Looking at the future, the report found increased concern over a growing host of strategic issues. In fact, the level of concern, measured on a scale on 1 to 10 with 10 being the highest, increased for nearly every issue, comparing the expected impact in 2006 with that in 2007-2008. Further, more issues had an anxiety rating of 6 or higher than ever before in this report:
- Healthcare costs, 7.9 in 2007-2008, up from 7.6 in 2006.
- Competition from other retailers, 7.7, up from 7.5.
- Credit/debit card interchange costs, 7.5, up from 7.2.
- Energy costs, 7.4, down slightly from 7.5.
- Staffing, hiring, retention, 6.9, up from 6.5.
- Technology investments, 6.5, up from 6.0.
- Food safety scares, 6.0, up from 5.7.
The frustration over some of the issues stems from the industry’s inability to control them. The most significant example is interchange fees, averaging nearly 2 percent, which credit card companies and banks extract from every plastic transaction. Interchange fees are fixed by Visa, MasterCard and the banks that issue their cards. The cost is rising fast for three reasons: the fees themselves keep increasing, more consumers are using rewards cards with higher interchange rates and plastic is becoming the predominant way that consumers pay for goods and services. Interchange costs for all retailers totaled $30.7 billion in 2005 and $36.3 billion in 2006 — an 18 percent increase in just one year. The cost of interchange has more than doubled since 2001. In the long run, consumers pay these costs as retailers are forced to build them into the price of all goods and services.