November 9, 2010

E-commerce emerges as priority for CFOs

Some degree of channel blurring reported

As this year's critical holiday season approaches, CFOs have shifted their focus from reducing operating costs to driving profitable sales through better strategy execution, improvements to merchandising effectiveness and inventory management, according to a new Global Retail CFO survey from PwC's Retail Consulting Services.

According to the survey, many retail CFOs reported that customers are slowly beginning to feel more optimistic about spending and retail chains are responding with initiatives to attract customers back into stores by investing judiciously in inventory and technology.  This was in contrast to last year's report, which was characterized by a significant focus on managing in the midst of the recession, leading to stringent monitoring of inventory controls and capital expenditures and driving substantial reductions in operating costs. 

The 2010 Global Retail CFO survey, which was conducted to explore the efforts retailers have taken to improve business and financial performance over the past year and their priorities going into 2011, is compiled from interviews with 56 retail CFOs, including 33 North American and 23 International retail chains in the specialty, grocery and department store sectors.  CFOs were asked to provide insight into five key areas: consumer sentiment, marketing/advertising, e-commerce, inventory productivity and real estate.

While the growth rate of e-commerce is outpacing that of traditional brick- and-mortar stores, most retailers have not achieved the needed scale to make online sales significant to their financial performance.  While all participating retailers have web sites, only 67% of CFOs said that their sites were actually e-commerce transactional sites.  All participants felt some degree of channel blurring as customers often use web sites for product research or competitive price checking and then buy in store or at a competitor. A year later, retailers still have a long way to go to leverage e-commerce opportunities.