels like discount grocery retailers, it’s worth noting how these dynamics played out in Europe and assess if their success across the pond is a precursor to what we might see stateside. Across the pond, nearly three-fourths of market share was consolidated into the region’s top four retailers. And what’s more, over the last eight years, the top four’s share eroded from 73% to 67%, while the newer discount retailers that encroached on the market nearly doubled their share.
However, the European market where the likes of Aldi and Lidl dominated and reigned success is a very different world than the U.S., which is facing a different set of challenges.
Discount grocery retailers are typically smaller format than traditional supermarkets, though their U.S. counterparts are twice the size of their European stores which estimate 10,000 square feet. Still smaller than traditional stores, that means a limited assortment of products on the shelves. Despite this limited shelf space, discount grocery retail stores are growing. Between 2011 and 2016, store counts increased 17.6% across the U.S. Though not apples to apples, the growth of discount retailers in Europe could serve as a precursor to what we might see in the U.S. in the near future. Some may be wondering whether this channel could potentially rise to capture a significant percentage of the U.S. grocery marketplace, putting pressure on other retail channels on how to compete.
The growing presence of discount grocery retailers is sure to create (or add onto) the domino effect that is causing traditional grocery retailers to rethink their growth strategies to remain relevant. As the industry continues to navigate these effects, there are five key questions that retailers should be asking themselves today to prepare for tomorrow:
Retail Channel Dynamics: Where Are Consumers Shopping?
Gone are the days when consumers shopped for all of their groceries at their neighborhood supermarket. Today’s on-the-go consumer can now pick up deli prepared meals at the drugstore or purchase all natural beverages and snacks at convenience stores, something that was once limited to niche natural specialty stores.
According to Nielsen Homescan panel data, grocery shopping trips grew the most at discount grocery retailers (2.9%) compared to other brick and mortar channels in the last year. However, basket sizes at discounters slightly declined 0.3%.
This decline in spend per trip could be the result of many factors, one of which is consumers’ on-the-go lifestyles and the growth of sprawling urban areas where households may not have as much physical space to store packaged items. Retailers must focus on what drives consumption—including product variety, package sizes and store formats—in order to remain competitive.
Pricing Pressures: Combating Price with Value-Adds
Downward pricing pressures are lowering the growth ceilings for all retailers, driven in part by the looming threat of discount grocery and online retailers. That being said, value is about more than just the lowest price. According to a Nielsen 2016 retail growth strategies study, consumers rate high-quality produce (57%), convenient location (56%) and product availability (54%) as more influential in store-selection decisions than the lowest price.
Consumers are looking for good deals regardless of their economic circumstances. And indeed, for many consumers, deal seeking is the thrill of the chase. Sixty-eight percent of Americans say they enjoy taking the time to find bargains, and discount grocery retailers have hit the nail on the head to provide the bargains they are seeking at price points that meet their wallets.
Investing in Store Brands: Private Label Driving Highest Growth in Discount
For many retailers, but particularly deep discount retailers, store brands (or private label) play a strategic role for winning over shoppers from other channels. Compared to other major retail channels, discount grocery retailers have more than twice the share of store brand dollars (51%), compared to only 15% store-brand dollar share in mass merchandise and 20% in supercenters. read more
Chris Morley, CONTRIBUTOR
WWhat retail apocalypse? That's what some of America's top commercial real estate CEOs are asking. In fact, they remain some of the retail industry's biggest cheerleaders.
While much of Wall Street is skeptical about retail's future — as evidenced by the less-than-stellar performance of the S&P 500 Retail ETF (XRT), compared to the broader market — there are still some believers around.
A slew of retail real estate investment trusts, or REITs, has reported quarterly earnings in recent days. The list includes Simon Property Group, General Growth Properties, Taubman and Macerich, shopping center landlord Kimco, and Sears spinoff Seritage Growth Properties.
Their results have offered a checkup on the health of retail's real estate. And, for the most part, much of these companies' results were positive.
"For the players that own the best assets, things are pretty good," said Floris van Dijkum, an analyst with Boenning & Scattergood. Other retail REITs Acadia Realty, Federal Realty and Regency Centers, which notably only owns grocery-anchored properties, are also reported "decent" results, he said.
"Continued results [from the retail REITs], like what we've just seen, will eventually get people to wake up," he told CNBC. "You have to be somewhat patient."
Many REIT CEOs are saying they've been patient for long enough. They are ready for the narrative to change.
'It will get better'
"Obviously, retail is under more pressure than it has been in the past," Simon CEO David Simon said on a conference call last week. "I do think that our environment is going to get better."
Notably, Simon raised its full-year earnings forecast to $6.20 to $6.28 per diluted share, up 4 cents from a prior estimate the REIT had issued in April. The REIT's stock rallied on the news, though shares of Simon have fallen more than 25 percent over the past 12 months.
Dijkum said Simon's earnings this quarter were "best in class."
"Despite high short interest in the mall sector," this is a company that isn't going to give in to pressure, Dijkum said.
"I think the retail community has been overly negative about the mall product," CEO Simon said on the earnings call. "I don't know why they do it, but we're just going to get up off the mat [and] keep doing what we do. ... This isn't sugar coating."
The retail REIT said that although there are more retail bankruptcies spilling out this year, Simon isn't oblivious to the changes taking place within the industry. Simon is taking steps like reducing exposure to apparel brands and increasing allocation to food services and lifestyle brands to reduce its risk.
Another bonus for the company, e-retailers looking to go physical also appear to be flocking to Simon.
Companies like UNTUCKit, Warby Parker, Bonobos, Fabletics and thredUP, which all got their start online, are now signing deals with Simon, among other REITs.
"They have all realized that having a well-positioned fleet of stores is certainly necessary and optimal for them to grow their business," Simon COO Richard Sokolov said on last week's earnings conference call. "It's going to be a process."
"There is a limit to attracting eyeballs online that [e-retailers] can't get in the physical world," CEO Simon added.
The company is employing other strategies to work with retailers, like offering shorter leases to tenants who are hesitant to lock in a space long term. "It makes sense to do short-term deals if you feel the environment is going to get better," Sokolov said. Retailers looking to test a format in a physical pop-up shop is not a new strategy, but it's one that's just recently gaining even more attention and popularity within the sector. read more
The retail apocalypse has been well documented. Major chains have had to close stores, lay people off and even go out of businesses entirely. And small retail businesses may have it even harder.
But retail businesses aren’t completely a lost causes. There are ways to make your retail business stand out and potentially save it from extinction, if you’re willing to rethink the customer experience and get a little innovative.
Brian Solis gives an overview of the top trends that retail businesses can use to survive and thrive in today’s environment. Here’s a breakdown of some of the main points.
1. Use human perspective to shape your future. Basically, you can consider trends and technology all you want. But if you want the shopping experience at your business to appeal to your customers, you need to relate to them on a human level and put yourself in their shoes. If you can come up with some common sense changes, even if those changes integrate new technology and trends, you can make the experience better for actual customers.
2. Cater to on-demand consumers. Today’s consumers want their purchases immediately and in the most convenient way possible. So retail outlets need to discover ways to get their products to customers with the fewest barriers possible.
3. Compete for customer experience. This doesn’t just mean customer service. It means the end-to-end experience that the customer has when dealing with your business. So you need to come up with ways to stand out and make the entire process as seamless as possible.
4. Become payments agnostic. Mobile payments and other high tech options have recently gained popularity with some consumers. If you can create an environment where all forms of payment are accepted, you can eliminate some potential roadblocks for customers.
5. Understand social commerce. Social commerce is mainly centered around connecting social media and shopping. And retail stores can utilize this idea to increase business by encouraging shared experiences and reviews online.
6. Invest in the trust economy. The trust economy is all about creating transparency and trust between your business and its customers. You can create genuine interactions with customers online and otherwise through content and more. And you can even utilize user generated content and reviews or referrals from other customers to create more trust.
7. Balance webrooming and showrooming. When customers come into your store to look at products, but then look for the same products cheaper online, it’s called showrooming. But when customers research products online and then go find that product in a store so they can get it right away, it’s called webrooming. Both concepts are popular with different shoppers. So your business should be prepared for customers who want to compare information or prices from both online and retail sources.
8. Blur the lines between digital and brick and mortar shopping. Because of the ways customers interact with online businesses and content, it’s important for retail stores to utilize new technology to blur the lines between retail and online shopping to make the experience as seamless as possible. This can also provide more options for customers who simply have different shopping preferences.
9. Cater to mobile customers. Many customers are turning to their mobile phones first when shopping. And some are only using their mobile devices. But technology like beacons can help you gather data and more effectively communicate with those mobile customers to create a more seamless experience for them.
10. Discover new competition and possibilities. Because of the constantly changing technology and trends out there, retail businesses need to constantly be on the look out for new possibilities and new forms of competition. There might be a new disruptive technology tool out there that competitors are using to create a better experience. And your business needs to be open to solving that problem in a new way.
11. Reimagine your space. Instead of simply adding in new technology or methods to your existing model, it might be a better route to reimagine the journey as a whole. Start from scratch and think about how to create the best customer journey from start to finish.