In a new survey conducted by Capital Business Credit, 75% of major retailers of soft goods such as clothing and accessories expect retail sales to grow by 4% or more for the spring and summer shopping season. If they do, they will outpace core GDP growth and provide a jolt to the economy.
According to the Global Retail Manufacturers and Importers Survey, a majority of those surveyed believe that 2016 will either be better (45.5%) or the same (38.6%) as 2015.
“While retail sales for January and February were lower than initially anticipated, this hasn’t seemed to deter retail suppliers’ confidence or business activity,” said Andrew Tananbaum, executive chairman, CBC. “In fact, nearly 90% of importers and suppliers are reporting reorders for the spring/summer shopping season.”
The reorders mean that the major retail chains and individual stores are optimistic. Retailers have become increasingly reticent to stock shelves if they don’t think products will sell according to Tananbaum.
The survey results found that over 3/4 of retailers have increased their orders or stayed the same; approximately half indicated that they have increased their orders. And of those who increased their orders, 1/3 ordered 7% to 10% more, while almost 30% said that orders increased by more than 10%.
Impact of the Chinese Yuan
With so many U.S. retail goods produced in China, the devaluation of the yuan has been an important factor for importers and retailers to increase profitability while keeping prices low. Half of survey respondents are considering increasing their Chinese production due to the strong dollar vs. the yuan.
Just over a third (37%) believe that margins may increase due to the lower cost to produce goods in China, but the majority (56.7%) do not think this will translate into lower consumer prices.
“While the overall recovery from the great recession of 2008 has been sluggish, the low costs of goods produced in China has allowed the U.S. consumer to stretch their spending dollars and allowed retailers to keep costs down,” Tananbaum concluded. “In our opinion, this is the first time since the recession that manufacturers, importers and other participants in the retail goods supply chain will have the opportunity to recover some of the margins they lost over the past decade.
Source: Retailing Today
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