grown and changed their businesses to
meet their clients’ new needs.
Consolidation. You don’t have to look
any further than the department store
category, where something like 80 different companies are all now part of Macy’s!
Every one of those 80 department stores
used to be a major account for a fixture
manufacturer, a visual company, and many
other suppliers of products and services.
We’ve seen similar consolidation in home
improvement, discount, grocery, and many
other categories of retail. Fewer larger
chains have in many cases also resulted in
fewer, larger suppliers to serve them.
Category-killers. Many local and
regional retailers that weren’t acquired
found themselves unable to survive competition with the new big-box retailers
that took the country by storm.
Internal changes. In the last 20 years
we’ve also witnessed a steady shift in power
from brands (and brand names) to the
retailers. And, arguably, a shift from retail
organizations run by merchants to retail
run by supply chain management types,
which has had a profound effect on the
sourcing of retail environments products
At the same time, some things on the
supplier side of the retail environments
industry haven’t changed at all. It’s still
driver of change
in A.R.E. over the
last two decades
has been the evolution of retail.”
a cyclical business that tends to be late to
enter a recession, and then late to emerge
once the economy starts growing again.
And it remains a fragmented industry that
has proven to be a difficult industry to consolidate successfully. Witness the at-best
mixed success of the fixture company rollup
attempts in the late ’90s, and even earlier
attempts in the ’80s. While there may be
more companies owned by private equity
and non-operating owners than in the past,
the retail environments industry continues
to have very few public companies. In the
past 20 years international sourcing has
had a major impact on the industry, as have
changes in purchasing practices (
including online auctions). Business has become
more challenging in many regards, as
demonstrated by an erosion in profitability.
Pre-tax profits for retail environments
companies are down by about a third from
average levels in the last two decades, and
gross margins are currently as weak as we
have ever experienced.
THE ROAD AHEAD
What does this look into the past tell us
about the future of the retail environments
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industry? The mostly entrepreneurial,
owner-run businesses serving the retail
environments industry are remarkably
resilient. If the past is any guide, many will
adapt and change as their retail clients do.
Some will not adapt and will exit the industry. And new companies will continue to
surface in the retail environments industry, growing alongside their fast-growing
As retail faces changes that would have
been unimaginable 20 years ago (internet
competition, mobile “showrooming,” social
media, omnichannel selling, nearly continual store “refreshes,” etc.), their retail environments vendors are working with them
to come up with ways to adapt the built
retail environment to remain competitive.
I confidently expect that 20 years from
now, looking back to today, retail will have
experienced even more startling developments and improvements—and we trust
that their retail environments vendors, and
their industry association, will have evolved
alongside to help them meet those needs.
Klein Merriman is executive
director of the Association
for Retail Environments.
Contact him at 954-241-
4824 or kleinmerriman@
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