2018 State of retail industry survey.7 takeaways accounting and tax professionals should know.

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2018 State of retail industry survey.Retailers are seeking to build more customer-centric experiences, attempting to build stronger relationships, and, of course, bring in more sales. In short, retailers are completely reimagining and reengineering how they do business.

From blending physical and digital experiences to embracing new technologies, new payment options and even new inventory and delivery approaches, the entire industry is transforming itself as never before.

Speaking to over 200 tax and accounting professionals in companies of all sizes and across a wide array of retail sectors and management levels, Bloomberg Tax took the pulse of the retail industry as it relates to changing consumer trends.

Here’s a snapshot of what we discovered.

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2018 State of retail industry survey.

The economy is top of mind. Even with growing consumer confidence and tax reform, professionals in most tax and accounting departments ranked global and domestic economic conditions as their top concern.

This applied across the board from $500 million companies to companies generating $100 billion or more.

Amongst Accounting Department

Amongst Tax Department

1

Please rank the top risks to the retail and consumer goods industry.

Global & domestic economic conditions

2Federal, state, and/or local regulations

3Competition & consolidation

4

5

Data security

E-commerce

1Global & domestic economic conditions

2

Federal, state, and/or local regulations3

Competition & consolidation4

5

Data security

E-commerce

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2018 State of retail industry survey.

Size matters in assessing risks.When it comes to assessing industry risks, companies under $500 million in revenue ranked the threat of consolidation and competition as their biggest risk. This was followed by concerns about broader economic conditions, regulatory burdens, E-commerce and data security.

But larger companies ranked their risks differently. Companies with $100 billion or more saw global and domestic economic conditions as their biggest risk factor. This was followed by concerns about data security, competition and consolidation, E-commerce and today’s regulatory environment.

96%of all respondents see consumer shifts as a positive for their organization’s performance.

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New trends equal new opportunities.Regardless of size, companies in all retail sectors are embracing shifts in consumer trends. 96% of all respondents see these shifts as a positive for their organization’s performance.

With growing trends such as downsizing showrooms, creating unique customer experiences, and offering online/in-store pick up, large and smaller companies alike are investing in store redesign and remodeling.

100% of the companies with over $100 billion in revenue in our survey and 70% of companies under $500 million intend to make redesign and remodeling investments in 2018. This is especially true for stores in the gasoline, electronics, and motor vehicle sectors.

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2018 State of retail industry survey.

It’s time to rethink reporting strategies. Tax professionals at mid-tier companies with revenue of $500 million to $1 billion expressed the most concern about the effects of tax reform on their organizations.

Considering tax reform’s impact on deferred tax items, business deductions, repatriation strategies, and even its effect on state taxes, their biggest concerns are over reporting challenges.

60%of all tax professionals who worried about tax reform — across companies of all sizes — said they are most concerned about its effects on their financial statements.

How concerned are you about the impacts of tax reform for your organization?

$1B-$49B

$50B-$99B

0%$100B or More **small sample size**

Tax Department

Co

mp

any

Size

Accounting Department

$250M-$499M

$500M-$999M

40%

44%

44%

72%

50%

66%

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2018 State of retail industry survey.

High-level assets present high level challenges. While most respondents feel their organizations are maximizing tax/accounting advantages, tax professionals say their biggest challenges are maximizing tax benefits of their high-level fixed assets.

Over 60% of company tax departments had difficulty tracking, depreciating, and classifying fixed assets across their business.

Despite 100% of the departments in our survey using automated tax processes many say managing their fixed assets still remains a challenge.

62%of company tax departments had difficulty tracking, depreciating, and classifying fixed assets across their business.

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Debt refinancings are coming.Debt remains an issue for many companies. 93% of all companies say they are concerned about the amount of high-yield debt they have on their books.

More than half of the mid-tier companies surveyed say their companies plan to refinance in the next five years. This increases to 77% with companies having $1 billion to $50 billion in revenue.

Is your organization planning on refinancing its debt within the next 5 years?

0% **small sample size**

$250M-$499M

$500M-$999M

$1B-$49B

$50B-$99B

$100Bor more

40%

0%

77%

65%74%

66

%

**small sample size**

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2018 State of retail industry survey.

Tax and accounting departments are getting smarter with AI.Nearly all respondents say their companies intend to integrate more technology into their tax and accounting departments in 2018.

Most of these investments will be focused on artificial intelligence. In fact, 70% of accounting departments and 89% of tax departments expect to make investments in AI this year.

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Summing up: technology is changing the game.Despite rapid retail change, one constant is clear: change will keep coming and technology’s role in managing change will continue expanding.

Smart departments are leveraging the latest technologies to solve challenges and maximize opportunities.

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