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The retail environments industry has experienced strong growth over the last four years, driven by new store construction and remodeling of the existing store base.
"Our current estimates are for low single digit growth in 2008," reports Klein Merriman, executive director of the Association for Retail Environments (A.R.E.).
Merriman predicts 2007 will be the fourth consecutive year of growth in the retail environments industry, "Fixture manufacturing and the entire retail environments industry continued to grow in 2007, with sales up an estimated 10 percent."
While A.R.E. members are optimistic about 2008, the major challenges for the retail environments industry are almost all external.
Merriman explains: "There are factors that our members cannot shape or influence in any way, but can only respond to. As our members look ahead to next year, their concerns seem to focus primarily on external factors such as the economy, the housing market, the credit crunch, presidential politics, and the falling dollar."
In the past, the top concerns of A.R.E members were industry-specific issues, such as industry consolidation, offshore sourcing, and online auctions.
"At this moment macro issues including the economy would be at the top of the list of worries," he says. "We tend to lag the economy overall and a recession would have an impact."
Merriman says several internal industry trends will remain, such as the pressure to reduce costs and the demand short lead times
"The growing impact of Chinese manufacturing on store fixturing, visual presentation products, and P-O-P appears certain to continue," he says.
Imports have been a factor in our industry for over 20 years, and almost all A.R.E. members have been forced to respond in some way.
"Some of our companies are establishing subsidiaries in China to supply both their domestic company's needs and also take advantage of supplying the growing retail market within China," Merriman explains.
Many A.R.E. member companies have developed relationships with Asian suppliers to produce parts, components and occasionally complete products.
Trend on the horizon
Merriman notes that the green movement is a major trend affecting A.R.E. member companies, and they are adapting their production and product offerings to meet these demands.
"We're likely going to see most of the adaptation in design, materials selection and production techniques," Merriman says. "Green has become of such great interest to our members that when we asked for volunteers for our Green Task Force, we had over 100 member companies volunteer to participate. Consequently, we decided to name our Green Task Force the The Green 100. They are currently hard at work determining how A.R.E. can best help its members with this new challenge and opportunity."
A.R.E. has yet to determine exactly how the green movement will affect the design, manufacture and installation of store interiors.
"Exactly how much of an impact this revolution will have at the individual store level, across entire retail chains, remains to be seen," Merriman says. "How this trend will play out in 2008 will hinge in part on supply and demand issues and, as always, on cost."
"Green" initiatives have generated much buzz among retailers; but the interest is out of balance with the financial investments member companies are willing to make, he says.
"In many instances, retailers have simply been unable to justify the increased costs of the green initiatives they were considering," Merriman explains. "Another limiting factor is inadequate quantities of green materials — and materials that lack the necessary performance standards. It is expected that these problems will abate over time as material suppliers push to roll out eco-friendly offerings to address demands in the marketplace."
A.R.E. hopes to assist its industry capitalize on the green movement through education and communication.
"Both vendors and end-users continue to have many questions about definitions and standards in this area," he says. "There is a tremendous need for education."
author: Klein Merriman, executive director, A.R.E.