Succeeding With Your 2002 To 2003 Transition

As retailers close the books on 2002, our retail team looks back and says that Darwin was right. Gutsy retailers like Wal-Mart, J.C. Penney, The Sharper Image, and Lowe's overcame the double whammy of "Iraqnophobia" and consumer malaise, capitalized on their technology expertise, and pulled further ahead of laggards Kmart, Macy's, and The Home Depot. The gap between leaders and losers will open wider as the industry adapts to a Wal-Mart world and turnover in the executive suite accelerates. What will it all mean in 2003? The rise of a new type of CEO, eBay's steady march ahead, and the extinction of Kmart. To find out more and get a head start in the new year, read our "Five Retail Predictions For 2003."

Retail's brightest spot in 2002 was the resurgent growth of online sales -- up 52% from 2001 to $78 billion. Here's why: 1) While stores struggled, billions of dollars of catalog sales shifted to the Web, fueling dramatic growth in categories like apparel, home goods, and jewelry; 2) investments that retailers made in sites like fixing navigation and search, improving images, and adding zoom paid off; and 3) the teams running sites became more effective at mining data to attract qualified shoppers. How can you optimize your site and pull your share of online shoppers? Start by reading Chris Kelley's brief "The Truth About Online Shopping Tools" and Carrie Johnson's report "Retail Digital Marketing Best Practices."

2003 will be another tough year for retailers -- the stretched consumer can only spend and borrow so much. But there's always a way to win. Retailers that remain focused on creating a great multichannel customer experience, as Sears and REI have done, will garner a disproportionate share of overall sales and enjoy double-digit online sales growth -- just like in 2002.

Without further ado, best wishes for a successful 2003. We'll do our best to help you win in the new year. Check out some of our upcoming research on broadband, RFID, and content management, and let me know if there are any topics you'd like to see us research by replying to this email address with your thoughts.


Kate Delhagen
Retail & CPG Research Director

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