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that’s where the growth is. And they are frequently looking to
their North American vendors for assistance in expanding into
these emerging markets.
According to A.R.E. member research in August 2011, 33 percent
of A.R.E. companies in North America reported that 10 percent or
more of their sales now come from international projects. In a different survey, 67 percent of retailers reported that they prefer to work
with their North American vendors in sourcing fixtures, displays,
products, and other services for international locations. This is a logical extension of the trend of North American-based retail design
firms doing more and more of their work for international projects.
CONSTRUCTION TAKES A BACK SEAT
The “new normal” of this recovery means that our industry looks
very different compared to a few years ago. One obvious difference
is the back seat new store construction has taken to renovations
and remodels for the last four years. While the AIA’s Consensus
Construction Forecast panel forecasts a 10. 9 percent growth in
new store construction in 2012, this increase is from a dramatically
lower base. Projections based on the AIA data indicates that the
growth in new store construction in 2012 will only get us back to
a total market size that is about two-thirds of 2007 level.
SHORTER AND SMALLER
In general, the trend in retail environments might be characterized
as “shorter and smaller.” “Shorter” as in ever-shorter lead times for
vendors as retailers delay decisions until the last possible moment;
“shorter” also in terms of shorter production runs. The “smaller”
is easily seen in the smaller footprints many retailers are moving
toward. While expenditures per square foot may be increasing, the
smaller, “optimized” footprints mean decreased demand overall
for retail environments products per store.
NEW RETAILERS BRING OPPORTUNITIES
There are definite bright spots in this otherwise modest recovery.
New retailers and brands morphing into retailers enter the market
almost non-stop. And many luxury brands and retailers are continuing to invest heavily in both new locations and remodels. This expansion by luxury retailers explains the anecdotal evidence we’ve seen
that vendors in this segment, including higher-end architectural
millwork firms, have fared better than average in the past two years.
And, at the other end of the spectrum, it’s been a good couple of years
for firms providing fixtures for the rapidly expanding dollar stores.
“Recovery” is really about healing, and more healing is the prescription for the retail environments industry in 2012. In general,
retailers appear to have adequate cash on their balance sheets to
fund both ongoing renovations and increased new store openings
in 2012. And to date, the consumer appears to be cooperating with
increased spending, which bodes well for the future.
Klein Merriman is executive director of the
Association for Retail Environments. Contact
him at 954-241-4824 or kleinmerriman@