a new generation of young consumers,
is growing rapidly. And Malaysia has big
malls with luxury brands setting up flagship stores, poised to become a luxury
What Lies Ahead:
MANUFACTURING IN CHINA
Two U.S.-based fixture companies, St.
Louis-based idX Corp. and Chicago-based
Leggett & Platt Store Fixtures, also shared
their experiences. Both companies operate wholly owned facilities in China, id X in
Shanghai, and Leggett & Platt in Kunshan,
China. Mark Pritchard is executive vice president for strategic business development
for id X Corp. Joel Katterhagen is executive
vice president for business development of
Leggett & Platt Store Fixtures Group.
Both Leggett & Platt and idX believed
that it was important for their companies
to have a presence in China, with active participation from their companies’ staff and
management. “Having your people there on
an ongoing basis is really the only way that
you’ll be successful,” said Katterhagen. He
noted that it’s critical for manufacturers to
understand what they do well and leverage
that, at least initially in their Asian manufacturing plans.
“We focused on things we do well in the
U.S. and products we could do well bringing back to the U. S., such as gondolas, hardware, accessories racks, and apparel racks,
for example,” Katterhagen said.
Pritchard noted that serving U.S. retailers and brands in Asia requires providing
the same level of quality as in the U.S.,
delivered across all of Asia. U.S. retailers
also tend to need extended services, including design adaptations, manufacturing,
logistics, general construction, and installation services, he said.
A few additional notes for success:
• “In Asia, look for partners with like
ambitions, and make sure they will hold for
the long term,” Pritchard advised.
• Project management teams on the
ground who understand how to get the job
done (not only in China but across Asia as a
whole) are a necessity, Pritchard said.
“The opportunities in China are vast, but
so are the challenges,” said Katterhagen.
The future of retail environments may rely
on how we envision the opportunities
“The notion that we are sharing an economic reality is a fiction,” stressed Zachary
Karabell when he spoke at A.R.E.’s Convention and Industry Summit in November in Palm Beach, Fla.
The composite “American consumer” referred to in the media does not exist, he explained. “We
talk about America as though all Americans are experiencing the same economic reality,” Karabell
explained. In Nebraska, there has been no recession to speak of, while Ohio, Michigan, Nevada, and
most of Florida remain mired in a deep recession. A software programmer in Silicon Valley is likely
to be experiencing a boom, while 50 miles away in Central California where many are dependent
on a declining service industry, the economic situation is very different.
MORE THAT YOU MIGHT NOT SEE IN THE NEWS:
• Many commonly cited statistics, such as GDP, trade deficit, and retail sales can distort the picture
to some extent; the reality is much more complicated. “Consumer sentiment is one of the worst,
because it’s incredibly volatile and has little to do with their actu al behavior,” Karabell said.
Ultimately, the only thing that determines whether people will spend money is their income (earnings
plus available credit).
• There is likely not room for all of the retailers currently competing in the marketplace. There
will also be continual erosion in the brick-and-mortar sales. Retailers will continue to try to make
their environments more exciting, more vibrant, even if they aren’t opening as many new stores.
• Job growth is likely to be very slow because the change in the economy is due to globalization and
technology, neither of which are decelerating. (It has nothing to do with governmental uncertainty.)
• “For all the emphasis on debt right now, it strikes me that the real deficit that we have right now
is not budget deficits or a spending deficit, it’s an optimism deficit—that belief in being able to create
a better future, being able to solve your problems.” This
is a serious hurdle because optimism is a key ingredient
in wealth creation. Some level of belief and optimism
about the future is a key ingredient in creating it. “If we
start losing that optimism collectively, it becomes a real
competitive disadvantage,” Karabell said.
• For all of the issues that are churning, we live in an
age with the greatest wealth creation globally that the
world has ever known, and it’s happening more rapidly
than the world has ever known. More people throughout
the world are rising out of subsistence-level poverty into
something resembling a middle-class life than ever
before. There is an electric hum in the air in parts of
the world that used to be the hallmark of the U.S.
• Try to understand the collective “story,” but
recognize that it’s not as important as we tend to
think it is, particularly in terms of how we conduct
our business on a daily basis.
Speaker: Zachary Karabell, economic
analyst, discussed how current economic
and political narratives affect the retail
environments industry. His take? “In the
past, things were never as good as we
thought; and currently, they aren’t as bad
as we think they are.”
More Karabell articles available at his web site