CHICAGO - The 2010 NACS State of the Industry Summit kicked off with an acknowledgment that this is the 40th State of the Industry survey conducted by NACS. Back then, industry sales barely topped $1 billion; today, they are in excess of $500 billion.
"We're still where America shops," said Greg Parker, CEO of the Parker Companies, noting that the industry has fared relatively well despite one of the worst economic years on record. However, vigilance is still the key to success. Parker said that gasoline consumption has decreased and that retailers must therefore pay greater emphasis to their backcourts. "The nimble retailer will come out ahead with less competition than they did in the past. I encourage you to watch your numbers."
Finally, Parker reminded attendees that the economic downturn has created a deeper pool of better employees, and that the costs for expanding are favorable. "A recession is a terrible thing to waste."
David Nelson, professor of Economics at Western Washington University and president of Study Groups (FRMC Inc.), offered encouraging news, declaring that the financial system has stabilized and that the economy is growing again.
Among the items that Nelson addressed:
- The housing market is not yet in recovery.
- The economy was unable to realize the full effects of the federal stimulus because of offsets at state levels.
- Nelson offered a correlation between fuel volume and inside store sales: For every 1 percent increase in fuel volume, there is a corresponding rise of between 0.36 percent and 0.57 percent in in-store sales.
- The average duration of unemployment during the current recession is 31.2 weeks, far higher than it was during other recessions. Some economists predict that it won't get back to "normal" levels (about 6 percent) until 2014.
- Not all of the unemployment news is negative. For retailers, that translates to lower employee turnover, lower training costs and lower wage growth.
Nelson also stressed the following throughout his presentation:
- We're in a recovery now, so position your stores for it.
- While things are looking up, don't get too optimistic: economic growth will be slow.
- Unemployment is high and will remain that way for the foreseeable future.
- There is little inflationary pressure on the horizon, so seek good value and take a measured approach to risk.
- Both short-term and long-term interest rates will rise gradually over time.
Nelson concluded by stating that fiscal and monetary stimuli are winding down and that the ball is being passed to the private sector. "Are you ready?" he asked rhetorically, tossing a tennis ball out into the crowd.