Retail CEOs report sharp drop in confidence

Published at 09:53 AM on 03 February 2009

The confidence of retail industry CEOs is at an all time low, according to PricewaterhouseCoopers (PwC) latest annual CEO survey. Only 14% of the 64 retail CEOs interviewed are very confident that they can increase their companies’ turnover over the next 12 months, compared with 44% in the PwC CEO survey last year.

Carrie Yu, global retail and consumer leader, PricewaterhouseCoopers, commented:

“Given the harsh commercial environment, it is hardly surprising that retail CEOs are much less confident than they were at this time last year. The current economic downturn has shaken people everywhere, precipitating a huge drop in consumer confidence. The resulting change in consumer spending patterns has had an immediate and dramatic impact on the retail sector.

“Consumers will tighten their belts even further, with spending on “big-ticket” items (like cars, luxury items, major appliances and home improvements), discretionary purchases and property continuing to decline.”

Retail CEOs anticipate that any growth will come from existing markets, rather than new markets. Over 60% of CEOs in the retail sector favour focusing on the territories in which they already operate, and only 17% plan to move into new ones. Emerging economies like China and India may continue to attract interest but the level of growth is likely to be lower than in previous years.

Despite the downturn leaders are still concerned about the environment. Most retail CEOs see dependence on carbon-based energy sources as one major danger, and they are looking for ways in which to alleviate the threat. Eighty-six percent are focusing on operational improvements; 50% are turning to alternative energy sources; and 45% are investing in new technologies to reduce the amount of energy they use. Wal-Mart, the world’s largest retailer, is active in this arena.

More than half of all retail CEOs are changing the nature of the products they offer, to meet growing consumer demand for goods that are manufactured in an ethical and environmentally sustainable manner. More importantly 72% of these respondents report that they are already making a return on their investments or anticipate doing so within the next 12 months. Many retailers are also demanding that suppliers improve their environmental footprint and document what they are doing.

Carrie Yu, global retail and consumer, PricewaterhouseCoopers, concluded:

“In the near term, there will certainly be tough times for most retailers, particularly those serving the consumers hardest hit by the downturn. Every retail CEO will have to make tough decisions about what actions are required to ensure his or her company’s short-term survival.

“A strong focus on working capital, cost-base issues and supply chain risks will be imperative. Over the longer term they will need to ensure that they also address systemic risks such as climate change and shrinking natural resources.”


Notes to Editors:

For more details or a copy of the report please visit www.pwc.com/ceosurvey 


For more information contact:

Vanessa Shaw
Consumer and Industrial Products & Services PR Manager, PwC 
Tel:020 7212 1002 
Mobile:07989 572 425 

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