Final Round of Judging on “This is Retail” Finalists

Between March 5 and March 16, retail employees and business owners began submitting two-minute videos sharing their retail story, highlighting anything from the positive impact they’ve had on shoppers to how an initiative within the business has helped to generate new jobs and boost the economy. After careful review, the NRF announced on April 2 the 20 finalists chosen for a final round of judging. While this first lot of finalists were determined by prominent retail executives at NRF member companies, the final round of voting has been issued to the public, beginning April 3. Public viewing and voting for the Top 20 can be done at retailmeansjobs.com/vote. Contest finalists range from small business owners to vice presidents at national retail chains, and from wine shops to sporting goods retailers.

The selection process will continue through April, as the 20 finalists go head-to-head in a bracket-style tournament, narrowed down each week from 20 to 10 to five, and then the top three. Those casting their vote can vote up to 10 times a day per matchup. During NRF’s Washington Leadership Conference in May, the third place winner of $10,000, second place winner of $15,000, and first place winner of $25,000 will be announced. “The incredible stories we heard from small business owners and employees through this contest serve as a reminder that retail is at the heart of every community,” explains Shay. “While each of these finalists has their own story, they collectively demonstrate the opportunities in and power of retail, which supports 42 million U.S. jobs.”

For more information visit www.retailmeansjobs.com/contest.
Check out our Industry Headlines for more NRF related news, studies and contests.

Shay offered his remarks on retail and the economy to nearly 600 attendees representing the Los Angeles and San Fernando Valley business communities. This year’s conference theme was, “The Big Economy That Should.” Shay used his speech to underscore the important role retail is playing in powering the U.S. economy. “In these difficult economic times, saddled with high unemployment and low consumer confidence, there are still many reasons to remain optimistic about the nation’s political and economic future,” he said. “Creativity, innovation and hard work remain firm tenets on America’s Main Streets, led by our nation’s retailers, and it is that binding, dynamic spirit that will lead our economic recovery.”

Shay’s speech also described three critical measures that the country and Congress could focus on immediately to help the economy: investing in infrastructure and transportation, opening new markets to trade and investment, and reforming and streamlining the tax code. Below are clips from his speech:

Infrastructure is vital to the supply chain.

“The world’s largest economy needs a national commitment to infrastructure improvements,” said Shay. “We must update and upgrade our vital supply chain links, be it our near-dock facilities or highways, to ensure our nation’s central role in the global economy. New public and private initiatives and creative funding mechanisms are essential to address our unchecked infrastructure deficit.”

More trade means more jobs.

“I commend Congress and the Administration for working together to secure passage of the free trade agreements with Korea, Colombia and Panama,” said Shay. “These agreements will help America’s relationship with the developed and developing world, increase opportunity, lower costs and provide a bipartisan path forward for additional agreements, including those associated with the ongoing Trans-Pacific Partnership.”

Taxes need to be competitive and fair.

“Reforming our arcane tax code is certainly resonating with politicians and the public these days,” said Shay. “Now is the time to make our nation a more competitive place to create jobs and establish businesses, by lowering corporate tax rates and simplifying and streamlining our disjointed sales tax, so every retailer is treated fairly.”

This piece has been adapted from an original article on NRF.com

NRF Campaigns Congress and the Capitol

Other qualms driving retailers to lobby are taxes and an outstanding and overdue issue surrounding free trade agreements. Matthew Shay, president and CEO of NRF, has continually urged Congress to pass stalled trade deals for the sake of the American people, and on behalf of retailers. The approval of these trade agreements would help boost job creation and spending. Seeing little response from Washington, however, Shay now speaks on behalf of the NRF and the retailers he represents, saying, “The real purpose of the organization’s recent advocacy campaign is to change outcomes on the policy issues that are central to the industry, and to the overall health of our nation’s economy because of the significant role retail plays.”

The NRF’s nationwide advocacy campaign includes grassroots activism, social media and old fashioned lobbying. The organization plans to become a well known force on Capitol Hill, spending more than $10 million over the next year to get its points across. The publication, The Hill, further details, “The centerpiece of the advocacy effort is a study from PricewaterhouseCoopers, commissioned by the NRF, that tallies up the contributions of retailers to the economy. The study says retailers provided close to 42 million jobs in 2009, while adding nearly $2.5 trillion to the nation’s gross domestic product.” With numbers on its side, the NRF has its campaign mapped out, and it includes:

• Distribution of the NRF sponsored study to all members of Congress.

• The launch of www.RetailMeansJobs.com, breaking down the retail industry’s economic impact by state and congressional district.

• Advertising in print, radio and online markets.

• Social media campaigning through Facebook, Twitter and LinkedIn.

• A viral video campaign to highlight the “Faces of Retail.”

The article has been adapted from an original piece by The Hill.

Millions Make NRF a Strong Campaigning Force

And while the NRF’s nationwide advocacy campaign is described to include grassroots activism, social media and old-fashioned lobbying, the organization plans to become a well-known force at Capitol Hill, spending more than $10 million over the next year to get its point across. The publication, The Hill, details the NRF’s other firing power, reporting, “The centerpiece of the advocacy effort is a study from PricewaterhouseCoopers, commissioned by the NRF, that tallies up the contributions of retailers to the economy. The study says retailers provided close to 42 million jobs in 2009 while adding nearly $2.5 trillion to the nation’s gross domestic product.” With numbers on it its side, the NRF has a strong case, which is to be supported by:

• Solicitation of the NRF-sponsored study to all Congress members
• The launch of www.RetailMeansJobs.com, breaking down the retail industry’s economic impact by state and congressional district
• Advertising in print, radio and online markets
• Social media campaigns through Facebook, Twitter and LinkedIn
• A viral video campaign to highlight the “Faces of Retail”

To read more about the NRF’s $10 million nationwide advocacy campaign, click HERE.

Thinking about it differently. The management of most companies has already taken action, reducing discretionary spending, slowing expansion, curtailing payrolls and tightening inventory controls. While these steps are reminiscent of past recessionary periods, management is beginning to realize it will not be business as usual during this recovery, and is planning accordingly.

Doing it differently. The first step is for retailers and manufacturers to engage in an intense self-analysis.

It will not be business as usual. Apparel deflation over the last 15 years reflected growth in lower priced imports from China, helping expand gross margins for vendors/retailers. There is currently excess production capacity in Asia, which should hold prices down over the near term, but the threat of inflation will likely loom as the economy recovers.

Developing a more profitable business model. Management must focus on redirecting cash flow towards greater differentiation. A top priority would be intense research into target consumers, something very few brands or retailers do on a consistent basis.

Higher average selling prices. Lower inventories and reduced markdowns are currently contributing to gross margin improvement, and lower sourcing costs could also play a role in improving that margin.

SKU rationalization as a means to profitability. Wherever possible, minimize clutter in presentation. Inventory reduction and allocation has been a prime focus in recent months. Retail traffic and sales declines will likely stabilize due to easier comparisons and slow improvement in economic activity.

Focus on maximizing gross profit per square foot. Quality of sales is more important than quantity. Management needs to begin considering how to move back to a model that includes more full price selling through lower inventory, a better mix and balance.

Sifting through the rubble, building a business at the top. Retailers and vendors need to develop a closer working relationship, as each looks to develop a more profitable business model. They must be willing to reach out and establish best practices in establishing a new partnership. Over time, entrepreneurial and visionary management has been replaced by executives with a primary focus on growth, and unfortunately, the needs of the consumer were forgotten in this transition. For a look at the complete report from the NRF, go to http://tinyurl.com/24gkjr6.

Of those polled, 64 percent said a federal value added tax of any amount would affect their spending on items such as cars, homes, groceries, and medicines. If the government imposed a VAT of 15 percent and applied it to all purchases, 86 percent said their spending would be affected. Matthew Shay, president and CEO of the National Retail Federation, expresses strong opinions against a value added tax in a press release accompanying the survey results. “With consumer spending representing two-thirds of the economy, a consumption tax, by VAT or any other name, is not the path to recovery or a prudent way to address the federal deficit,” he says. “The deficit needs to be reduced, but a VAT is not the answer.”

How to reduce the deficit is a conundrum with which politicians and advocacy groups such as the NRF continue to grapple. The research asked respondents how they thought Congress should tackle the deficit, and only 18 percent chose raising or adding taxes as a solution. An overwhelming 82 percent said that the government should spend less, although the poll did not ask where cuts should be made.

According to the results, merchandise categories most affected by the implementation of a value added tax would include eating out (83 percent), clothing or accessories (80 percent), food and groceries (74 percent), entertainment (72 percent), and vacation travel (72 percent). The NRF offers more information and advocacy action items against a value added tax online at nrf.com/vat.

Learn about emerging consumer behavior. The study points to the example of Apple’s iPhone. The transformation of how customers use their phones to get product and retailer information came very quickly. Companies have to stay on top of the latest trends in customer shopping, and not only enable that new behavior, but anticipate it.

Enable a single view of the customer across all channels. At issue here is the tendency of customers to approach a single transaction through multiple channels. They browse the company website for information, then come into a store to shop. They visit a store, but look for more information on their smartphone while still in the building. Successful retailers will understand this behavior and present a common brand identity across multiple channels.

Look to technology to provide the road map forward. Big obstacles to channel integration include a reluctance to change legacy information technology, and to devote the budget required to do the job correctly.

According to the RSR results, “Winners are more aware than ever that misaligned incentives stand in the way of further progress towards process integration to enable cross-channel retailing.”

The study issues a warning: the more profitable customers are those troublesome consumers who cross channels. “Retailers that are not cross-channel are not only leaving a lot of value on the table, but are actively encouraging customers to shop with other retailers.”

“Making data less vulnerable to card thieves by eliminating it wherever possible has been a major focus by Visa for several years now,” said Visa’s Head of Global Payment System Security, Eduardo Perez. “Visa is committed to helping develop workable solutions that reduce the burden on merchants who must secure their payment systems from criminal threats. Working with the National Retail Federation has helped us identify an issue and address it effectively.”

Despite the fact that Visa does not require merchants to retain full card numbers beyond the transaction settlement, the NRF believes there is marketplace confusion going on which has led many independent retailers to store more information than is necessary, thus putting their systems at risk.

“Visa’s priority is protecting cardholders and the integrity of the electronic payment system,” said Perez. “By reducing the amount of vulnerable data in merchant systems that must be protected from compromise, merchants can see greater security as well as more streamlined compliance needs.”

According to Visa’s current operating regulations, issuers are required to accept a suppressed or disguised card on a transaction receipt for dispute resolution. Merchants are also permitted to keep disguised or truncated card numbers, in order to minimize the amount of vulnerable data stored.

Beginning August 22, gift cards will not be allowed to expire any sooner than five years after they are issued, and dormancy fees will not be able to take effect less than a year after a card is issued. Any expiration dates or dormancy fees must be disclosed to customers before purchase.

NRF asked the Fed for a six month delay in a requirement that expiration dates and dormancy fees be printed on the cards, saying retailers could honor the restrictions on dates and fees by August, but needed more time to get old cards without the proper disclosures printed on them off the shelves. In the final regulations, the Fed declined. “People will be scrambling to make sure every single card is off of every single shelf,” NRF VP and Government Relations Counsel, Elizabeth Oesterle, said. “A lot of retailers don’t have expiration dates or dormancy fees, but for those that do, they will have to go back and check carefully to make sure on August 22 those cards are off shelves.”

The deadline could become even tighter if Senator Charles Schumer, D-NY, gets his way. Schumer told Women’s Wear Daily he plans to work with the Fed, “To speed up the effective date, rather than keep consumers at risk of being ripped off until next summer.” Schumer did not specify a date. The Fed did acknowledge NRF’s concern that there might not be enough room to print disclosures on the cards, and revised the regulations to allow variations in type size and placement of disclosures, “So long as the disclosures are clear and conspicuous.”

Most major national retailers have already eliminated expiration dates and dormancy fees, both to comply with a wide range of restrictions adopted by more than 40 states, and for customer service reasons. That means the new rules will impact mostly bank issued gift cards, usually sold under credit card brand names, or as “mall” cards, which typically carry the quick expiration dates and high fees that led to calls for legislation. For more information, contact the National Retail Federation at www.nrf.org.

To entice consumers into stores, retailers offered special deals to get them to use gift cards they received over the holiday season and to stock up on clearance items. Sales at electronics and appliance stores increased 1.2 percent, seasonally adjusted. Clothing and clothing accessory store sales increased 0.3 percent. Sporting goods, hobby, book and music stores also saw increases, with sales jumping one percent.

NRF is the world’s largest retail trade association, with membership that comprises all retail formats and channels of distribution, including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores.