The fundamental economic forces explain so much about our ever-changing culture and values. The Middle Ages, from the 5th to the 15th century economy, were based on two often conflicting forces: building castles for kings as monuments to their power, and building cathedrals and churches to God’s glory.
The Industrial Age in the 18th and 19th centuries resulted in a focus on converting energy and new manufacturing processes into a tremendous new supply of consumer products, which needed to be sold through an efficient distribution channel — thus the emerging significance of retail.
Within the local and national economy, 68 percent of economic activity is comprised of consumer spending. This statistic has remained at the same level over the century – throughout the consumer era.
Spending is affected, however, by consumer confidence, tax rates, employment and changes in personal income. At the same time, the types of retail have experienced tremendous changes and adaptations, with neighborhood shopping centers, department centers, downtown retail districts, malls, off-price centers, box stores, discounters, warehouse clubs, and now online retail.
Consumer behavior is about seeking, searching, and satisfying needs and wants. Based on Hebert Research’s research findings, the consumer shops 104 times a year for groceries, 27 times to a warehouse club, 17 times to specialty retailers, 51 times to buy fuel, and the list goes on. Shopping, therefore, involves not just the impact on the checkbook but also the calendar.
The Great Recession has had its toll on 22 percent of the retail locations nationally which have been closed. The Eastside retail sector, however, is the exception because it is one of the brightest regions of the US economy.
The future of the retail shopping center continues to be very variable. The following are some of Hebert Research’s findings as of this fall:
1. A higher level of quality customer service is more important than the lowest prices. Among the local consumers surveyed, 64 percent rated quality of service as more important, while only 12.7 percent believed that lower prices were essential.
2. Selection of premium brands had a mean rating of importance of 5.49 (0 to 10) scale. Private or warehouse brands rated even lower with a mean of 4.87. So what really prevails is the trust and service of the retailer.
3. Product quality is at the top of the scale of importance with an 8.36 mean rating. In fact, 28.7 percent of consumers rated this variable as an absolute.
4. Convenience to where consumers live and work scored similar ratings of 5.27 and 5.57, respectively. At one time, convenience to residence greatly outperformed where consumers worked. Over one third (36.8 percent) rated retail locations close to work as highly important.
This month’s U.S. congressional decision to extend the tax cuts, especially for the middle class, is critical to the retail spending and employment recovery. The elimination of the state tax on many consumer items will also have a great impact on retail activity. Tax policies need to be in alignment with consumer and citizen values.
Jim Hebert is the president and founder of Hebert Research, Inc., an international real estate, land use, and statistical research firm in Bellevue.
