Survey: Surprising number of retail executives see better picture in 2010

New York City Two-thirds of senior executives in the retail industry expect to see better revenue, profitability and an improved jobs outlook in 2010, according to a survey released Wednesday by KPMG.

Seventy percent of the executives said they expect business conditions to improve in 2010, with 68% expecting stronger revenue and 66% expecting improved profitability. However, 44% of those surveyed still believe the U.S. economy as a whole could take as long as 2011 or later to substantially recover.

Overall, 84% of retail executives see an improving jobs picture in their industry in 2010, with 52% saying it would be stable and 32% saying it will be better than 2009. At the same time, three-quarters of them said they had already instituted headcount reductions and only 14% were contemplating further such actions.

"This outlook for the year ahead and beyond should be heartening, since the importance of the U.S. retail industry to gross domestic product and overall economic health cannot be overstated. It's the second-largest industry in the United States and employs the second highest number of people among all sectors," said Mark Larson, KPMG global retail sector chair.

The KPMG survey also asked retail executives to indicate if their strategic focus was now on investing for growth or cutting costs. More than half (54%) chose the investment option, but 46% said they were still focused on cost cutting.

When asked to identify how they were coping with the economic downturn, more than nine-in-10 retail industry executives (91%) said they cut capital expenditures. A clear majority (77%) of the retail executives said they were implementing IT solutions to reduce operational costs as a means to adjust to the downturn.

Interestingly, 69% of retail executives believe their business is well-poised right now to take advantage of an economic recovery. Also, 49% of the respondents said they thought the retail industry would fully recover ahead of the U.S. economy, while 51% thought their industry would recover at the same time or after the U.S. economy.

"Those retailers who have taken the opportunity to consolidate, and to restructure their operations and risk exposure, as well as invest for the future during the past year are preparing for the new American marketplace surely to emerge as the economy rebounds,” said Larson. "While the Conference Board's Consumer Confidence index continues to languish, the retail execs surveyed are cautiously optimistic that we've seen the economic bottom and 2010 will begin trending favorably for the industry."

The KPMG survey reflects the responses of CEOs and other C-level suite executives in the retail industry. Approximately 31% of respondents work for retail companies with annual revenues exceeding $1 billion; 37% represent companies with annual revenues in the $250 million to $1 billion range and 32% represent companies with annual revenue below $250 million. Clarion Research conducted the survey and compiled the data.