Hardware Retailing

DEC 2018

Hardware Retailing magazine is the pre-eminent how-to management magazine for small business owners and managers in the home improvement retailing industry.

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December 2018 | HARDWARE RETAILING 41 HR: What do other nonmanufacturing industry indicators say about the overall economy, especially as we head into 2019? AN: One key indicator is the Bureau of Labor Statistics' Jobs Report. The employment index is currently 62.4 percent, which is the highest reading since 1997. In our current economy, employment is reflective of how the overall economy will go, especially in the nonmanufacturing sector. That employment index indicates to me that this is a really strong economy overall. The downside to that is that we've had labor shortages as was reported on both the manufacturing and nonmanufacturing side. HR: Is there any solution to the skilled labor shortage and logistics obstacles in the short term? AN: It looks like these are long-term issues. I think part of it is that we just don't have enough people in certain skilled labor segments. HR: How do you predict the economy will affect manufacturers who work with small businesses in 2019? AN: Right now, with discretionary spending where it is and unemployment as low as it is, and the fact that the construction industry is really going gangbusters and residential and commercial renovations are up, there doesn't seem to be any potential economic slowdown at this point and into the start of 2019. HR: What issues should manufacturers who work with small business owners keep an eye on in 2019? AN: Retailers should know that lead times and cycle times have lengthened, and that has to do with ongoing capacity constraints and logistic challenges. There's a countrywide trucking shortage in wholesale distribution. Wholesale trade is very much an intermediary for the retail industry and many others. With capacity constraints happening, our respondents are telling us suppliers are having difficulty delivering orders in a timely fashion. For big companies and small operators, cash liquidity will be important. It's a matter of looking at small businesses and their net receivables and then going in and transposing that into payables. The cycle time between receivables and payables will become increasingly important. Retail foot traffic and online traffic are both up, so businesses that weren't as competitive or as strong in those areas have been flushed out. What we're seeing now is high demand from consumers. Discretionary spending is high, and that could benefit home improvement retailers in the year ahead. Retailers should know that lead times and cycle times have lengthened, and that has to do with ongoing capacity constraints and logistic challenges.

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