CHESS favorites Dana Telsey, CEO and Chief Research Officer, Telsey Advisory Group, and Joe Feldman, Senior Managing Director and Assistant Director of Research, Telsey Advisory Group, presented their annual analysis of the current retail landscape. Founded in 2006, the Telsey Advisory Group (TAG) a leading equity research, sales and trading, consulting, and investment banking firm focused on the consumer sector. It currently studies more than 100 companies in 15 sectors.

They shared their insights on the general overview and then dug in with details on retail performance with analysis based on their proprietary research.

• Macroeconomic and Consumer Environment
• Current Retail Landscape
  • Retail Sector Update
  • Key Retail Trends
• Home-Related Retailing Trends
• Retail Industry Outlook

They outlined standard economic topics such as employment levels, disposable income, consumer spending preferences, housing starts and remodeling statistics. In retail trends, consumer spending is increasing in health care and decreasing for apparel and food.

Consumer preferences for spending on experiences over goods is expected to continue. This shift in spending patterns is driven by the millennial age group, which is influenced by social media. Technology becomes the differentiator as tech-savvy consumers gravitate toward retailers that deliver exciting retail experiences. Millennials devote more of their disposable income to fitness activities and are less interested in branding or luxury items. As members of the sharing economy, they prefer renting to owning products. Interest in resale/consignment shops is growing.

The ecommerce field is seeing new and rapidly growing retailers with disruptive online and mobile-based business models. TAG presented its confidential analysis of numerous retailers’ competitive positions. They discussed the omni-channel strategies of established retailers and explained the practices of many newcomers.

Store closings push malls to seek new uses for vacated space and managers are selecting new tenants to drive traffic. Retailers are experimenting with adding food service and wellness/entertainment activities to enhance product sales. Mobile shopping merges with physical stores, as consumers still want to come to stores. Some product categories are best purchased in person and consumers want the touch and feel experience. When consumers come to pick up or return items bought online, such store visits often lead to additional sales onsite.

Telsey and Feldman discussed long-term implications of ecommerce on traditional retail. Technology retailers are learning more about consumer preferences and behavior to drive instore traffic and offer a better shopping experience to increase sales. Margins of the future are not as stable as in the past. Pricing transparency affects all accounts and it is difficult to maintain pricing. Brand integrity is harder to control with third party sellers.

In closing, they offered their forecasts for areas of concern and for growth. Innovation, speed and vision powered by data will drive successful businesses. Sales will flow from multiple touch points because of the global reach of information. At the same time, expect more localization/regionalization for products and experiences. Smart Home technologies are becoming more accessible to consumers and more integrated into typical home devices. Communication commerce, or commerce by voice command, is the future—in the car and in the kitchen.

Telsey and Feldman suggested CHESS attendees sign up for TAG’s daily newsletter by contacting Dana Telsey.