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MKT 322 WebPaper one

Retail Environment Paper 2009

MKT 325 Assignment (100 points)
Analyze Key Facts and Suggest Implications about the 2009 Retail Environment

Retailing activity is important to the U.S. economy for many reasons. Although manufacturing receives much of the credit, retailing is the transmission for the economic engine that drives the American and world economies –another way to say this is jobs! (Precisely how important is retailing to the U.S. economy? Provide stats. What percent of GDP?) Without a retail distribution system manufactured products would have no way to reach the final consumer. When consumers make purchases, that economic activity provides jobs to literally millions of people. Another benefit is the amount of tax money generated. Not only do businesses pay property, employee, and income tax; businesses pay sales tax or gross receipts taxes that fund local government support services like police, fire protection, and water systems. Without retail sales that support manufacturing the U. S. and the world would be a much different place. As we can see from the federal government statistics table below sales have declined dramatically in late 2008 and continued to fall in 2009. Much has been made of this in news reports as well as government officials reporting on the status of the economy. As we move into 2010 there are some signs the economy is recovering, but jobs creation still lags behind.

Not Adjusted
Kind of Business / 12 Month Total / 2009 / 2008
% Chg. / Dec.3 / Nov. / Oct. / Dec. / Nov.
2009 / 2008 / (a) / (p) / (r)
Retail & food services,
total ………………………………. / 4,139,381 / -6.2 / 409,231 / 347,175 / 344,726 / 387,964 / 338,788
Total (excl. motor vehicle & parts) … / 3,443,815 / -4.9 / 352,419 / 295,513 / 287,895 / 334,459 / 289,976
Retail …..……………………………. / 3,683,124 / -7.0 / 370,945 / 311,226 / 306,112 / 350,138 / 302,569
GAFO4………………………....……...……...………….. / (*) / (*) / (*) / 102,736 / 91,199 / 136,308 / 103,191
Motor vehicle & parts dealers ……. / 695,566 / -12.3 / 56,812 / 51,662 / 56,831 / 53,505 / 48,812
Auto & other motor veh. dealers . / 618,290 / -13.4 / 50,727 / 45,771 / 50,147 / 47,105 / 42,565
New car dealers ………………. / (*) / (*) / (*) / 36,805 / 40,184 / 38,596 / 34,435
Auto parts, acc. & tire stores…… / (*) / (*) / (*) / 5,891 / 6,684 / 6,400 / 6,247
Furniture & home furn. stores …… / 93,824 / -11.1 / 9,185 / 8,223 / 7,672 / 9,521 / 8,754
Furniture stores ………………….. / (*) / (*) / (*) / 4,324 / 4,179 / 4,542 / 4,469
Home furnishings stores ……….. / (*) / (*) / (*) / 3,899 / 3,493 / 4,979 / 4,285
Electronics & appliance stores …… / 102,451 / -7.8 / 13,804 / 9,944 / 7,506 / 13,913 / 10,325
Appl., T.V. & camera……………… / (*) / (*) / (*) / 7,790 / 5,825 / 10,989 / 8,204
Computer & software stores……. / (*) / (*) / (*) / 2,154 / 1,681 / 2,924 / 2,121
Building material & garden eq. &
supplies dealers……………………. / 285,751 / -11.6 / 20,897 / 21,802 / 23,268 / 22,113 / 23,230
Building mat. & sup. dealers …… / (*) / (*) / (*) / 18,481 / 20,081 / 18,877 / 19,830
Food & beverage stores……………. / 589,673 / 0.3 / 54,161 / 49,210 / 49,734 / 52,275 / 49,296
Grocery stores ………………….. / 526,308 / 0.0 / 46,892 / 43,865 / 44,420 / 45,372 / 44,062
Beer, wine & liquor stores ……… / (*) / (*) / (*) / 3,459 / 3,536 / 4,660 / 3,548
Health & personal care stores ……. / 253,945 / 3.3 / 24,235 / 20,767 / 21,430 / 23,123 / 19,808
Pharmacies & drug stores ……… / (*) / (*) / (*) / 17,279 / 17,955 / 19,054 / 16,403
Gasoline stations …………………… / 361,542 / -24.5 / 32,680 / 31,728 / 32,264 / 24,506 / 28,049
Clothing & clothing accessories
stores …………………………….….. / 209,358 / -3.1 / 28,751 / 18,787 / 17,394 / 26,863 / 18,858
Men's clothing stores …………… / (*) / (*) / (*) / 762 / 743 / 1,165 / 817
Women's clothing stores ……….. / (*) / (*) / (*) / 3,132 / 2,976 / 4,107 / 3,210
Family clothing stores …………… / (*) / (*) / (*) / 7,777 / 7,124 / 10,633 / 7,869
Shoe stores ……………………… / (*) / (*) / (*) / 2,125 / 2,081 / 2,771 / 2,181
Sporting goods, hobby, book &
music stores………………………… / 87,197 / -0.6 / 12,429 / 7,422 / 6,366 / 11,957 / 7,441
General merchandise stores………. / 594,618 / -0.2 / 70,980 / 55,296 / 48,816 / 69,679 / 54,778
Department stores (ex. L.D.)…….. / 188,330 / -5.8 / 26,996 / 18,605 / 15,011 / 27,417 / 19,569
Department stores (incl. L.D.)5…… / (*) / (*) / (*) / 19,092 / 15,453 / 28,238 / 20,196
Other general merch. stores…. .. / (*) / (*) / (*) / 36,691 / 33,805 / 42,262 / 35,209
Warehouse clubs &
supercenters…………………. / (*) / (*) / (*) / 32,360 / 29,801 / 37,058 / 31,197
All oth. gen. merch. stores…… / (*) / (*) / (*) / 4,331 / 4,004 / 5,204 / 4,012
Miscellaneous store retailers …….. / 114,252 / -2.8 / 11,572 / 9,334 / 9,935 / 10,974 / 9,065
Nonstore retailers ………………….. / 294,947 / -0.9 / 35,439 / 27,051 / 24,896 / 31,709 / 24,153
Elect. shopping & m/o houses …. / (*) / (*) / (*) / 19,936 / 17,766 / 23,654 / 16,993
Food services & drinking places … / 456,257 / 0.7 / 38,286 / 35,949 / 38,614 / 37,826 / 36,219

In 2009 many companies had to make sharp cuts in the number of employees to manage the downturn in sales. Since a company’s payroll is always one of its largest expenditures, it is also one of the first items to be cut. The following reduction in force figures occurred in 2008 and 2009:

2009 Job Layoff

130,000General Motors, announced 6-1-09

30,000Circuit City, announced 1-16-09

10,915KB Toys, announced 12-12-08

10,000Blockbuster, announced 9-15-09

9,000Goody's, announced 1-6-09

7,960Macy's, announced 1-8-09 and 2-2-09

7,000Home Depot (Expo), announced 1-26-09

7,000Starbucks, announced 1-29-09

5,000Gottschalks, announced 4-2-09

Given everything the American consumer has had to contend with; for example, rising fuel cost, higher interest rates on bank credit cards, lower home values, and job worries many Americans are preparing to cut purchases and be more prepared for financially hard times. The graph below shows consumer expectations for the 2009 holiday season. At the time, it was a forecast based on interviews. Now that we are in February 2010 data has show the forecast to be correct. Holiday sales for 2009 were flat at best. One lesson to be learned here is that many consumers may be making a fundamental change in how much confidence they have in the future. Consumer confidence plays an enormous role in how much people spend of their disposable income. If the public does not have confidence in their job being there for them – then they curtail there purchases. Perception of the future is like a canary in the coal mine – it is the predictor of things to come real or imagined.

If you don’t live in a cave you have certainly seen the auto industry in the national news. Sales in 2009 reduced sharply for several reasons. High fuel prices, job security in the economic down turn, and General Motors and Chrysler facing bankruptcy -- requesting and receiving a tax payer bailout all are factors in why fewer autos were sold. Keeping in mind that manufacturing has a direct effect on retailing it is easy to understand how important a downturn in auto sales is to the economy. Automotive manufactures spin off thousands of support companies that in turn provide jobs for a large segment of the nation. Any downturn is retail sales for autos are going to result in a trickle down affect that will lower consumer confidence.

What can retailers take away from the 2009 sales figures? The country and the world seem to have narrowly avoided an economic disaster comparable to the 1929 stock market crash and resulting depression. Abuses by the stock market industry, the mortgage industry, the insurance industry have all pushed the consumer to the edge of the financial cliff. Only slow and steady growth spurring job creation will help consumer confidence recover. Retailers are going to have to find answers other than quick increases in sales to increase profits – at least for 18 to 24 months.

Works Cited

GDP Information:

(Lay-offs)

(flat retail Sales)

(auto Sales)

Good job overall. Very well written.

Overall Score: 95/100