WWW.COLLIERS.COM/RESEARCH | P. 2
ON THE ROAD AGAIN
|WHITE PAPER|MAY 2012
FACTORS DRIVING RETAILER SUCCESS
Much has already been made o the Great Recession’s eect on consumer preerences andresulting outperormance by both discounters and luxury brands. Low-price chains such asRoss, T.J. Maxx, and the dollar stores benetted rom shoppers’ newly rugal mindsetsdictated by personal debt levels and employment concerns. On the high end, luxury goodsshoppers led a “ight to quality” that spiked revenues at Burberry, Hermes, and Chanel, toname a ew. Yet, while this biurcation trend highlights the troubles or brands caught in themiddle, it doesn’t explain why some high-end retailers and some discounters have struggled.Looking ahead to suggest which retailers are poised to outperorm, we argue that corporatesuccess now hinges ar less on absolute price than it does on corporate strategies or rein-vesting in technology, elevating the in-store experience, and rening the service aspects othe retailer’s oering.
ABILITY AND WILLINGNESS TO REINVEST IN THEIR BUSINESS
When the recession hit, many companies—not just those in retail—had weak balance sheetsand subsequently spent the last couple o years rebuilding their reserves. Moody’s InvestorService recently reported that U.S. nonnancial corporate cash holdings were $1.24 trillionat the end o 2011, matching what they were in 2010, up rom $1.11 trillion at end o 2009.As their competitors operated in “survival mode,” retail companies with more liquidity seizedthe opportunity to invest in corporate inrastructure. Nordstrom and Macy’s, two prominentexamples, ocused real estate expansion on their o-price store concepts (Nordstrom Rackand Bloomingdale’s Outlet, respectively), expanded their programs to promote customerloyalty and enhance in-store ulllment, and established multichannel inventory systems.Eective cost containment and revenue optimization have generated enough executivecondence to loosen the purse strings on capital expenditures (CapEx) or both technologyand real estate. Technology investment takes the orm o channel diversication: improvingand integrating brick-and-mortar, online, mobile, and catalog operations. Real estate invest-ments include opening new stores, experimenting with smaller prototypes, and upgrading
Enhanced Web Ratings TrackingMore Eective CRMBetter Website Search ToolsAdvanced Web AnalyticsBetter Order ManagementMore Social MediaMobile Commerce (General)Better E-commerce Platform
(% of Respondents)
* Percentages do not total 100% because respondents were allowed to select more than one answer.
, “2012 Complete Guide to E-Commerce Technology
HIGHEST-PRIORITY* 2012 CAPITAL EXPENDITURES IN TECHNOLOGY
9. Yum! Brands $1,00010. Safeway $9007. Home Depot (tie) $1,3007. Lowe’s (tie) $1,3006. Costco $1,400 - $1,6005. Walgreens $1,6004. CVS $1,9003. Kroger $1,900 - $2,0002. McDonald’s $2,9001. Walmart $13,500 - $14,000Fiscal 2012, in millions
LARGEST RETAILER 2012 CAPEX BUDGETS
Source: Bloomberg, company reports