Industry Outlook 2005
Many homeowners hit by any of the four hurricanes that struck this summer, damaging more than 50,000 homes, have had to pay deductibles in the thousands of dollars, and that's putting a crimp in retailers' bottom lines.
"Insurance doesn't really cover all your costs, so people are feeling a little poorer" in hard-hit areas, says Erik Gordon, a marketing professor at the University of Florida.
Another factor likely to put a damper on growth in the year ahead: Voter approval of a minimum wage increase to $6.15 an hour.
Although most retailers pay more than the minimum wage, Florida voters' approval of a minimum wage hike to $6.15 an hour will hurt the industry. Retailers fear raising the minimum wage will lift the entire wage floor. "Stores are going to be very careful about how many people they can hire," says Gordon.
"For the first time in several years, we may see slower growth in Florida," says Gordon.
Watch for Florida to continue to lose some of its retail uniqueness as consolidations take hold, Gordon says. (Burdines-Macy's will look even more like Macy's, for example.)Takeover Targets
With the launch of its new Soma lingerie line and completion of the integration of its White House Black Market stores, Fort Myers-based Chico's just keeps growing. That growth makes it a prime target for acquisition, says University of Florida marketing professor Erik Gordon. "Their growth isn't done," he says. At some point the offers may just get too good to pass up, Gordon believes. Another successful Florida retailer ripe for acquisition: Tamarac-based City Furniture.Rick McAllister, CEO of the Florida Retail Federation, says small retailers will feel the effects of a minimum wage increase a lot more than large ones. "They're having a hard time competing now," McAllister says.
2005 Forecast: Rick McAllister, CEO of the Florida Retail Federation, expects a substantial expansion of large chain stores in Florida and a continuation of the trend toward more luxury centers. "International retailers believe Florida is their No. 1 growth market," McAllister says.