February 23, 2015
Ronald Friedman, Co-Leader, Retail/Consumer Products Industry Group, Quoted in Los Angeles Business Journal Supplement, Consumer Goods & Retail Roundtable
The world of consumer goods and retail has been heating up and has clearly become one of the fastest growing and most vibrant business sectors in Southern California. The landscape of managing such businesses has rapidly evolved as well - with laws, regulatory protocols, best practices, consumer and business needs and industry trends seemingly changing by the season. To take a closer look at how this sector works, we asked several experts in the field to weigh in for a roundtable discussion. We hope you'll find the resulting dialogue to be an insightful resource - whether you are looking to buy, sell, launch or grow a business in this industry.
How would you describe today's overall climate for retail in Southern California? How have things improved over the last five years?
FRIEDMAN: The current retail climate for most retailers remains challenging, with the last five years showing slow signs of improvement. Consumer belts are still tight, with average household income declining and costs holding steady. Retailers continue to respond with more discounting, which has a direct impact on their bottom lines.
How have recent trends in consumer behavior and purchasing habits affected the consumer goods industry?
FRIEDMAN: Consumers are looking for discounts and will not spend unless they feel like they are getting a bargain. Consumers walk the aisles instore, but then they pull out their smart phones to comparison shop online. They are aggressive about finding the best price before committing to a purchase. The industry needs to be more creative in attracting customers. Retailers need to make social networking and the internet an integral part of their business plans. The local retail store may become a thing of the past as more and more manufacturers go vertical with their own retail stores. We are starting to see a trend whereby retailers are starting to manufacture merchandise for their own stores to increase gross profit margins. As the manufacturers go vertical, the retails are going to need to respond and produce merchandise with the store brand to compete with the manufacturers.