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Sourcing Summit “State of Retail” Panel Highlights

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Sourcing Journal’s first annual Sourcing Summit: Reflections and Projections 2013 kicked off with an expert panel on the Current State of Retail.

Faye Landes, managing director of the Cowen Group; John Kernan, Cowen Group vice president; David Bassuk, managing director at Alix Partners and Allan Ellinger, senior managing partner at MMG joined to discuss topics ranging from the upcoming holiday season to the growth of online shopping and the macroeconomy. The big picture? Traditional retailers continue to face an uphill slog as brick-and-mortar stores get squeezed by online shopping, fast fashion and discount retailers.

Landes brought up the “calendar issue,” or the shorter number of shopping days this holiday season, sharing her perspective before opening the conversation to the other panelists.

The shortened season, she said, “has an impact on margins. Consumers on the lower end have been pressed all year, too, so they have less money to spend. Walmart and Target’s results should show that.”

Bassuk began his response with a joke and a nod to the state of this holiday season saying that, at AlixPartners, “our view is that Black Friday becomes Black Halloween.” He continued with a different perspective from Landes, pointing out that average holiday growth (not counting recession years) has been around 5 percent. Analysts are predicting growth as low as 1 percent this year, but in almost every retail year, 65 percent of sales have happened by the end of August. This year, the 65 percent seemed to come in October, he said.

“Based on those numbers, assuming around 35 percent of annual sales remain,” Bassuk said, “We’re on track to see a very promotional holiday season, but not necessarily a soft holiday season.”

The idea that margins may suffer but sales will grow was echoed by the other panelists. It fits with the notion of a tightening retail landscape, with consumers becoming increasingly segregated into low-end and upper middle markets. The slow-growth macroeconomy isn’t helping things, panelists said.

“All this pressure is pushing Black Friday back. We see retailers starting their discounts in early November,” Bassuk said.

Online retailers are capitalizing on this economic picture. According to Landes, 77 percent of consumers shopped at Amazon.com in the last thirty days. Twelve percent of those who made purchases bought apparel products, according to a Cowen Consumer Tracking Survey.

This far outweighs the 21 percent of consumers who shopped at Macy’s over the same time period.

In terms of off-price, Kernan said, “TJX, ROST and other off-price retailers (Burlington, SteinMart) are getting access to more vendors and brands so the quality of product and number of brands inside the store is improving.  At the same time,” he said, “They still give consumers a “reason” to go to the physical store, which is that they have the best value equation–certainly better than

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