BDO: 54 percent of brick and mortar retailers say they are merely surviving

Yesterday the National Retail Federation forecasted retail sales to grow between 3.8 and 4.4 percent in 2019. “The underlying state of the economy is sound”, said NRF’s president Matthew Shay in a statement. But today a BDO survey of 300 CEOs, CFOs and COOs from Retail & Consumer Products companies with revenues ranging from 50 million to 3 billion US dollars revealed the picture is not equally rosy for everyone. 54 percent of traditional retailers -- including big box, department store, discount and specialty retailers -- said they are merely breaking even, while 9 percent reported their businesses to be downright struggling. Of those who said they’re thriving, 84 percent were pure play online companies.

Thrivers vs. survivors

According to the study, thrivers are e-commerce-centric and early adopters of technology. They also obtain competitive advantage by offering exclusive products, while survivors tend to do so by improving their customer service. Thrivers also display a tendency to think ahead: some respondents are already planning for an economic downturn and anticipating increased levels of retail bankruptcy in 2019. Meanwhile, survivors tend to be risk-averse, taking a wait-and-see approach; use outside capital to remain stable; and lag behind in terms of technology.

“Only 14 percent of retailers see superior technology as a top advantage over competitors. As technology continues to disrupt all business functions, from finance to supply chain and marketing, it’s likely that future thrivers will be the ones in that 14 percent”, says BDO’s report.

When it comes to future investments, all retailers are allocating significant amounts to their e-commerce operations. The way survivors and thrivers are spending their money differs, however: traditional retailers try to compete with pure online players by downsizing or remodelling their stores and spending money on ecommerce instead. By the way, few of them plan on expanding their online presence through Amazon: over 70 percent of respondents, thriving and surviving, think the cons of partnering with Amazon outweigh the pros. Thriving players tend to be already have a consolidated online presence, so they are investing on ecommerce while also venturing into or expanding their physical retail presence. One in three thrivers are planning to grow their store count, says BDO.

Images: Pexels, BDO