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Study: Economy is Top-of-Mind for Retailers

CHICAGO -- General economic conditions were cited as the leading risk factor among the 100 largest public U.S. retailers for the second year in a row, according to research released today by BDO, a professional services firm.

Of those retailers surveyed, 96 percent cited general economic conditions as their top concern. In addition, 49 percent of those retailers citing economic conditions highest also said financial market turmoil was another concern, a drop from the 97 percent of retailers who cited it as a concern in 2008, according to the report by BDO, called "The 2010 BDO RiskFactor Report for Retail Businesses."

"Although the economy has improved over 2009, retailers are still concerned about general economic conditions, unemployment and consumer credit. The April 2010 sales results confirmed that the consumer rebound is still a work in progress. Until consumer spending is fueled from actual income growth and not savings accounts, retailers have modest expectations for a consumer comeback," Doug Hart, partner, Consumer Practice at BDO, said in a statement. "In the interim, retailers need to continue focusing on the fundamentals of cost control and careful inventory management, while selectively looking for strategic growth opportunities."

In 2010, retailers are more concerned over unemployment (70 percent), interest rates (56 percent) and inflation (41 percent), the study found. Jumping to the second spot this year was concerns over U.S. and foreign suppliers and vendors, cited by 86 percent of respondents.
Coming in at No. 3 this year is competition and consolidation in the retail sector, with 85 percent of retailers citing this as a concern. This factor ranked first in last year's survey.

Credit availability and company indebtedness dropped in importance to No. 4, at 86 percent of retailers surveyed. And rounding out the top five was consumer confidence and spending, with 83 percent of survey respondents citing it.

In other news, a separate study by ConAgra Foods found that despite the a turnaround in the economy, Americans say they will not soon let go of their new-found frugal shopping habits. In addition, the survey found four-in-five Americans (79 percent) said they do not feel like the recession is over, while seven-in-10 (71 percent) said they will continue the savings habits they developed during the economic downturn.

The survey showed of those American consumers who made changes to their food shopping or preparation habits, most of those changes will continue into the coming year.

Other findings include:
-- In the past year, 75 percent of Americans have cooked more meals at home, and said they will continue to do so.
-- Four-in-five (79 percent) said they will continue to focus on saving by using coupons, store specials or a budget, and two-thirds (63 percent) will continue to cut back on premium purchases.
-- Two-thirds (67 percent) said they have enjoyed becoming more of a bargain hunter.
-- Nearly half (49 percent) of those already making cutbacks will freeze more meals, and two-in-five (38 percent) will continue to stretch meals.
-- More than half (52 percent) said they expect to cook more in the coming year compared to last year.
"Consumers are saying loud and clear that the effects of the recession are lingering," said Phil Lempert, Supermarket Guru, in collaboration with ConAgra Foods, in a statement. "Over the past 20 months shoppers are heading back to shopping lists and looking for real value. When they are in the store, they are shopping in more locations, especially in the center of the store. Many are turning to canned or prepared products, which can offer both cost savings and convenience for those who are cooking and eating at home more."

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