Study: Middle-market retailers optimistic — especially about digital sales

As the holidays approach, this group of retailers is feeling very confident about its financial health.



Eighty-percent of middle-market retailers (revenue between $5 million and $2.9 billion) rated their overall financial condition as healthy or very healthy in the 8th annual CIT Retail Outlook. 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 among 310 financial decision makers within the retail industry by Harris Poll on behalf of CIT Group, a provider of commercial lending and leasing services.



Middle-market retailers are most 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.



On the employee fronts 54% of middle market retailers expect to increase the number of staff devoted to Internet/mobile sales channels over the 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 No. 1 strategic investment for 2016. More than seven in ten (73%) of omnichannel middle market retailers say that the biggest investment priority will be their online presence, followed by social media (57%) and digital marketing (50%).



Other key findings from the study include:



• The competitive landscape: 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 10(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: 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 price of entry: 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%).