Expansion High on Agenda

Feeling confident that the worst is behind them, most retailers are ready to expand again as they turn their attention from steadying the ship to actively growing their business. That’s the big takeaway from Retail Horizons: Benchmarks for 2010, Forecasts for 2011 report. The annual study, sponsored by KPMG and the National Retail Federation Foundation, is widely acknowledged as the definitive state of the industry report.

After several years of stagnation, growth and expansion topped retailers’ agendas for 2011, with 41% of the surveyed executives reporting that their companies intend to increase domestic store expansion in 2011, up from just 25% in 2010. Additionally, 25% will expand overseas, up from 21% a year ago.

According to Mark Larson, partner in charge of KPMG’s retail group, the findings “dramatically demonstrate that retail expansion is back on the agenda.”

“After several years of belt tightening, retailers are also ready to begin experimenting again with new brick-and-mortar concepts, hoping to appeal to shoppers interested in buying discretionary items once gain,” Larson said.

Although retailers are moving forward with cost disciplines in mind, budget restrictions are easing. Nearly two-thirds of retailers polled plan to increase investments in store operations. More companies also are considering upgrading systems and technologies, areas that had lain largely dormant from an investment point of view for the past two years.

Providing a more streamlined online and offline experience also ranks as a top priority for 2011. According to the survey, 59% of retailers plan to make integrating their online presence with social media and other channels a key focus in 2011, up from 41% last year.

Another key focus area is mobile commerce. In fact, 69% identify m-commerce as a strategic initiative, up considerably from 28% a year ago.

According to Larson, the findings “dramatically demonstrate that retail expansion is back on the agenda.”

“They will, however, move ahead with cost discipline in mind.”

In other findings:

  • Three-quarters (74%) of retailers in 2011 will increase their consumer insight and data gathering initiatives (up from 65% in 2010).
  • Fully three-quarters (75%) said customer service would be a top priority in 2011, up from 56% in 2010.
  • The number of retailers who report using Twitter jumped from 61% in 2009 to 79% in 2010, with an additional 18% planning on using the social networking site for their e-commerce program during the next 18 months.
  • Seventy-eight percent of the execs ranked customer loyalty programs first, up from 65% a year ago.
  • Among supply chain initiatives, greater focus will be made for optimizing the distribution network, increasing from 38% in 2010 to 52% in 2011, and for cross-docking, up from 17% to 24%.
  • Eighty percent of retailers surveyed said leadership development will be a top priority in 2011, up from 69% in 2010. Employee retention also was flagged as a major agenda item for 2011.

“Good talent matters more than ever,” Larson said.