Fuel Prices Trump Unemployment as Top Retailer Concern
The BDO RiskFactor for Retailer Businesses examines the risk factors listed in the most recent 10-K filings of the largest 100 public U.S. retailers. The study revealed that 99 of retailers cited general economic conditions as a risk.
However, fuel prices made a large rise compared to last year's report. Seventy-one percent of retailers cited fuel prices as a primary concern, compared to 58 percent last year.
Fuel prices overtook unemployment as a top concern for the first time in three years. Sixty-eight percent of retailers stated unemployment is a top concern. Unemployment reached its peak in 2010, when 70 percent of retailers cited it as a top concern, reported BDO.
Also weighing heavily on retailers' minds this year was maintenance of information technology (IT) systems. The category leapt from retailers' 12th top concern to No. 6.
"Despite a dip in April, consumer spending has been improving, and retail executives feel that their strategy adjustments are on point," said Doug Hart, partner in the Retail and Consumer Products Practice at BDO. "This year, there is an increasing concern over unknown external factors, such as IT security, supply chain disruptions and geopolitical events that could derail the execution of their strategies. While retailers are also concerned about gas prices this summer, they are otherwise encouraged by consumer spending."
Some other conclusions drawn from the report are that supply risks remain a significant focus for retailers; risks associated with U.S. growth and expansion are at their lowest level since the study began in 2006; positive sales results in the first quarter of 2012 left retailers feeling more confident about consumer spending; and despite an election year, retailers are less concerned about government regulation than before.
BDO USA LLP is a professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies.