Government gridlock, consumer frugality temper retailers’ 2014 expectations in latest Outlook Survey.
Retailers are also grappling with the turbulent rollout of the ACA. “We are trying to understand what we can and can’t offer,” says Zikias, pointing out that the company has hired a firm to navigate through its choices. “We have concerns because the system for signing up is not working correctly. What impact will that have on our team? Our view: [It will impact] those at the front and those at the tail end. There are just a lot of moving parts keeping us up at night.”
One area where retailers do not expect any help: the government. “I don’t feel our government, at any level, seriously takes care of small businesses,” says Mathias of Outback Run Thru. “When they’re gone, there’s going to be a price to pay for that.”
More than 53% of participants cited the ACA as one of their top three business challenges, compared to 37% of participants in the 2012 survey.
One of the concerned operators: Marsh of Sapp Bros., who believes the ACA is directly responsible for increases in health-insurance costs.
“We’re up 40% in cost of our plan this year, over what we projected,” says Marsh. “Those are huge dollars. The ACA is driving this.” His company offers health insurance to all employees working 30 hours or more and covers two-thirds of the benefit costs. “We are covering that 40% increase,” he says. “Right now we are probably paying closer to 85% and the employee 15%.”
The second biggest challenge cited by c-store retailers? That old standard, credit-card fees, chosen by nearly 50% of Outlook Survey participants. “The price of fuel is down this year vs. last, but credit-card fees are a big expense for us,” says Zikias of Holmes Oil. “We have an above-average number of transactions paid for by credit cards.” He also questions how the legal wrangling over the swipe-fee settlement will resolve itself.
Nearly one-third of Outlook Survey participants cited increased competition from nontraditional retailers as one of their top three challenges. But hypermarkets’ reign as the biggest nemesis is officially over. More than one-half of survey participants said dollar stores were the biggest nontraditional threat, with supermarkets and drug stores ranked second and third, respectively.