The latest Executive Opinion Survey conducted by the National Retail Federation (NRF) and the Bank of Tokyo Mitsubishi Ltd. (BTM) indicates that retail executives are buying into the strengthening economy, spiking the Retail Sector Performance Index due to an upbeat outlook on demand and less pressure on pricing.
The Index, or RSPI, increased to 57.9% in October versus 54.6% in September. The latest RSPI was 2030 basis points above the same period a year ago; and its highest since the survey began in September 2002. The RSPI, which measures retail executives evaluations of a number of core retail performance metrics, is based on a scale of 0% 100% with 50% equaling normal.
“With each passing month, this survey shows that the health of the industry is becoming more of a certainty as retail executives continue to express more confidence in the state of their business,” said Michael Niemira, Senior Retail Analyst, Bank of Tokyo-Mitsubishi, Ltd. “We are now starting to see growth in retail employment as retailers begin to hire for the holiday season.”
The Operations Index, which takes into account the employment and inventory, came in at 52.3%, up 590 basis points from the 46.4% in September and was 1170 basis points higher than the October 2002 index.
While retailers surveyed were a bit more pessimistic about traffic and sales in October, the outlook on Average Transactions per Customer at 62.5% drove the Current Demand Index (average of sales and traffic) to 57.3% compared to September 56.5%-revised and was 2400 basis points higher year-over-year.
The six-month look ahead Demand Outlook was also back to its mid-sixties range in October.
>>> But will it last after the rough October comp sales reports…
