Oh, how we envy those Tier 1 companies with their big budgets and their ability to spend their way to success. Being big comes with a series of challenges that make SME’s cringe. Below are the Top Ten trends that high volume retailers and vendors will confront in 2008.

ONE
Cash & Credit Crunch
Headwinds from the macroeconomy (outside of our industry) now cloud the outlook for the business climate and the consumer spending environment for retailers. The European Bank says “a perfect economic storm” is on the horizon. Let’s not talk ourselves into a recession but acknowledge the reality of America’s mortgage and foreclosure crisis, UK’s Northern Rock fiasco, France’s Société Générale’s rogue trader scandal, Germany’s government-backed bailouts of German banks, and Spain’s new reliance on ECB finding for their banks.

A solid credit rating and healthy balance sheet will serve retailers well during 2008 as they again demonstrate why cash is king. With consumer spending constrained by economic weakness and tight credit, the marginal players in the industry are in for a tough time. Companies who struggled to grow sales last year, even when growth was robust, may have increase borrowings under their credit lines, if they haven’t already done so, to fund operations. Financial and credit managers from distributors, retailers and vendors should observe these trends at www.ecf-congress.eu

TWO
Search for Perceived Value
Retail in affluent economies is an emotion-filled business where product purchases are driven by consumers’ desires to satisfy wants, rather than simply meet needs. In an environment where consumers have a lot of reasons to feel unsettled about the economy, retailers need to demonstrate value-added on top of compelling prices and quality merchandise.

THREE
Growth for Private Brands and Branded Non-Brands
The increased penetration of private brands is not a new phenomenon, but with retailers and disties facing tough market conditions for 2008, the allure of direct sourcing will result in acceleration. The capabilities of retailers’ internal product development teams have improved, but building a brand from scratch is never easy, so the more common strategy involves entering into exclusive distribution agreements.

Interesting note: in what appears to be an oxymoron, there’s a trend to successfully brand Private Label