EXCERPTS OF RECENT MEDIA COVERAGE CONSUMER BUSINESS PRACTICE
A SAMPLING OF BDO THOUGHT LEADERSHIP IN THE MEDIA FOR Q1 2016
store, and which can be shipped directly FORBES to the consumer. For an apparel retailer, for instance, certain styles and colors of MACY’S DOWNSIZING IS A available shirts that are not carried in the WARNING: HOW RETAILERS store should be easily accessible to the SHOULD RIGHT-SIZE THEIR consumer via digital or mobile channels.”… STORES IN 2016 “As retailers align their physical-to-digital By Barbara Thau ratio, they must re-evaluate and rationalize their real estate portfolio,” Berliner said. Less is more, good things come in small That calls for ”negotiating with landlords to packages—no matter the cliché on the reduce space in malls, which will become BDO has been a valued virtues of all things compact, little, and increasingly important to retailers’ entire miniature, size definitely matters these days cost structure. Retailers will need to business advisor to in retail, and bigger is not better… determine if, upon lease expiration, it is consumer business more cost effective to shrink their existing For Macy’s, that also means moving to space or move locations to a smaller unit.” companies for more than smaller boxes. Just as the chain cuts 40 of its 150,000 to 250,000 square foot full- 100 years. BDO’s dedicated, line stores, it’s plotting 50 new Backstage partner‑led teams provide locations, its off-price spin off chain, which NBC NEWS average 30,000 square feet… a comprehensive range of BOXED IN: BIG RETAILERS assurance, tax, advisory What strategies should retailers consider SEARCH FOR THEIR SPOT IN when right-sizing SHOPPING’S FUTURE and consulting services to their brick-and- By Martha White Fortune 500 companies and mortar stores? David entrepreneurial businesses Berliner, partner As Amazon’s record-breaking holiday in the consumer season comes into sharper focus, some alike, both domestically business practice experts and investors are questioning and overseas. at BDO USA, LLP, whether or not the retail model that relies weighs in… on vast stores packed with merchandise—a model that defined shopping in the 20th “As retailers reduce space, they need to century—can survive in today’s increasingly optimize the inventory mix and ensure digital environment… customers are aware that other SKUs are available online,” he said. “Store employees, Retail experts say the downsizing isn’t all in-store terminals and mobile devices about who can provide the lowest prices. should be available to facilitate the sale of the products that are not available at the MEDIA COVERAGE OF THE BDO CONSUMER BUSINESS PRACTICE 2
“This is a change in shopping habits, and it’s not just a change as far as moving to online,” said Ted Vaughan, national partner for consulting company BDO’s Consumer Business Industry Group. “There’s also some shifts in the younger shopper and whether the mall is an attractive concept to them.”…
“It’s a change that’s been slow to occur, and while just 10 percent of sales occur online, you can see the effects it’s had,” said Vaughan, the consultant. He spoke approvingly of Saks Fifth Avenue and Lord & Taylor parent Hudson’s Bay Co.’s purchase of flash sale site Gilt Groupe, which was announced Thursday.
“One of the things we’ve seen with retailers is when they first started getting into the online business, they were creating their expectations. “We’ve seen an increasing own platforms. (Now) you acquire it rather correlation between stock market RETAIL TOUCHPOINTS performance and consumer confidence,” than building it yourself,” he said. “I think DATA SECURITY: YOUR that’s a better approach.” Hart says… CRITICAL FOUNDATION Still, retail CFOs are hardly in a panic that FOR OMNICHANNEL CFO MAGAZINE the “sky is falling,” says Hart. SUCCESS By Ted Vaughan RETAIL CFOS ON 2016: “They’ve been through their budgeting and planning season [for 2016], and they’re DOWN, BUT NOT OUT not going to have a knee-jerk reaction just Through 2015, we saw a lot of exciting By David McCann because holiday sales were a bit off plan developments around omnichannel, and there’s global market turbulence,” especially through the holiday season. Among 100 retailer finance chiefs polled by he says. “They’re still looking to the long However, with these increased investments BDO, three quarters said they expect sales term, and there’s a lot that can happen come a few ramifications that all retailers to increase this year, but on average they between now and next fall and the need to think about as they go into 2016 pegged the increase at only 3.4%. That’s holiday season.”… and further invest in omnichannel… down from 3.9% in last year’s annual survey of such CFOs by the auditing and advisory Also on the minds of some retail- Big Data: Managing Big Data is a growing firm, and 5.1% the year industry finance chiefs is the specter of obstacle for retailers. Based on BDO’s before that. the revised lease accounting standards 2015 Retail Compass survey of CMOs, slated to take effect in 2018. Under the nearly 90% of retailers say they’re finding “That 3.4% is not a very new rules, companies will have to record it difficult to manage the vast amounts of strong outlook,” says leases—including existing ones—on their data available as part of their omnichannel Doug Hart, a partner balance sheets. strategy. This is a significant increase in BDO’s consumer from last year, when 72% of retailers business practice. “A large retailer might have a couple billion said the same. On the front end, we’re Historically—meaning, before the 2009- dollars in lease obligations that it has to seeing shoppers grow more comfortable 2010 recession—such forecasts routinely pay over time,” says Hart. “Putting them purchasing items online, and retailers have topped 4%, he notes… on the balance sheet will make it look as made the appropriate investments to make if they own that property, and the lease the shopping experience more similar to BDO’s survey was taken just after New Year, payment obligations will look like bank- being in the store. But in the back office, when global markets were plunging. That debt obligations. It will make retailers look retailers now need to invest in the systems probably influenced the relatively gloomy more leveraged.” and processes to analyze all this data… MEDIA COVERAGE OF THE BDO CONSUMER BUSINESS PRACTICE 3
Although a large percentage of retailers estimates released by the U.S. Department don’t believe the risk of data breaches has of Commerce E-commerce, totaled $341.7 CONTACT: declined, they have increased their focus billion in 2015—a 14.6% increase over on raising internal awareness and making 2014’s $298.3 billion. They also represent DAVID BERLINER, New York the appropriate investments to know what the mindset of some traditional brick-and- 212-885-8347 / [email protected] information they have in their systems, mortar retailers, who have adopted the where it is stored and who has access mantra “if you can’t beat them, why not PAUL BROCATO, Chicago to it… acquire them?”… 312-616-4639 / [email protected] AL FERRARA, New York Have IT officers play a more integral role in Some retailers are better positioned to 212-885-8000 / [email protected] educating your team: As retail organizations attract a newer and younger audience rely more on data to improve internal through the acquisition of e-commerce sites RANDY FRISCHER, New York decision-making, the role of the IT security that cater to the ever-elusive Millennial. 212-885-8445 / [email protected] team increases. Now, we’re finding more IT Greater access to this demographic was DOUGLAS HART, San Francisco officers report to CEOs on their strategies Nordstrom’s goal in purchasing private 415-397-7900 / [email protected] and on findings and developments… sale website HauteLook in 2011, and in 2014, Trunk Club, an online style service NATALIE KOTLYAR, New York Develop preventative measures: The for men. Nordstrom Direct president Jamie 212-885-8035 / [email protected] average hacker is in a company system Nordstrom told WWD, “We may have done ISSY KOTTON, Los Angeles for 205 days before they’re discovered. a good job over the years with the Baby 310-557-0300 / [email protected] These cybercriminals sit quietly within a Boomer generation, but we have also got company’s system and accumulate delicate to figure out how to be relevant to the MIKE METZ, Minneapolis customer information until someone finds Millennial customer, and HauteLook has 952-656-2612 / [email protected] them. To be more proactive in your security built a business on figuring that out. They measures, conduct an assessment of talk to customers who are rabid fashion RICK SCHREIBER, Nashville 615-493-5641 / [email protected] internal security vulnerabilities and identify fans on a daily basis. Our ability to get improvements. Nordstrom into that conversation has ALAN SELLITTI, New York driven some meaningful results.”… 212-885-8599 / [email protected]
The saying, “if you build it, they will come,” TED VAUGHAN, Dallas CHAIN STORE AGE can often be true. But for retailers, how fast 214-969-7007 / [email protected] BENEFITS ABOUND WHEN you move makes the difference between BRICK-AND-MORTAR a boom or a bust year, and an acquisition- based strategy might be the speedier, more RETAILERS ACQUIRE effective approach for traditional brick-and- E-TAILERS mortar retailers that want to maintain their By Natalie Kotlyar competitive edge.
These recent acquisition announcements reflect traditional retailers’ increasing appetite for a greater share of the online sales pie which, according to non-adjusted
Material discussed in this article is meant to provide general information and should not be acted on without professional advice tailored to your firm’s individual needs.
ABOUT BDO BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, advisory and consulting services to a wide range of publicly traded and privately held companies. For more than 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. The firm serves clients through 63 offices and more than 450 independent alliance firm locations nationwide. As an independent Member Firm of BDO International Limited, BDO serves multi-national clients through a global network of 1,408 offices in 154 countries. BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. For more information please visit: www.bdo.com. © 2016 BDO USA, LLP. All rights reserved.