Middle Market Retailers Optimistic for Holiday Season as Black Friday Approaches
23 November 2016 - 12:30AM
Business Wire
Online Heavy and Store Light; Many Express
Clear Strategic Focus on the Growth of Digital Interactions
- Financial Conditions Remain Strong for
Many Middle Market Retailers
- Increased Sales Projected for FY16
- Continued Growth Expected over the Next
Three Years
- Physical Stores to Play a More
Complementary Role to Digital Plans
According to the 8th annual CIT Retail Outlook
(cit.com/retailoutlook), 80% of middle market retailers rate their
overall financial condition as healthy or very healthy. Many are
cautiously optimistic about the upcoming holiday season and the
near-term future. Sixty percent expect an increase in total sales
of more than 5% for the 2016 holiday season, compared to only 33%
three years ago. The online study was conducted in August 2016
among 310 financial decision makers within the retail industry (259
middle market retailers and 51 large retailers) by Harris Poll on
behalf of CIT Group Inc. (NYSE:CIT), a leading provider of
commercial lending and leasing services.
“As consumer shopping preferences evolve based on the continued
growth of mobile and online retail, retail executives must equip
themselves with more than just traditional retail skills,” said
Burt Feinberg, President of CIT Commercial & Industrial
Finance. “To survive, they must now create an experience that
excites consumers. This takes not just a keen sense of technology
and analytics, but the ability to actively consume and act upon
information about their customers’ needs, preferences and
interests.”
Marc Heller, President of CIT Commercial Services, added,
“Understanding how your customer expects to be spoken to, whether
it’s via the web, a smartphone or something else, will likely
continue to be a focus for retailers into 2017. Analytics, in
addition to dynamic, integrated, data-driven websites, could be the
key to making the transformation necessary to offer a more
localized and customized shopping experience.”
Although sales are projected to increase over the next three
years, progress is not expected across all sales channels. Middle
market retailers are far more optimistic about sales generated from
their online (75%) and mobile (65%) offerings compared to other
channels. Their expectations for growth in revenue from in-store
(45% compared to 50% in 2015) and catalog/phone (28% compared to
42% in 2015) channels have been scaled back significantly since
last year.
While growth is expected across a variety of employee fronts in
2017, the biggest increase will be in the number of staff devoted
to Internet/mobile sales channels. Fifty-four percent of middle
market retailers expect to increase the number of staff devoted to
Internet/mobile sales next year, down from 62% in 2015, while 52%
say they will increase the number of hourly staff. The ubiquitous
influence of the web has made having an online presence the #1
strategic investment for 2016. More than seven in ten (73%) of
omni-channel middle market retailers say that the biggest
investment priority will be their online presence, followed by
social media (57%) and digital marketing (50%).
KEY FINDINGS
- Middle Market Retailers Predict a
Successful Holiday Season: Three in five middle market
retailers (60%) expect an increase in sales of 6% or more this
holiday season versus last year. Nearly half (49%) expect an
increase in online shopping to have the biggest incremental impact
on holiday sales this year. Forty-seven percent expect an expansion
of Black Friday promotions and 44% expect an increase in online or
in-store discounts will have the most incremental impact.
- The Competitive Landscape Continues
to Shift: Fifty-three percent of middle market and large
retailers agree fast fashion retailers are taking consumers away
from U.S. middle market retailers and pose a threat to other
categories of goods. Seven in ten (71%) middle market and large
retailers feel that it is likely that one or more prominent
retailers will disappear in the next one to three years.
- Brick-and-Mortar Stores in a State
of Flux: Almost three in five (56%) large and middle market
retailers are using their stores differently than they have in the
past, with over four in five of those with both a physical and
online presence (83%) agreeing that their company is using their
physical stores in a way that complements their digital channel.
Eighty-one percent of middle market retailers agree that providing
a unique shopping experience is an innovative way to attract new
customers to brick-and-mortar.
- Web Presence Is Now the Price of
Entry in Retail: Middle market retailers are less likely to say
revenue is growing from stores (45% compared to 59% in 2015) than
websites (75% compared to 71% in 2015). Expected growth from mobile
is also high at 65%, while phone/catalog growth is low at 28%. Half
(51%) cite updating and replacing technology as the key way to
connect their channels.
- Mobile and Social Offer Competitive
Advantages: Sixty-five percent of middle market retailers
believe revenue is growing from mobile. The most common steps used
to take advantage of mobile technology remain: creating mobile apps
(51%), updating their website to meet consumer needs (50%) and
increasing email campaigns (46%).
EDITOR’S NOTE:
CIT thought leadership content can be found at the Knowledge
Center on CIT.com (cit.com/knowledgecenter) and our CIT Point
of View blog (cit.com/pov). View our corporate video
(cit.com/corporatevideo) and follow us
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Register to receive press releases at cit.com/newsalerts.
Methodology
This study was commissioned by CIT and conducted by Harris Poll
from August 3–26, 2016 among 310 financial decision makers within
the retail industry (259 middle market and 51 large). Qualified
respondents were age 18 and up, employed full-time or
self-employed, working in the retail industry with revenue between
$5 million (middle market retailer: revenue between $5 million and
2.9 billion; larger retailer: revenue $3 billion or more) having
one of the following titles: Owner, Board Member, C-suite executive
(Chief Executive Officer (CEO), Chief Operating Officer (COO),
Chief Financial Officer (CFO), Chief Information Officer (CIO),
Chief Investment Officer or other C-level executive) or Sr. Vice
President/Vice President/Director, Head of Business Unit, Head of
Department and working in one of the following functional roles:
Finance, General Management, Operations and Production,
Procurement, Strategy & Business Development, Supply Chain
Management or Treasury.
The data for this research study were weighted to ensure that
the data are balanced and accurately represent the firmographics of
interest to CIT. Figures for industry, title, functional role,
decision-maker role, revenue, company ownership structure and
company location/region were weighted to bring them into line with
the respondent profile from prior waves of the research.
About Harris Poll
Over the last five decades, Harris Poll has become a media
staple. With comprehensive experience and precise technique in
public opinion polling, along with a proven track record of
uncovering consumers’ motivations and behaviors, Harris Poll has
gained strong brand recognition around the world.
About CIT
Founded in 1908, CIT (NYSE:CIT) is a financial holding company
with more than $65 billion in assets. Its principal bank
subsidiary, CIT Bank, N.A., (Member FDIC, Equal Housing Lender),
has more than $30 billion of deposits and more than $40 billion of
assets. It provides financing, leasing and advisory services
principally to middle-market companies across a wide array of
industries primarily in North America, and equipment financing
and leasing solutions to the transportation sector. It also offers
products and services to consumers through its Internet bank
franchise and a network of retail branches in Southern California,
operating as OneWest Bank, a division of CIT Bank, N.A. cit.com
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CIT MEDIA RELATIONS:Matt Klein, 973-597-2020Director,
Media RelationsMatt.Klein@cit.comorCIT INVESTOR
RELATIONS:Barbara Callahan, 973-740-5058Senior Vice
PresidentBarbara.Callahan@cit.com
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