That was the word from Mark Zandi, chief economist and co-founder of Moody's.com, and a sentiment echoed by other panelists during the opening Super Session, "Recasting Retailing: New Rules and Opportunities," of the National Retail Federation's BIG show held this week.
Citing the massive amount of fiscal stimulus as a major contributor to growth, Zandi predicted that the coming year will see an increase in jobs particularly from industries including health care, technology, education and even retail.
Panelists also agreed that the struggles of the past year had forced retailers to examine their businesses more closely, leading to more efficient practices that had in many cases reduced costs and waste while adding value and gaining a greater understanding of their customers.
This was the case for Family Dollar Stores, represented on the panel by its chairman and CEO Howard Levine. He noted that the recession forced Family Dollar to focus on reducing its costs, as well as those of its customer -- one who is typically affected more and earlier by a recession than others.
Noting that his company had spent more on customer research in the past 18 months than it had in the previous 10 years, Levine said the company had shifted its strategy to focus more on customer needs than wants, for example pulling discretionary items such as apparel and adding certain food items to the stores.
Allen Questrom, the former chairman and chief executive of J.C. Penney Co., Federated Department Stores, Barneys New York and Neiman Marcus Group, noted that the recession had led to more efficiency among retailers, including much better planning with respect to inventory levels.
"I've never seen anybody go out of business because they had too little; only because they had too much," he quipped, noting that the right-sizing of inventory had allowed retailers to hold steady with their prices and avoid the heavy markdowns that characterized the 2008 holiday season.
Questrom predicted a rise in home-related spending, such as at DIY (Home Depot, Lowes) and furniture stores, noting that many homeowners had postponed these types of purchases for their existing homes, while others were buying up homes made more affordable in a post-bubble market.
Still, Questrom does find cause for concern in the nation's overabundance of retail space, and in the possibility of a coming value-added tax (VAT) imposed by the government with the goal of reducing the deficit. "A VAT may be good for the economy in the long run, but it's bad for retail," he said. "You can't have a VAT tax without raising prices. I don't like VAT because it's easy for government to do ... and the government doesn't know how to stop spending."
Zandi, however, said reducing the national deficit will require cutting growth in spending and raising taxes, and expects a VAT to be imposed, calling it the "best of a lot of bad choices" available to fix the problem.
Jordan K. Speer is editor in chief of Apparel. She can be reached at [email protected].