We have to make our own real world economic forecast for the gift and gourmet industry. Normally we keep it under Wraps (pardon the pun), but why not share? Maybe it will help you in planning. Remember it is just a forecast – and our best guess – so take it only for that.
Historical:
Our competitors will eat this up, but if they are honest their charts probably look like this or worse. The chart is for number of orders per week. Yes we are capable of handling 10,000 orders a week (all on time too)! As you can see, business ramps up about week 37 (September) and peaks in mid November then falls back off. Historically the independent retail industry (gift, floral, gourmet food, specialty retail, etc) has been growing at just about 7 to 10% a year, but by the middle of 2008 things started to change and we think it will be a long time before it is even back to 2007 levels.
Nashville Wraps’ performance is a mirror of the industries we serve. In Q1 2009 we had the same number of orders as 2008 but revenues were off. Orders were smaller because our customers were not making as many sales at retail, plus we lowered our minimums to help in the recession. Same is going to be true for Q2 2009, and frankly we do not see much change in Q3 2009 but do expect a positive bump of maybe 2-3%.
Where does the line go in 2009?
Because of many factors we think the line for Q4 2009 will look a lot like the line did in 2008. Meaning we are predicting a flat Q4 2009 as compared to 2008, with the same order volume and revenue as it was in 2008. You have heard in governmental and independent economic forecasting that things are beginning to look up. We feel that the real measurable retail economic recovery is not going to be until 2010.
Quick recap as compared to 2008:
Q1 2009 Transactions flat, revenues down 15% (pre-recession last year)
Q2 2009 Transactions flat, revenues down 10% (pre-recession last year)
Q3 2009 Transactions + 3%, revenues + 3% (Recession was impacting comps last year)
Q4 2009 Transactions up 5%, revenues up 5% * (recession in place this time frame last year)
* We think Q4 2009 with be almost like Q4 2008 or flat to +5%. The main reason is that we were well into recession in late 2008 and although things have gotten worse in both general family income and unemployment we do not see it going far backwards like it has for the first half of 2009 due to some growth in 2009…but it could. The country has had time to do some preemptive planning and promos to better cater to a recessionary customer base, and so have we. In late 2008 people were still in shock, uncertain as to what the future holds. We feel that there is less stress in the consumer, but not much more (if any) cash. Americans have hunkered down but can only do that for so long.
It is my hope that sharing this information will help you make good decisions this year and beyond. I welcome your comments. This is an overview and not specific to any one retail segment. Your business or business segment could be radically different. We know of industry segments that have shown no signs of recession while others are struggling. Change is inevitable for everyone. Plan for the worse and hope for the best.
Robby Meadows, Nashville Wraps
Let’s face it—–retail in this economy isn’t for sissies!!!! Let’s keep a positive attitude towards our business and customers. We have to remember that they leave their home to enjoy themselves and if our shops are doom and gloom–they will feel it.
Things were extremely slow for me until this month. Perhaps it’s tax refund money getting spent? I can say that the bit of money I invested in cuter packaging has helped. I give my jewelry as birthday gifts and when the other gals enviously watch a mutal friend unwrap a darling package with glittery jewelry inside, I ALWAYS leave the party with orders! I really had no idea how much a few cents extra on packaging could boost those I-want-one-too sales!
As a retailer that launched her company as the recession hit (what was I thinking!), I’m appreciate you folks sharing your forecasts. I will continue to use your company for my packaging because because of the quality and I think we need to stay US-focused to keep all of our businesses strong.
I cannot predict anymore than the next guy but I can give my thoughts too! I feel that consumers coming in the store are feeling that we are coming out of the recession, it will take a little time but we need to support local businesses. So, we, the shop owners, need to keep up the smiling faces, help them find what they need and find ways to keep them coming back! By the way, I keep hearing the customers say they love my pretty packaging! I always ask if it is a gift for them or someone else…and make it look lovely! Tissue, ribbon and bag goes a long way! All part of making the customers feel we do think of more than our bottom line! Been a rough year for my first but we will make it and we will learn from it. Thank you for sharing your thoughts and facts.
I think all speciality retailers are in the same position, however, we reduced the size (and price) of some our favorite products to generate more frequent purchases. As we all know, then they inevitably purchase other items — this has helped our bottom line and 2009 YTD sales growth. Let’s face it — people are more careful when making purchases and think more carefully about the amount of each purchase — and who can blame them? I started this business after losing my career in the banking crisis — We’re all in this together —
because ‘ the real measurable retail economic recovery is not going to be until 2010’ doesn’t mean that things aren’t beginning to look up. we’ve been pretty low in the barrell! if they aren’t looking up…what?
Excellent analysis, and probably on the nose. After a horrible 2008 holiday, not expecting corporate orders to come back strongly in ’09.
It is hard to believe that all the money the government has pumped into the economy won’t begin to surface as a boost in stock prices and then a slow rebuilding of consumer confidence. Jobs are going to be coming back this fall and the retail rebound could be bigger than you predict.
I live in Oklahoma where the recession has not hit as hard as some states. However, the mentality of the consumers is being affected by the media. My products are soy candles and body products using essential oils.
I have not lowered my prices but I continue to point out to my customers personally and in advertising that my products are comparable in price to Walmart and other discount stores.
I use two basic catch lines: Support your local merchants and We support green products and renewable resources.
Thank you so much for sharing your thoughts on this! This is a very helpful perspective.