We have to make our own real world economic forecast for the gift and gourmet industry. Normally we keep it under Wraps (pardon the pun), but why not share? Maybe it will help you in planning. Remember it is just a forecast – and our best guess – so take it only for that.
Our competitors will eat this up, but if they are honest their charts probably look like this or worse. The chart is for number of orders per week. Yes we are capable of handling 10,000 orders a week (all on time too)! As you can see, business ramps up about week 37 (September) and peaks in mid November then falls back off. Historically the independent retail industry (gift, floral, gourmet food, specialty retail, etc) has been growing at just about 7 to 10% a year, but by the middle of 2008 things started to change and we think it will be a long time before it is even back to 2007 levels.
Nashville Wraps’ performance is a mirror of the industries we serve. In Q1 2009 we had the same number of orders as 2008 but revenues were off. Orders were smaller because our customers were not making as many sales at retail, plus we lowered our minimums to help in the recession. Same is going to be true for Q2 2009, and frankly we do not see much change in Q3 2009 but do expect a positive bump of maybe 2-3%.
Where does the line go in 2009?
Because of many factors we think the line for Q4 2009 will look a lot like the line did in 2008. Meaning we are predicting a flat Q4 2009 as compared to 2008, with the same order volume and revenue as it was in 2008. You have heard in governmental and independent economic forecasting that things are beginning to look up. We feel that the real measurable retail economic recovery is not going to be until 2010.
Quick recap as compared to 2008:
Q1 2009 Transactions flat, revenues down 15% (pre-recession last year)
Q2 2009 Transactions flat, revenues down 10% (pre-recession last year)
Q3 2009 Transactions + 3%, revenues + 3% (Recession was impacting comps last year)
Q4 2009 Transactions up 5%, revenues up 5% * (recession in place this time frame last year)
* We think Q4 2009 with be almost like Q4 2008 or flat to +5%. The main reason is that we were well into recession in late 2008 and although things have gotten worse in both general family income and unemployment we do not see it going far backwards like it has for the first half of 2009 due to some growth in 2009…but it could. The country has had time to do some preemptive planning and promos to better cater to a recessionary customer base, and so have we. In late 2008 people were still in shock, uncertain as to what the future holds. We feel that there is less stress in the consumer, but not much more (if any) cash. Americans have hunkered down but can only do that for so long.
It is my hope that sharing this information will help you make good decisions this year and beyond. I welcome your comments. This is an overview and not specific to any one retail segment. Your business or business segment could be radically different. We know of industry segments that have shown no signs of recession while others are struggling. Change is inevitable for everyone. Plan for the worse and hope for the best.
Robby Meadows, Nashville Wraps