If NAMM is the main course of trade shows, the 99th annual National Retail Federation (NRF) show could be considered the appetizer. In fact, the show that took place last month at New York City’s Javits Convention Center, ended the night before NAMM started. You could sum up NRF with one ugly four-letter word. It used to be a pleasant four-letter word. But sadly, it’s became a dirty word along with those other four-letter words. That word is jobs.
Jobs and job growth were the most important thing mentioned during NRF’s Jan. 11 keynote speech titled “Recasting Retailing: New Rules--and Opportunities--of the Global Economy.” All three speakers who took part in the panel discussion said retail job growth is crucial to our economic prosperity. A lack of retail job growth could be catastrophic for our economy. The discussion, led by Stacy Janiak, vice chairman and U.S. retail leader for Deloitte, featured Howard Levine, chairman and CEO of Family Dollar, Alan Questrom, former CEO of J.C. Penney and Federated Depaertment stores, and Mark Zandi, chief economist at Moody’s. “I’m optimistic,” said Zandi. “The economy today was measurably better than it was a year ago. It will be masurably better a year from now. The best gage of that is jobs. A year ago, we were losing 700,000 or 800,000 a month. Now, we’re starting to lack of retail job growth could be catastrophic for our economy. The discussion, led by Stacy Janiak, vice chairman and U.S. retail leader for Deloitte, featured Howard Levine, chairman and CEO of Family Dollar, Alan Questrom, former CEO of J.C. Penney and Federated Department stores, and Mark Zandi, chief economist at Moody’s. “I’m optimistic,” said Zandi. “The economy today was measurably better than it was a year ago. It will be measurably better a year from now. The best gauge of that is jobs. A year ago, we were losing 700,000 or 800,000 a month. Now, we’re starting to see some growth. Next year, at this time, we think we will see net job creation of about 150,000 to 200,000 per month. The key to this is the massive economic stimulus. We need to see businesses begin to hire and invest now. Even retail will be adding jobs by this time next year. We’re not seeing boom times. But it will be better. We must see job creation in the retail section. It’s the area that employs the most people. If we don’t see job growth in retailing, my optimism won’t come to fruition.”
“In order for us to really see longterm growth, we have to see both job creation and our net worth improve,” said Questrom. “Net worth means the value of our homes and the stock market improve. The stock market has improved. So people look in the newspaper, see the market is doing well, and feel good. Our market is about people feeling well. Most retailers are optimists. If we weren’t, we would have committed suicide. I’m positive. But as Mark said, I’m concerend about what happens this year.”
Levine added that December sales were positive at Family Dollar because customers were looking for value. During the recession, Family Dollar focused more on customer research than it had in the past 10 years. “We wanted to know what was going on with our customer,” said Levine. “We determined they were focused on their needs, not their ‘wants.’ I want to add I’m an optimist too. I like a lot about what Mark said.”
Prior to the panelists approaching the New York City stage, NRF CEO Tracy Mullin admitted 2009 was a tough year for retail. However, “We separated the true men from the boys and the true leaders from the imposters. Smart retailers refused to give up. They demonstrated day after day their true passion to lead. This is a time of innovation. For example, K-Mart and Sears reignited their layaway programs, leading to tons of sales. Zappos developed a new group of brand ambassadors when it encouraged its employees to ‘Tweet’ about the company. Wal-Mart continued to lead the way on sustainability...Embrace social media, entice consumers, generate sales.”
V.A.T. Tax?
Could the United States join much of the rest of the world by implementing a Value Added Tax (V.A.T)? Our country is loaded with debt now. “I don’t think we had a choice but to run a very high deficit,” said Zandi. “It was a hostage situation. We had no choice. But clearly, there is no free lunch. We need changes. The only way to lower the deficit and bring down the debt-to-GDP ratio is cut spending or the growth in spending. Or you raise taxes. A value added tax is a very efficient way to raise taxes. At the end of the day, I think we will have a V.A.T. tax. That sounds like a problem. It is, but, if a V.A.T. is designed properly, we could probably cut income tax rates. It will be a drag on consumer spending, but it’s the most efficient way to raise taxes. If we don’t cut spending or institiute a V.A.T., the hit to retailers will be even worse. That would mean much higher interest rates and lower job growth. So pick your poison.”
“A V.A.T. would be very bad for retailing,” responded Questrom. “It might be best for the U.S. economy in the long run, but the United States has the largest consumption in the world. My problem with the V.A.T. tax is like a sales tax, it’s so easy to raise. My problem with the government is they don’t know how to stop spending.”
Tech Savvy
Levine mentioned how quickly he can get feedback from customers and respond to it. That’s mostly due to changing technologies. The Internet has evolved to the smart phone. You no longer need to have a computer handy. You can do virtually anything on your cell phone now.
Questrom added technology is the key to getting your costs down. “The consumers have every technology you have,” he said. “Now, consumers can plug in information in their cars and, before they even reach an intersection, know which of the four gas stations has the best price. In England, you can go on the computer and find out where you can get the lowest price for a basket of products you’re interested in. You must be sharp on your prices. You cannot fool your customer.”
Added Questrom: “If you’re a brick-and-mortar retailer and you want to create a Web site, you need to examine your competitions’ Web sites. Even though e-commerce may only be 7 percent of a retaler’s business, it is a very important medium for customers to know you, what you sell in your store, and details of your products. If you don’t have a good Web site, you will be at a disadvantage now and in the future. Technology is here to stay.”
Crystal Ball Time
The 2010 holiday season will be good. “It won’t be boomlike. But we will be pleasantly surprised,” said Zandi.
“We need to see job growth,” repeated Levine. “Our system cannot absorb another shock. Hopefully, there will be stablization.”
“I think we will see reasonable growth this year,” added Questrom. “There will also be new innovations that come through. We must encourage new innovations. If we don’t, we won’t see the job growth we’d like. We have to spend more money on schools to help develop young talent. I hope we see new innovations like an iPod or Kindle. Young kids coming out of schools are the ones who create these ideas. We must also help small businesses. The answer to the economy is jobs, jobs, and more jobs!”
Editor’s Note: For more on NRF, including credit card security and a new job site for those interested in the retail field, check out the March issue of the Music & Sound Retailer.
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