McKinsey: If one certainty about economic downturns is that they end, another is that traditional retailers recover slowly. In the United States, for example, only 25 percent of drugstores, 40 percent of mass retailers, and 60 percent of specialty-apparel retailers returned to pre-recession growth rates within five years of the 2001 downturn.1 That’s time retailers can’t afford. The period when an economy emerges from a recession is pivotal to determining retail’s winners and losers, and our research suggests one of the keys to securing this success is to maintain investments throughout the business cycle. We believe that for companies coming out of the current recession, investing to build robust multichannel capabilities provides an attractive opportunity for retailers to set themselves apart from their peers.For all the difficulty retailers have experienced in the past year, online sales have continued to be a bright spot: while overall sales have generally fallen in the United States, online sales have actually been increasing since the start of 2009.2 In fact, the percentage of total sales made online continues to increase, and our research also shows that more and more consumers are using the Internet to investigate products they later buy in stores. By 2011, we believe the Internet will play a role in more than 45 percent of US retail sales, as either a research tool or a sales channel. What’s more, consumers who shop across a number of channels—physical stores, the Internet, and catalogs—spend about four times more annually than those who shop in just one (exhibit). Companies that get multichannel retailing right can enjoy larger profit margins and yearly revenue growth more than 100 basis points higher than companies that don’t. Click here to read the full article >>
