Social media, technology changing retailing, finance expert says
Casual Living Staff -- Casual Living, October 11, 2011
New York - Social media, digital communication and the Internet are dramatically transforming the retail industry, says Burt Feinberg, group head of CIT Commercial & Industrial at CIT Group, a provider of financing to small businesses and middle market companies, including many in the home furnishings industry.
Feinberg discusses technology trends, financing opportunities and consumer confidence in Retail Industry Trends, the latest in a series of in-depth Q&As featured in CIT's Executive Spotlight series.
The convergence of social media, e-commerce and mobile technologies are changing the consumer experience, according to Feinberg.
"Consumers today are able to actually comparison shop as they walk through a store," he said. "We're also seeing consumers use social media to communicate with their friends to articulate their discovery of a particular product or deal in areas like high fashion apparel or electronics.... In addition, retailers can optimize their marketing dollars by understanding and mining the data they now accumulate about their customers via their electronic platforms."
Fluctuations in commodity prices also are affecting the retail chain, Feinberg said.
"Since cotton is such a major component in much of our clothing, its cost can obviously have a significant effect on the apparel segment of retail. The question is who bears the cost. In order to maintain price in this highly price-conscience market, retailers face considerable pressure from consumers and suppliers face pressure by retailers. Everyone in the chain is being squeezed," he said.
Private equity firms continue to maintain an interest in the retail sector, whether it's the ability to expand an existing concept or rebuild a franchise, he added.
"If a private equity firm finds the right concept, it can realize considerable growth due to the scalability factor, greater than in most other industries. The other opportunity is finding situations where companies may have been managed incorrectly and could potentially be revitalized by a change in strategy," said Feinburg.
"Improving sourcing, optimizing labor hours, managing inventory levels and stock-keeping units (SKUs), combined with strategic store expansion and e-commerce strategies, collectively have had a powerful impact on profit growth that is hard to find in other industries."