By Steve Rowen, Managing Partner
1/20/2009
It’s often amusing to hear the wildly varied accounts of a singular event when described by different onlookers. CNN’s early coverage of the Miracle on the Hudson last week is a great example: in the hours directly after landing safely, the cable news channel was able to unearth some serious characters willing to profess that they saw smoke and fire flooding the sky, when in fact, most others described it as a peaceful and (with the exception of running river where the runway should be) “entirely normal” looking phenomenon.
I doubt you’ll find such variance in description from anyone who attended last week’s NRF Conference in New York. In fact, if forced to choose one word to describe the common experience, I’d suggest it was relief. For vendors, relief that customers were still attending and armed with pointed buying questions; for retailers relief that they still had budget to be present and asking such questions.
One of the best sessions I attended while there was the perfectly-titled “The Sky has Fallen: Now What?”, hosted by Accenture and featuring a panel of truly heavy hitters. JC Penney CEO Myron “Mike” Ullman was joined by Peter J. Solomon, founder of the financial company that bears his name, as well as highly recognizable economist Marc Zandi (Economy.com), who quickly identified his role on the panel as that of “speaking in numbers.”
And while the show floor buzzed with conjecture from all fronts about where the economy is headed, these three men set out to have a discussion that was markedly more statistically-based than anything else I’d heard.
“We hear so much about the devastating effects of a possible automotive industry crash in this country,” said Ullman, which he pointed out, is an industry that accounts for roughly 2 million jobs in this country. “Retail is 10 times the size, employing over 25 million Americans,” and then explained that the retail industry had lost more than 580,000 jobs in 2008 alone. “Perhaps we should be paying more attention to that.” One step of action he has personally enacted? In a nod to accepting personal responsibility as called for by the brand new administration, Ullman set up a TARP program with his own children, paying off their credit card debt if they elected to hand over their cards to him permanently. “The next generation is going to have to manage their life with what they can afford to buy… That’s a legacy that all of us have to think about because it’s going to be a much tougher economy.”
Solomon pointed to the fact that this “bust” was entirely natural and in some ways necessary, and despite an audibly shocked audience response, went so far as to suggest that the banking system be nationalized here in the US (coming from a banker). “You’ve already paid $350 billion to the banks, and what do you have to show for it? With nationalization, at least you’d have something to show for your investment.”
Zandi’s input was the most compelling to me, as he helped quantify economic decline with statistical information. In the 1970’s, the US consumed 64% of its GDP, a number that rose to 71% in the last few years, and a number he assumes must fall to 1970’s levels within the next 10 years. By way of comparison, China is expected to double its consumption of GDP in the same 10 years (25% to 50%), hinting at something that we’ve been noticing in our research for some time now: Those retailers who identify new geographies sold-to as a key metric to success will be well poised against their competitors. This is a tack we saw Winning Retailers embrace in our recent eCommerce Study: The e channel truly holds the key to pushing more US-based goods out to the rest of the world, an absolutely vital component to growth and success as countries like China and India become more self-sufficient.
Elsewhere at the show, IBM presented some very cool customer advocacy findings from a recent survey it had conducted. Sampling 40,000 consumers, IBM further statistically validated Nikki’s theory about this being the “year of the existing customer”: customer advocacy to specific retailers has risen from 21% last year to 38% this year. Further, only 5-6% of that 17% shift is attributable to “new loyalty”. What is most important to these advocates? Freshness and store experience top the bill.
SAP also presented a fantastic customer panel early on Tuesday morning, where executives from four vastly varied customers shared their common experiences in a tough economic climate. David Edwards, Divisional VP of Business and Technology with Coldwater Creek, Tim Kasby of India’s Reliance Retail (920 stores across all segments), Dominic Luzi, CIO of Hastens Sangar (maker/seller of all-natural high-end bedding), and John Baldino, Senior Director of Business Transformation at WaWa discussed the business challenges they’ve recently faced, which as you might imagine, were quite diverse. Ranging from rapid expansion (Reliance is currently opening up to 20 stores a day), to creating a consistent shopping experience regardless of the store location (Hastens), all agreed that the current environment lends itself far more to reinvesting in existing technologies than brand new ones, evaluating what’s being used, what’s being replaced, and figuring out logical next steps for true optimization of existing systems.
So as all parties on all sides gasped a sigh of relief – accepting that the sky has indeed fallen and now there is business to conduct – the takeaway from this year’s NRF conference is just as Brian so aptly noted: Time to get on with it.
|
