Growth in retail sector predicted for 2020, according to Moody's, with investments yielding positive results
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The retail industry is gearing up for an eventful year ahead, with a mix of promising growth and potential challenges. Here's a roundup of the key trends and predictions for 2020.
Despite a sluggish November with shopping holidays, analysts remain largely optimistic about the industry's prospects going into the new year. Dollar stores are projected to lead the way, with operating profits expected to increase more than 9%. Similarly, off-price retailers are anticipated to see a 7% rise in operating income. However, department stores are forecasted to experience a 1% decline in operating income next year.
The apparel sector, too, is expected to see growth, with profit growth estimated to reach up to 5%. But climate change and consumer awareness of environmental impact pose risks for apparel sellers. Companies in this sector need to focus on sourcing transparency and sustainable supply chains to stay competitive.
Moody's analysts predict more than half of retail sectors to have operating income growth over 4%. Yet, there are major pockets of distress and decline, particularly among retailers tied to lower-tier shopping malls. Thousands of store closures occurred in 2019, but the retail industry continued growing its sales despite these closures.
Trade tensions with China, risk of a recession, and high levels of debt for many retailers are identified as risks for the industry. Tariffs remain a threat to apparel makers and retailers, and e-commerce growth is expected to outpace the rest of the sector. Online retail sales may reach 25% of the total market in the next four to five years.
Analysts expect e-commerce growth to continue, with online sales expected to grow faster than brick-and-mortar stores. However, it's worth noting that there are no available search results that provide information on the ten largest dollar store chains in Germany in 2020 with proven revenue growth of more than 9%.
In conclusion, while the retail industry is anticipated to be stable in 2020, it is essential for retailers to adapt to the changing landscape and focus on sustainability, e-commerce, and operational efficiency to remain competitive.
