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RAPAPORT... U.S. retail executives are planning to increase capital spending this year and they placed a strong emphasis on the use of technology to manage the enterprise, according to the 2013 Retail Outlook Survey by KPMG LLP. The survey noted that 58 percent of retail executives will increase capital outlays in 2013 and 27 percent expect capital investment to remain the same as it was in 2012. Fifteen percent plan to reduce capital spending. More than 60 percent expect to focus capital on geographic expansion plans, while 40 percent will invest in technology and 24 percent will add to their advertising and marketing programs, according to the survey's results.
"Technology is paramount to driving growth and enhancing customer engagement for retailers," said Mark Larson, KPMG's global retail leader. "With consumer behavior, spending and demographic profiles changing rapidly, it is absolutely critical that companies take an omnichannel approach to engage consumers, utilizing all the platforms at their disposal, including brick and mortar, online and mobile." 
The most important technology-related trend that is having a ''significant impact'' on retail businesses, was social media, cited by 71 percent of executives, followed by mobile and online shopping at 52 percent, and mobile and online promotions and coupons at 51 percent. Additionally, KPMG found a 13 percentage jump in the number of executives who said their companies are using social media to reach more customers and explore new ways of doing business compared with 2012.
Only 32 percent of executives said the use of instore mobile technology was having a great impact on their business, while 18 percent said the ability to scan QR codes and 16 percent said mobile payments were resulting in a positive impact at stores. Showrooming was having a significant impact on just 12 percent of those surveyed.
KPMG confirmed that data and analytics provided a great opportunity for retailers; for example, executives most frequently cited that data analytics played a key role in helping provide customer insight (72 percent), as well as in the areas of branding and product management (67 percent) and pricing decisions (56 percent). Executives also said they used data to drive operational excellence and actionable insights (50 percent), and acquire customers (36 percent). However, a gap exists between this opportunity and retailers' ability to realize opportunity, as 43 percent of respondents rated their companies' data analytics literacy as only average, according to the survey.
"A key to success will be investing in technology to harness the vast amounts of structured data that reside in a company as well as the unstructured data online and in social media," said Larson. "That data can drive the insights that will allow retailers to interact with consumers more effectively and capture more 'wallet-share,' as well as identify new markets, new strategies and new operating models to generate growth and profitability."
There was positive news on current revenue and future projections for retailers with 74 percent of executives already observing increased sales compared with one year ago. Thirteen percent said revenue was about the same as in 2012 and another 13 percent reported a revenue decline. Additionally, 85 percent of retail executives indicated that the industry would experience growth in the coming year; however, 74 percent anticipated only modest gains of 5 percent or less. Some of the top reasons these executives believed their revenue would increase was the result of strong customer retention plans, attracting new customers, improved economic conditions and consumer spending, and innovative merchandising strategies.
Impediments to increased revenue included pricing pressures as the top concern, labor costs, lack of consumer demand, regulatory and legislative pressures and increased taxes. KMPG found that 30 percent of respondents cited increased government regulation as a major factor hindering industry growth, nearly double the number from 2012. Furthermore, in addressing barriers to company growth, far more executives this year cited legislative pressures, increased taxation and political/regulatory uncertainty as major concerns.
Most retail executives said their organizations are most focused on regulatory issues around healthcare reform (54 percent) and labor/immigration laws (41 percent). Despite these challenges, 89 percent of respondents believed their company is somewhat (60 percent) or very (29 percent) prepared to manage the impact of public policy and regulatory change, according to KPMG.
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