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Eye on Retail: Report debunks ‘retail apocalypse’

BY Marianne Wilson

Yes, some very well-known retailers are closing stores. But that’s not the story — not by a long shot.

According to new research from IHL Group, North American retailers will open 12,663 stores and close 8,828 stores in 2018, for a net increase of 3,835 store locations. The report found that a handful of retailers — 16 companies — represented 66% of the total number of store closings. For restaurants, 16 companies represented 74% of all net closings.

“We can’t emphasize enough that the closings have been driven by a handful of retailers, not the entire market,” IHL stated.

IHL’ Retail’s Radical Transformation/Real Opportunities report reviews 1,485 retail chains with 50 or more locations on net store openings and closings. It found that while physical retail is thriving it is also changing drastically.

“There has been a great deal of negative press about retail in the last two years,” said Greg Buzek, president of IHL Group. “Overall retail is very healthy… But there are vast differences in retail segments with some growing rapidly and others struggling.”

According to the research, grocery stores, drug stores, mass merchants/supercenters, and convenience stores are adding a net 2,694 stores in 2018. The increase is on top of 3,115 net new stores in 2017.

But department stores, specialty softgoods (apparel, shoes), and specialty hardgoods (DIY, electronics, sporting goods, books, furniture) are closing a net 682 stores in 2018. This follows 2,557 net closings in 2017.

“Off-price retailers, dollar stores, grocery and restaurants are seeing great growth,” added Buzek. “It is the apparel and department stores that continue to struggle and the C & D class malls that really need to adjust in this new market to drive traffic. The strong growth is at the high end and the low end side of retail and these are generally A-level malls and off mall locations.”

The report detailed the growing influence of Amazon, noting that 55% are now members of Amazon Prime. To compete in today’s evolving marketplace, retailers need to invest in their people, technology and ambience of their stores.

“There is a reason that Publix, Wegmans, Apple Stores and Chick-fil-A make multiples of net profit more than their competitors,” the report stated. “Their people and their stores are more inviting and customers like to shop there.”

Along with improving their experience, stores need to attack their out-of-stocks. Upwards of 24% of Amazon sales can be attributed to customers who first tried to buy the product at a local store but found it out of stock, according to IHL.

“When consumers had to shop for everything at a bricks and mortar store, retailers could often get away with poor inventory levels and out of stocks,” the report stated. “Not anymore. Amazon is almost always in stock…Walmart’s marketplace is another competitor. The retailers that will survive and thrive will invest in technologies such as RFID and computer vision to right-size their store inventory and eliminate out of stocks.”

IHL’s Retail’s Radical Transformation/Real Opportunities is free for download.

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Feeling the pain on the job site

Q3 USG Construction report finds that labor shortages affect job site safety.

BY HBSDealer Staff

The third quarter 2018 USG Corporation + U.S. Chamber of Commerce Commercial Construction Index (Index) released today indicates skilled labor shortages will have the greatest impact on commercial construction businesses over the next three years. The report revealed 88 percent of contractors expect to feel at least a moderate impact from the workforce shortages in the next three years with over half (57 percent) expecting the impact to be high/very high.

The skilled labor shortage has been consistently identified as a major issue facing the industry, but it is now reported by 80 percent of contractors to be impacting worker and jobsite safety. In fact, the Q3 report found that a lack of skilled workers was the number one factor impacting increased jobsite safety risks (58 percent).

“The commercial construction industry is growing but the labor shortage remains unresolved,” said Jennifer Scanlon, president and CEO of USG Corporation. “As contractors are forced to do more with less, a renewed emphasis on safety is imperative to the strength and health of the industry. It continues to be important for organizations to build strong and comprehensive safety programs.”

As contractors grapple with a scarcity of skilled workers, findings show a majority are working to improve the overall safety culture on the jobsite (63 percent) and at their firm’s offices (58 percent). However, the indicators that were reported to have the highest impact on improving safety culture and outcomes are those that engage employees throughout the organization. This includes developing training programs for all levels of workers (67 percent), ensuring accountability across the organization (53 percent), empowering and involving employees (48 percent). Other indicators reported include improving communication (46 percent), demonstrating management’s commitment to safety (46 percent), improving supervisory leadership (43 percent) and aligning and integrating safety as a value (42 percent).

In addition to the skilled labor shortage, the report found addiction and substance abuse issues are a factor in worker and jobsite safety. Nearly forty percent of contractors are highly concerned over the safety impacts of worker use/addiction to opioids, followed by alcohol (27 percent) and marijuana (22 percent). Notably, the report showed that while nearly two-thirds of contractors have strategies in place to reduce the safety risks presented by alcohol (62 percent) and marijuana (61 percent), only half have strategies to address their top substance of concern: opioids, which is a newer growing concern. The opioid epidemic cost our economy $95 billion in 2016, and could account for approximately 20 percent of the observed decline in men’s labor force participation.

“The opioid crisis has both human and economic costs,” said Neil Bradley, chief policy officer of the U.S. Chamber. “The U.S. Chamber of Commerce remains committed to helping combat the opioid epidemic, which continues to devastate too many families, communities, and industries every day. While there is no one-size-fits-all answer, a multipronged legislative approach is a critical first step.”

Overall contractor sentiment saw a slight boost in optimism with an Index score of 75 in the third quarter – up two points from Q2 2018. The Index looks at the results of three leading indicators to gauge confidence in the commercial construction industry – backlog levels, new business opportunities and revenue forecasts – generating a composite index on the scale of 0 to 100 that serves as an indicator of health of the contractor segment on a quarterly basis.

The Q3 2018 results from the three key drivers were:

  • Backlog: Optimal backlog rose from 73 to 81, the largest change in any of the three components of the CCI in the last six quarters. The average current backlog was 10.3 months, up from 9.3 last quarter.
  • New Business: The level of overall confidence was 74, relatively steady quarter-over-quarter (75 in Q2 2018) but down two points since Q1 (76).
  • Revenues:  Expectations slipped from 72 to 69, the most notable change coming in a decrease in the percentage of contractors who now expect an increase in revenues, which dropped from 83 percent to 72 percent.

The research was developed with Dodge Data & Analytics (DD&A), provider of insights and data for the construction industry, by surveying commercial and institutional contractors.

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Promotion at DaVinci Roofscapes

Michael Cobb named president and chief marketing officer.

BY HBSDealer Staff

Lenexa, Kansas-based DaVinci Roofscapes named Michael Cobb president and chief marketing officer. DaVinci is a supplier of composite slate and shake roofing products.

Cobb joined DaVinci Roofscapes as the VP of sales and marketing almost two years ago. Before that he served more than 26 years in the building industry.

“Michael’s done an exemplary job in leading our sales force, customer service team and marketing efforts since joining us in January of 2017,” says Ray Rosewall, CEO of DaVinci Roofscapes. “His dedicated efforts at refining our product positioning and improving our sales channel effectiveness have helped the strategic growth of our company. Overall, Michael’s actions have better positioned DaVinci Roofscapes for continued long term success.”

DaVinci will enter its 20th year of operations in 2019.

“We’re steadily educating both building industry professionals and consumers on the many benefits of composite roofing,” says Cobb. “The Made-in-the-USA roofing product we manufacture has a proven track record for both performance and aesthetics. We’re offering what everyone wants: a top-quality, competitively-priced alternative roofing product that is supported by outstanding service and a great warranty.”

Prior to joining DaVinci Roofscapes, Cobb worked with Nichiha, USA, Inc. in roles involving sales, marketing and logistics. He has additional industry experience with Louisiana-Pacific, Nailite International, James Hardie Building Products and Velux-America.

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