NRF expo examines strategies for success

Discount Store News, Feb 3, 1997

NEW YORK -- The National Retail Federation's annual convention and exposition, held here last month, was the largest in history, drawing more than 15,000 visitors and 300 exhibiting companies. The following are highlights of some of the conference's breakout sessions.

High Expectations,

High Stakes

As the American consumer invests more time in convenience-store shopping and Internet surfing. American retailing will be faced with the challenge of an even busier consumer lifestyle. To address this issue, NRF invited five industry experts -- Bill Fields, chairman and ceo of Blockbuster Entertainment Group; Arthur Martinez, chairman and ceo of Sears; Donald Straszheim, first vp and chief economist, securities research & economics for Merrill Lynch; and Byron Wien, managing director & U.S. investment strategist for Morgan Stanley & Co. -- to one of its marquis events, "High Expectations -- High Stakes -- High Anxiety: The '97 Economy." Together, they outlined five significant industry trends to watch for in 1997:

* By 2005, the Internet will account for 25% of all durable goods and merchandise sales.

* Neighborhood stores, which highlight convenience, will continue to grow.

* Department and specialty stores will continue growing at 3% to 5% a year.

* Average shopping time has dropped 25% in recent years, and mall visits are down.

* Big box retailers will continue to grow at a rate of 28% until the year 2000, and nonstore retailing will chart an annual growth rate of 12%, including catalog sales.

Retailers must manage their businesses, said Martinez. "Stores have to break the mold.", He credited Sears, revival to a strong customer franchise, that, however bruised, was still intact.

Fields said consumers need a reason to shop today other than price, and making the environment fun is one key to getting them in the door. He said that on April 19 Blockbuster will open a new Chicago store, one for which he is considering charging admission.

Beyond Customer

Data

Unlike other times in history when manufacturers or distributors dominated the supply chain of merchandise, the 21st century will have consumers in charge, while retailers are left scrambling to track down customer data. It will be an environment that will require retailers to know "why" something happened, and support that answer with hard facts. Such was the prognosis of Ohio State University professor Roger Blackwell at NRF's "Beyond Customer Data" panel discussion.

Retailers will have to start with understanding the mindset of consumers and then work backward, Blackwell said. He noted that "young" is a set of attitudes, and ethnic marketing will become more important.

Between 1995 and 2010. Blackwell said, the Asian population will rise 50%; Hispanics will increase 30%; blacks will jump 14%; and whites will go up 4%.

He encouraged the audience to walk through their offices to see what people are wearing, "then you'll know what they want and why they're not your buyer."

A Wall Strut Review

of Retailing

Coming on the heels of a disappointing Christmas, retailers heard more bracing news from the panelists of "A Wall Street Review of Retailing." who delivered a sobering outlook for the industry in 1997.

Panelists included Larry Haverty, senior vp, State Street Research Management Corp.; Bruce Missett, managing director, department stores & specialty retail, Morgan Stanley & Co.; and George Strahan, vp, research, Goldman Sachs A Co. Walter Loeb moderated the discussion.

The end result of '96, a "zig-zagging season, will be comp store growth of 3% to 4%, said Strahan, who doesn't expect to see a lot of debt growth in '97. He urged retailels to "give customers a reason to shop your stores."

Missett reminded delegates that the current economic cycle is in its seventh year and added that he doesn't foresee much growth ahead. "I expect really the same performance as last year."

Haverty, who was more optimistic going, into the '96 holiday season thought apparel and CE would do better.

All agreed that mall retailers are the most disadvantaged and that retailing today is very much company-specific.

The group noted that consumers are getting older, Baby Boomers are entering their highest earning years, the country is overstored and more consolidation is coming, including in the discount tier.

They all agreed that Wall Street is more skeptical of retailers and their plans than in previous years.

Driving Top Line

Growth

An emerging element of power retailing lies in finding innovative ways to quickly build sales by tapping the knowledge of store-level employees and quickly transforming this intelligence into actionable plans. In a panel called "Driving Top Line Growth by Leveraging Customer Needs," Sam's Club outlined a program that has helped build incremental sales for the club operator's 440 domestic units.

Brett Hutton, manager, credit/member benefits, maintained that the club has been able to improve tactical club-level decisions and build sales volume by conducting Saturday morning meetings at each of its clubs. These two-to three-hour rap sessions, chaired by the club manager, discuss sales performance, membership programs and competitive developments. The meetings focus on creating opportunities and generating feedback from members, and then disseminating that information to headquarters.