Retailers Set To Thrive On Consumer Confidence And Homebuying Trends

0aaaMichael Rittler TD Bank 2

Traditional brick-and-mortar retailers continue to navigate some fairly challenging waters. They’re maneuvering between complicated economic conditions that impact staffing, inventory and manufacturing while heeding consumers’ increasing preference for e-Commerce. While retailers in certain categories are weathering this well, these factors can still lead to a dramatic effect on retailers’ sales and profits.

Adding to consumer perception about the state of retail, headlines are ripe with doom-and-gloom accounts of falling sales and shuttered stores, debating whether and when online competitors, led by Amazon, will destroy traditional brick-and-mortar businesses for good.

The good news in this is that consumers still enjoy shopping in stores and see benefits to doing so. TD Bank’s Retail Experience Index found that more than half of shoppers making major purchases said that they shop at a brick-and-mortar location all the time. Furthering that point, 66% of shoppers who make their purchases in-store asked a sales associate for help, reinforcing the benefit of a strong salesforce and the importance of maintaining the customer experience at physical store locations.


Analysts predict the impact of these disruptors will grow as younger shoppers who are comfortable with buying online come of age and pass down their habits. TD’s data on Millennial buyers shows that they prefer online shopping because of the convenience of the perk, as they are able to avoid in-store lines, and also enjoy the special promotions that are often offered through online shopping. This generation is also loyal to their favorite brands, with more than 69% returning to the same retailer for major purchases.

Despite these trends, many brick-and-mortar retailers are finding ways to survive and even thrive. They know that their best chance at attracting customers lies in adjusting their business models to fit the needs of the evolving shopper. They must have a presence in every shopping channel, from physical stores to laptops to mobile devices. Even digital successes such as Amazon, Warby Parker and Casper agree that successful retailers need both online and actual storefronts, and have opened physical stores to meet that customer demand.

Aligning Forces Play To Brick-And-Mortars’ Strengths

Though drastic, these changes have set traditional brick-and-mortar retailers on sounder footing, giving them a chance to weather the sector’s transition and to take advantage of several converging trends: climbing consumer confidence, historically high home values and aging Millennials. These aligning forces play to the strengths of some traditional retailers, particularly those selling building materials, garden equipment and home furnishings.

Households are growing more secure about their finances, according to a University of Michigan consumer survey, and thus would be more open to buying durable goods. Even though the summer months typically include rising mortgage rates and gas prices, more consumers say they feel confident as the national unemployment rate ticks lower and other economic indicators send positive signals overall.

More Money To Fix Up That Fixer-Upper

One such indicator is home prices, which remain in striking distance of record highs for new and existing homes thanks to persistent demand and low inventory in some markets. That means there’s more equity home buyers can tap for renovations, repairs, additions or general improvements. Even with the new tax laws, homeowners can still deduct the interest on home equity loans used to buy, build or improve the home that secures the loan, according to the IRS.

Pent-up demand for home improvement products will fuel spending in the sector. That stands to benefit brick-and-mortar stores in particular, as shoppers typically want to touch and interact with these types of larger bulk items before they buy them. Through May 2018, sales of furniture and home furnishings climbed 5.2% from the same period in 2017, according to the U.S. Census Bureau. The same holds true for building materials and garden equipment sales, which rose 4.1% over the same span.

Millennials — those born in the period extending from the early 1980s through the mid- to late-1990s — are helping drive this trend as more come of age and become homeowners. Older Millennials’ shopping habits have changed to fit their life stage: furnishing a rental and furnishing a newly purchased house are different shopping experiences. The experience of purchasing a dresser online to assemble for a dorm room or an apartment that lasts a few years contrasts sharply with that of buying a higher-quality, more durable version expected to last 20 years.

Younger consumers eagerly embraced the digital shopping experience to buy clothing, accessories, bags and electronics, where online shipping policies made returning items easier. But many furniture and lawn equipment products remain difficult and expensive to ship and return, propelling more Millennials onto showroom floors.

Retailers Need To Cover All Of The Bases

All of this speaks to the need for retailers to offer an experience that is consistent across all channels and can engage the widest array of consumers. The shopping experience may start online or with a mobile phone and lead to a brick-and-mortar store purchase, or vice versa. Consequently, each of those channels becomes crucial; retailers cannot afford for any individual channel experience to halt the process that could lead to a sale.

An “omnichannel” approach alone won’t be sufficient to stem the slide for brick-and-mortar retail businesses; they must put technology to smart use and try to further integrate the online experience to physical store visits. The very shopping experience must evolve beyond transactions. To that end, retailers must leverage data to personalize shopping to individual tastes, and to use both virtual and augmented reality technologies to create more immersive shopping experiences. Data will influence how products are advertised, how they’re displayed and how representatives talk about them. Data can help retailers do a better job at pushing the right product to the right customer at the right time.

Retailers must realize that time is short for devising and implementing a successful strategy to attract shoppers; Millennials aren’t the only consumers using their phones to shop. The challenge of marrying certain elements across channels remains steep. Transforming the shopping experience in a way that reconciles the desire for customization with shorter delivery timelines and expanded inventory — all while simultaneously appeasing the customer’s need for instant gratification — won’t be easy. Those that can pull off this complex equation stand the best chance of winning discerning and demanding customer dollars.


Michael Rittler is the General Manager Retail Card Services, Personal Lending and Business Development of TD Bank, N.A., managing a diverse portfolio of private label credit card programs in the United States and Canada. Rittler Joined TD Bank in 2014 from JP Morgan Chase, where he held a number of leadership roles within Card Services, most recently as General Manager for Affinity & Retail Partnerships.  In that capacity, he managed premier partner programs including AARP, British Petroleum, AAFES, and Mary Kay cards, and he also managed the Partnership Analytics group.  Prior roles within JP Morgan Chase included CFO, Partner Credit Cards and various leadership roles within the finance organization.  Rittler has a deep knowledge of the credit card industry, including Vice President of Financial Planning & Analysis at CitiFinancial; Director of Business Analysis for Small Business Credit Cards at Advanta Corporation and Division Controller at American Express. Rittler holds a Bachelor of Science degree in Accounting from Drexel University and he passed the Certified Public Accountants examination in 1987.

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