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    The retail industry is going through a form of evolution, maybe even a revolution. In this CIT Executive Spotlight, Marc Heller discusses e-commerce and retail industry trends, and shares his outlook for the rest of 2016. Read E-Commerce Drives Retail Revolution for more insight.


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    The core 2016 back-to-school shopping season gave way to some interesting purchasing trends. On average, spending is up from the prior year, with those who began shopping in early July spending 27 percent more than those that began shopping in August or later. According to a recent study performed by Deloitte, while 61 percent of parents plan to do their research online, traditional school supplies like clothing, pencils, paper, notebooks and the like will be purchased at a physical store, putting brick and mortar in the lead this shopping season. 1

    Tablet user 350x192 Parents are still the primary decision makers when it comes to K-12 back-to-school shopping. But they are getting some help from their local schools in the form of supply lists. Some schools have circumvented the shopping process all together by offering preconfigured mommy packs. For a nominal fee that includes shipping you can have everything your child needs to start the 2016 school year delivered to the comfort of your home.

    Technology continues to win in 2016, with K-12 parents spending on average $343 on tech purchases. The numbers are higher for the parents of college freshman who spent roughly $470. 2  This is great news for consumer electronics retailers and manufacturers, as more will be spent on tech items this back-to-school season than in any other category.

    A breakdown of this tech spend shows that laptops will account for 49 percent of all planned tech purchases, followed by:

    • Tablets, 42 percent
    • Mobile devices, 31 percent
    • Headphones, 27 percent
    • Mobile phone plans, 22 percent
    • Desktop computers, 18 percent
    • Cameras, 14 percent  3

    When it comes to tech purchases, Amazon, Walmart, Best Buy, Target & Apple respectively are the preferred retailers. Interestingly enough, Walmart, Target & Amazon are the preferred destinations for back-to-school shopping across the board when it comes to technology, traditional supplies and apparel, with Walmart surpassing Amazon in the areas of traditional supplies and apparel in 2016.

    1 http://www2.deloitte.com/us/en/pages/consumer-business/articles/back-to-school-survey.html
    2 http://rubiconproject.com/insights-report/2016-back-to-school-consumer-pulse/
    3 http://rubiconproject.com/insights-report/2016-back-to-school-consumer-pulse/  

    *Total number of responses will equal more than 100% as study participants were are allowed to select multiple responses.

    The retail industry is going through a form of evolution, maybe even a revolution. E-commerce has changed the way retailers sell, so that the major brick-and-mortar companies are looking at their individual stores, potentially closing what they consider unprofitable stores, and investing in e-commerce to continue to grow their business. 

    In apparel, millennials and teen consumers have different buying habits than their parents, which is reflected in millennials' preference for 'buying' one specific item, even when at a mall or a store, rather than 'shopping' for multiple items. This difference can be attributed to the fact that millennials are often accustomed to buying a specific item online rather than browsing for items in multiple stores. Consumers whose shopping behavior was established before the rise of e-commerce could be more likely to browse through a store or a mall, leading to the discovery of new items and greater sales.

    Mall 350x250 Some of the other trends we're seeing in the market include:

    Consumers Favoring Experiences over Products: The apparel side of the business, as well as accessories, has slowed down. In the recent past, handbags, watches and leisurewear were booming. Those areas seem to have taken a significant step back, while consumers are spending more on restaurants, vacations and health spas. Consumers are favoring experiences over products, and retailers are reengineering their businesses as a result.

    Furniture Sector Remains Strong: The furniture segment continues to do well. Feedback at the furniture show in High Point, North Carolina, indicated that the show was extremely busy. A looming question in the furniture sector is whether the Asian suppliers will go direct to retail versus using furniture companies in the U.S. to distribute.

    Consumer Product Companies That Sell to Retail Still Pursuing M&A: Consumer product companies that sell to retail are looking to acquire the front ends of businesses, because that gives them an increase in revenue. If the acquirer already has the back office, warehousing and sourcing in place, an acquisition can add significantly to the bottom line, especially if the company is acquiring a brand that sells to customers it doesn't presently have. Acquisition at the right price can sometimes be the key to growth.

    Overall, retailers and consumer products companies that sell to retail continue to adapt in response to evolving consumer behavior. 

    You can read the full Executive Spotlight, "E-commerce Drives Retail Revolution," on the Knowledge Center on CIT.com.

    Marc Heller is President of CIT Commercial Services. His responsibilities include client service and retention, ensuring client credit quality and profitability, and business development for Commercial Services. He earned a BS in Economics from Queens College. 

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