The numbers are in from the past few years, and projections for the future have been set, so what do they mean for your retail store? Read our guide to find out what to expect.
A political shake-up
When business mogul Donald Trump took office as the 45th president of the United States, he did so on vows to change policies and politics. Within the first few weeks, he was busy making those changes, and many more are likely to come. Set aside your political view either way and look at how this affects the retail industry in the next four years – it's varied and complicated.
Tax reform
Traditional retailers pay extremely high taxes – they're at the top compared to most industries. You're already paying 35 percent federal tax, plus state and other taxes, so tax reform would likely benefit you if you're running a brick-and-mortar store.
A corporate tax break could help those retailers who aren't doing as well with sales to increase cash flow, which satisfies shareholders for a while. It can also serve as a boost to fund restructuring efforts so you come out on top next year. A reduction of the federal corporate tax rate to 15 percent from the current 35 percent, which is what Trump is suggesting, would be a relief for retailers, but other tax reform proposals have been made.
One such proposal is a border adjustment tax, which could have serious consequences for retailers. If it passes, then retailers would not be able to deduct the cost of imports from their tax liability – plus, there would be a 20 percent tax on anything imported. The result? Higher prices to offset those costs, which could drive consumers to another option – an online retailer.
Immigration
The president has made it clear that he wants to deport undocumented immigrants, and if he is successful in keeping that promise, that means 5 million to 10 million people in America gone from the workforce and economy. The chances of that happening on such a large scale are slim at best, but it's a concern nonetheless. The impact of deportation would directly affect the retail industry in terms of consumer demand and labor.
Recently, Trump signed an executive order to make it much more difficult for companies to hire workers through the H-1B visa program. The "Buy American, Hire American" order is meant to protect born-and-bred American workers and the jobs here, and this has a direct impact on the tech industry, which often hires thousands of foreign workers a year.
Although the order doesn't seem to target the retail industry, many companies hire foreign workers because they're looking for the talent needed to create apps, code and other dev work. America simply doesn't have enough of the workers for these positions, many companies argue. This could slow many retailers' efforts to move forward into technologically enhanced shopping experiences.
Health care
As soon as Trump was sworn in, one of his first orders of business was to repeal the Affordable Health Care Act (often referred to as Obamacare) and replace it with a Republican-approved plan. It could affect many industries, including retailers – both in good ways and bad ways.
Although Trump's efforts to repeal and replace have halted, what he plans to do could mean reducing the cost of health insurance for employers. However, that could put more pressure on employees to make up the difference and stay insured, which reduces their spending with retailers.
Trade
For many years, the retail industry has relied heavily on imported goods, so Trump's stance on the Trans-Pacific Partnership and the North American Free Trade Agreement could mean more trouble for retail. Trump wants to keep jobs such as those in oil, coal, manufacturing and development in the United States. In other words, he wants to prevent companies from outsourcing work or importing goods – and high tariffs could be a deterrence.
Putting more money back in the pockets of consumers is a good thing, obviously, but it could end up costing retailers more. Cutting off the retail industry's access to the global supply chain is going to hurt retailers' ability to sell goods at competitive prices.
Infrastructure
As it stands now, Trump wants to sink $200 billion of taxpayers' money into improving U.S. infrastructure. More could come from private sources. In the end, upward of $1 trillion may go toward rebuilding tunnels, bridges, airports and highways.
These infrastructure improvements may pave the way for retail supply chains, and they also put more people to work getting the roads built – in turn putting a healthy injection of money into the economy. However, it's not the saving that the retail industry needs.
The technology demand
Consumers have higher expectations than before. The instant-gratification era has ushered in a crop of customers who want their products now – like, same-day delivery now. Many online retailers are making that happen, or at least within 24 hours. Delivery services like Amazon Fresh, Uber, UberEATS and Postmates are making it possible for consumers to never step foot inside a retail store, grocery store or restaurant if they'd rather stay at home to binge-watch something on Netflix.
Technology is affecting not only how consumers get their goods, but also how they choose to get their goods. The numbers for e-commerce have been increasing exponentially since they were first tracked by the U.S. Department of Commerce in 1998. Even comparing the statistics from only a few years ago is telling. In 2011, e-commerce retail sales were just shy of $200 million, and in 2015, they reached more than $340 million.
For many retailers, the writing has been on the wall for a while. Now they're starting to do something about it. The trends earmarked to become the norm are already popping up online and in stores around the country.
BY AMY NICHOL SMITH
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