Having just returned from one of my regular trips to the US, I was struck by the abundance of something that had been virtually non-existent for the past 3 years ….. optimism! While the American economy is far from being out of the woods, it is clear that consumer confidence is slowly turning around and with it there is increased optimism from reps, distributors and retailers.
The latest US retail sales climbed 1.1% in February, the fastest in five months, to reach US$407.8 billion. In the wake of the data leading economists have lifted their estimates of first-quarter GDP to 2% which is far from world beating but shows that the worst might finally be over for the world’s largest consumer market.
True there are parts of the economy that are still vulnerable and with unemployment still well above 8%, the Federal Reserve is likely to leave rates on hold (at all time lows) at least for the short term. But in the land of consumerism it is retail sales that are the bellwether of any recovery and with groups like the National Federation of Independent Business reporting the sixth straight monthly improvement in small business optimism the future looks ‘LED’ bright.
They say that out of adversity comes opportunity and there will certainly be good prospects for international companies in the US moving forward but how has the market changed and what are the trends that are re-defining the US retail market?
1. The Majority Becomes the Minority
The demographic landscape is changing rapidly in the United States with groups once termed as ‘minority’ now representing large consumer groups that cannot be ignored by companies. A few statistics of interest:
- By 2042 the minority (African American, Hispanic, Muslim etc) will become the majority in the US;
- This will be the case by 2019 for those under the age of 18;
- 16% of US adults aged 25-49 are Hispanic (45% in Los Angeles); and
- The number of Latinos in the US is larger than the population of Canada.
2. E-Commerce is King
While other retail sectors hemorrhaged during the recession E-commerce has achieved double-digit growth for the last 5 years. For the 2011 calendar year, U.S. retail E-commerce spending reached a record $161.5 billion, marking a 13 percent increase from 2010. As well as being a lucrative channel if approached strategically, the Internet also plays an extremely important role in building your brand in the United States. Consider these facts:
- For every $1 purchased online, $6 are researched online and purchased offline.
- Online will influence more than half of total US retail sales by 2013.
- 83% of consumers say they are more confident in making a purchase when they have conducted research online as opposed to speaking to a salesperson in a store. (TIME Magazine, July 2010)
3. Mobile Commerce – The New Frontier
According to Neilson around 66 per cent of Americans aged between 24-35 own a smartphone and 52% of them use their devices while in a store to get help with purchasing decisions (Pew American & Internet Life Project, 2012). Over 74 million consumers in the US already shop from their mobile devices and it is predicted that mobile shopping sales volume will reach $9 billion in 2011 (InMobi study, 2011).
Not only do these figures point to a monumental change in the way people shop but also a huge opportunity for retailers (and vendors) that can enhance the shopping experience to cater for an information hungry consumer. And this is starting to happen with 67% of US retailers seeing the value of having customers use their smartphones within the store (RSR Research, 2011).
US entrepreneur, Bo Bennett, was quoted as saying “As sure as the spring will follow the winter, prosperity and economic growth will follow recession”. It has been one of the mildest Winters in the US on record, lets hope this is a sign of things to come in the coming season!
Author:
Ian Smith
Chief Executive Officer
Access USA Pty Ltd
