Retail

Retail CFOs Tighten Purse Strings Over Physical Store Uncertainty

Retailers face new challenges in 2020.

Retail chief financial officers (CFOs) are in for a bumpy road ahead, sitting in the eye of a storm with the presidential election, global trade disputes and mixed signals on customer spending, according to reports.

Following a depressed holiday turnout for major retailers, small businesses seemed to fare well — though many brick-and-mortar stores still struggle in terms of sales. Uncertainties abound as customer tastes continue to shift as well.

In terms of investment and expansion, retail CFOs will need to be cautious. They must keep an eye on the economy, analysts have said, and look at freight costs, commodity costs and thefts to make sure they don't fall further behind. The top issues retail CFOs will likely face include looming eCommerce challenges, closing physical store locations, the tumultuous tides of the presidential election and tariffs as trade disputes continue.

In terms of eCommerce, the big threat is the growing number of customers each year who prefer to shop on the internet instead of in brick-and-mortar stores. CFOs have had to look at strategic innovations and modern trends, such as letting people be more flexible in ordering things online, then picking them up at a physical store.

With more than 9,300 store closures in 2019, and more planned this year, retailers have had to wrestle with the tough question of whether to expand their businesses at all — with long-held companies like Toys R Us and Payless closing their doors recently.

The political climate could also cause friction among retail CFOs, due to the impeachment trial of President Donald Trump — if Americans are more invested in watching the trial, they may spend less money on retail. In addition, if Trump loses the re-election to a Democratic candidate, the reinstatement of Obama-era regulations could mean changes for retailers.

On the trade front, retailers have had to deal with hard-hitting tariffs from the U.S. trade disputes with China, and they've been monitoring Brexit as well.

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NEW PYMNTS STUDY: LEVERAGING THE DIGITAL BANKING SHIFT – SEPTEMBER 2020  

The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

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