The economic outlook through 2005 looks upbeat despite of the increase in interest rates and inflation.
 
The essential points in this respect are:
 
1. What's Old is New Again: Rising Prices and Interest Rates.
Consumers have more money in their pockets due to increase in employment and lower interest rates in the past. The economic expansion will be beneficial for those retailers who are ready to take risks, investing in the technologies and opportunities that keep them in the minds of the consumers.
 
2.The Empowered Consumer.
On the other hand, Consumers have been empowered by the internet allowing them to buy on their own terms. Thus the retailers are now giving more importance to the consumers.
 
3. Pyrotechnics in Technology.
Adoption of new technologies has helped the in improving the decision-making process. Retailers are using the gadgets and back-office technology to improve the efficiency of operations.
 
4.Closer Financial Management. Keener Government Oversight.
While most companies seek to be compliant with Section 404 of the Sarbanes-Oxley Act of 2002, those that fully embrace the spirit of the law – strong ethics, good governance, reliable reporting – will likely benefit from a re-energized company, reassured investors, and reduced costs. In short, shareholder value can be enhanced. With more Americans making health, privacy, nutrition and food safety higher priorities, governments are more closely monitoring these areas as well. Cash-strapped states are legislating out old tax planning strategies and increasing their enforcement efforts. The outlook: higher effective tax rates directly impacting the bottom line.
 
5. Diverse Lifestyles. Distinct Life Stages.
To help understand their customers better, retailers are collecting accurate data on their customers' buying habits. Consumer demand is being impacted by an extremely complex set of psychological and demographic issues. The traditional demographic trends in age and income are continuing to impact the entire retail spectrum. With the aging of the population, retailers need to better understand the “shopping mechanics” to better serve their customers. Populations are also becoming more diverse, which provides opportunities to satisfy new or different demand preferences. Another important socioeconomic trend is the increasing obesity of industrialized societies, which is impacting such retailers as food, apparel and drug stores.
 
6. The Proliferation of Retail.
Increasingly, it seems as if you can buy just about anything just about anywhere. In an attempt to broaden their appeal to shoppers, retailers are offering a wider array of products and services, but this is creating channel blurring. Rising numbers of time-starved consumers are providing retailers with the opportunity to satisfy these one-stop shopping preferences. As a result, malls and supermarkets are no longer the kings and queens of retail. The lifecycle of all retail formats is shortening and changing at an ever-increasing pace. The Internet in particular is changing the way many people shop.
 
7. The Rise of Brand.
A retailer can stand out by having a strong brand. Successful brand creation has a lot to do with relationship building, consistency and trust. Once a brand has been built, it's also important that the brand be managed. Private label is an effective way to build brand and distinguish one chain from another, as is mass customization. At the end of the day, those retailers with the strongest brand identities are the ones who consistently and successfully execute on their brand promise.
 
8. Swimming With the Big Fish.
There are obvious benefits to being big. But expansion comes at a price. Being big also means closer scrutiny of operations from the outside. Further, one of the challenges to being large is maintaining your Dominance. Smaller retailers frequently can be more agile and adapt and grow more quickly. The competitiveness of the marketplace requires that all players develop strategies that leverage their strengths and increase market share.
 
9. Gearing Up for Globalization. Again.
Global strategies have been achieved through a variety of methods – acquisition, organic growth, or strategic alliances and franchises. Often, the best strategy involves “glocal” thinking, that is, combining global brand consistency with a regional feel and local relevance.