Although retailers had a tumultuous year in 2013, many retail Chief Financial Officers (CFOs) believe that the retail industry will see an increase in total sales in 2014, according to a new study from BDO.
In fact, more than half (56%) of CFOs surveyed stated that they expect consumer confidence to increase in 2014, leading to a 5.1% increase in total sales and 4.8% increase in comparable store sales this year.
The eighth annual BDO Retail Compass Survey Of CFOs is a national survey based on the insights of 100 CFOs in the retail industry. A wide range of topics are discussed and analyzed, including employment, holiday trends and e-Commerce sales and engagement strategies.
Out of the variety of product categories, consumer electronics is expected to be the most popular with consumers in 2014: More than two thirds (69%) of respondents noted that it would be the top performing category this year, while 58% stated that it will be the most discounted category.
Aggressive discounting strategies during the 2013 holiday season affected the bottom-line of many retailers. But there were some trends that had a positive impact, with surveyed CFOs highlighting online promotions and campaigns as top-performing tactics. Free shipping (28%) and promotions via social media and email (24%) were the most successful, while extending store hours (40%) was considered the least successful strategy.
While most CFOs said they believe consumer confidence will improve in 2014, there are many factors that can hinder positive results. Approximately half (47%) of CFOs said unemployment will play the biggest role in overall consumer confidence, while 16% believed the housing market would have an impact. Only 12% of CFOs pointed to tax increases as a factor.“With consumer confidence gaining momentum, retail CFOs are relatively bullish about 2014 retail sales,” said Doug Hart, Partner in the Retail and Consumer Products practice at BDO. “While concerns remain about unemployment and financial market volatility due to the Fed’s pullback, they appear to be offset by the housing market recovery and less concern over Washington gridlock. Retailers are hoping that those factors will help boost consumer confidence in the coming year.”