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100th annual NRF Convention Opens in New York City

BY CSA STAFF

The National Retail Federation’s Annual Convention & Expo kicked off at the Jacob K. Javits Convention Center on Sunday, Jan. 9, with a lineup of power speakers and plenty of buzz. It is the 100th anniversary of annual event, which attracts retailers from around the world.

This year, the four-day NRF show featured more than 600 exhibiting companies, new retail technology pavilions, and presentations from a stellar line-up of top-tier retailers. Total attendance was estimated at more than 18,500, with representatives from 70 countries.

Terry Lundgren, chairman and CEO of Macy’s, and NRF chairman, officially welcomed conference attendees, urging them to get involved in NRF’s various efforts. He also made a point of noting that the retail and restaurant industries account for one in five jobs in America.

Mobile commerce, multichannel integration, business analytics and data security were among the most talked-about topics at this year’s show. Also, Facebook took a booth at the event, representing the increasingly important role that social media plays in the retail industry.

Sustainability was another hot topic at the show. In a presentation entitled “The Many Shades of Green,” Paco Underhill, founder and CEO, Envirosell, said that as true sustainable environment will be the result of a fundamental change in how we live. Sustainable business practices, and living a green life, is no longer a political or financial issue, according to Underhill. Rather, it is a moral one.

The 2012 NRF Annual Convention will be held January 15-18, 2012, also at the Javits Center.

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Tips for Operational Excellence

BY CSA STAFF

Ask retail operations executives what their priorities are, and the answer comes down to the two T’s: Talent and Technology.

At the National Retail Federation’s Annual Convention & Expo, experts discussed how they are positioning their companies to for the economic comeback and the efficiencies learned from the downturn.

Sharon Leite, executive VP stores for Pier 1 Imports, Fort Worth, Texas, said that in the downturn, Pier1 turned its focus to its associates and the resources they needed to do their jobs in order to prevent a negative impact on the chain’s customer service delivery.

“It all starts with the talent,” Leite said. “We had to continually make sure that our associates were really connecting with our customers.”

Other top operational tips presented by Leite, along with Ben Teicher, senior VP and CFO of the Ratner Cos., included:

To tune up your talent, narrow the expectation gap. “Put in place customer feedback mechanisms so that you can close the gap between what you and your associates think the customer expects from you, versus what the customers are really expecting,” said Leite.

Dive into your data. Both Leite and Teicher support traffic counters in stores, in order to provide enough information to drive conversion rates. “Combine internal feedback from stores with the external feedback from your customers to ensure that you’re delivering a service experience that is spot on,” said Teicher.

Add discipline to your supply chain, reducing the number of times product is touched before it reaches the selling floor.

If it doesn’t add value, eliminate it. “We streamlined what we asked our field personnel to do,” said Leite.

Build partnerships, both internally and externally.

Make sure you make the right hires. “Finding top talent became even more critical over the last three years,” said Teicher. Tools such as pre-employment screening solutions can serve to up the talent quotient.

Leverage the knowledge and capabilities of your internal IT staff.

And, above all, make sure your business process works, then layer on the technology tools to help drive costs down.

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Focus on Global Retailing

BY CSA STAFF

More than one-third of the world’s 250 largest retailers suffered a decline in sales in fiscal 2009 (encompasses June 2009 through June 2010), according to the Global Powers of Retailing 2011 report, whose results were revealed at the National Retail Federation’s Annual Convention & Expo in New York City. The annual report, from Deloitte Touche Tohmatsu Limited, identifies the largest 250 retailers around the world, provides an outlook for the global economy and an analysis of market capitalization in the retail industry.

The aggregate sales of the Top 250 totaled $3.76 trillion in fiscal 2009, down from $3.82 trillion in 2008, giving them a 25% share of global retail sales ($15 trillion).

“Those figures signify how important retail activity is its significant can’t be overstated,” said Richard Hyman, strategic advisor, consumer business, Deloitte, in a presentation at the NRF show.

Hyman noted that the 250 largest retailers in the world have been losing share of total retail sales since 2003, when they garnered 27.4% of total global sales.

“These retailers have massive scale advantages but they are losing share,” he said. “It appears scale may be a bit less important going forward. Retailers who relied on superior scale for their competitive advantage may have to think about adding a few more ingredients to their strategic armor.”

The world’s 10 largest retailers, led by Wal-Mart Stores, saw their share of total Top 250 sales slip in fiscal 2009, and their composite sales growth was stagnant at 0.2%.

“The top 10 fared less well than the total group of 250,” Hyman said.

But while sales for the global power players were down, profitability showed a marked improvement in fiscal 2009 as retailers tightened their belts.

“Costs have been very well managed, which has improved margins,” Hyman explained. “In fact, the Top 250 composite net profit margin rose to 3.1% in 2009 from 2.4% in 2008. But continuing to keep a lid on costs going forward will be a major challenge for retailers.”

The report also included analysis of the Q ratio of publicly traded companies on the Top 250 list. The Q ratio is the ration of a publicly traded company’s market capitalization to the value of its tangible assets. The higher the Q ration, the greater the share of a company’s value that stems from such intangibles. The composite Q ratio for the Top 250 retailers is 1.144 by comparison, Swedish fast-fashion retailer Hennes & Mauritz (H&M) had the highest Q ratio in fiscal 2009, with a 7.852 score, followed by Turkish discounter BIM (7.475); Coach (6.803); Amazon (5.760); and Apple/Apple Stores (5.362).

“It’s a tremendous testament to the strength of these retailers that they have received such a high rating in this added value metric,” Hyman said.

Future Growth: Hyman noted that retail consultancy Planet Retail has forecast sales growth of $6 trillion during 2011 to 2014, with the majority — 66.2% — of the growth coming from developing/emerging markets.

“The growth in developed markets has peaked,” Hyman explained. “There are too many retail mouths to feed, and too much capacity in most developed markets, which has led to a lower returns from floor space. The global prize is in developing markets.”

Hyman said that solid and effective local partnerships are key to doing well globally.

“Local knowledge and local credentials are increasing important,” he added.

Top 10 Global Retailers

The composition of the Top 10 retailers in the world remained the same in fiscal 2009 as it did the previous year, according to the Global Powers of Retailing 2011. However, sales declined for four of the chains: Carrefour S.A., Metro AG, Costco Wholesale Corp. and The Home Depot.
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