NRF Global Supply Chain Summit, May 19-21, DallasIn the American Society of Civil Engineers’ 2013 Report Card for America’s Infrastructure, the United States scored a D+ average. Not exactly “hang-on-the-refrigerator” type grades.

In a Tuesday presentation at NRF’s Global Supply Chain Summit, the society’s Brian T. Pallasch presented a somewhat grim portrait of the nation’s roads, railways, airports and other infrastructure. Although scores improved in six of the report’s 16 categories, the reality is that investment in infrastructure is not keeping up with needs. But what’s the real impact of this to retailers and consumers?

The report estimates that if an additional $157 billion isn’t invested in infrastructure every year through 2020, the United States will encounter:

  • $3.1 trillion in losses in GDP
  • A $1.1 trillion loss in U.S. trade value
  • 3.5 million fewer jobs
  • A $3,100 per-year decrease in personal disposable income per household
  • A $2.4 trillion drop in consumer spending

Pallasch said preventing those losses will require strong leadership at the national level, as well as a commitment to sustainability and being smart about how to prioritize projects to get the biggest benefits. Watch the short video for more details from the report. And for those interested in the full results, their fantastic app is worth exploring.

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NRF Global Supply Chain Summit, May 19-21, DallasRetailers at NRF’s Global Supply Chain Summit are learning about how to make their supply chains more effective and serve their businesses better. And, as they learned at one session, that sometimes includes giving stuff away.

Charles Johnston, director of the repair and liquidation center at The Home Depot, joined Good360 Vice President of donor Relations Doyle Delph to make the case for donating unused goods to nonprofits in local communities. And when you see the numbers, it’s not a tough case to make. Many retailers have merchandise they can’t sell. Props from store displays, merchandise used in photo shoots, or returned merchandise that has been damaged and can’t be resold are just a few examples. The nonprofit group Good360 does a job that most of these supply chain executives can appreciate – logistics, or getting the right goods to the right nonprofit at the right time – while retailers gain a solution for unused items that reduces their carbon footprint, saves the cost of shipping waste to landfills, and helps them give back to their communities.

Home Depot has taken this win-win concept to impressive heights. Five years ago, when some associates at company noticed how many building materials were being thrown out, they asked if they could instead put it to use in their own communities. That request led to the creation of the Framing Hope project at the Home Depot Foundation (their philanthropic arm), an initiative that uses unsold merchandise to build houses for veterans and others in need. Since 2008, the foundation has donated more than $150 million in merchandise and impacted over 1 million homes and families through this partnership with Good360.

Johnston said the program isn’t just the right thing to do. It also increases employee morale, builds up the community, reduces carbon emissions, and makes good financial sense. Watch the video to see how the program works below:

The key to Good360 is their network of nonprofits that distribute goods within their local communities. In Dallas, one of those partners is Refugee Connections, run by Bright Osigwe, who was also among the speakers. Osigwe’s organization supports refugees by setting them up in homes and helping them get on their feet in a new country. And while their organization used to drive from garage sale to garage sale to gather supplies, working with Good360 has connected the group with retailers from the area that have donated home items, linens and even food to help those in the most need. A true “one man’s trash is another man’s treasure” story.

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Is the lack of “bad” economic news affecting consumers’ spending habits and sentiment in a good way? Bloomberg recently reported that confidence in the economy climbed to the highest level in almost six years in May as rising real estate values and record stock prices boosted household wealth. And NRF’s latest consumer survey conducted by Prosper Insights & Analytics finds that the number of people who say the economy is affecting their household spending plans decreased to 83 percent in May, down from 85 percent in both March and April in March.

As we look into the psyche of the American consumer, it’s easy to base perceptions on some of the latest news. Surprising growth in April retail salesdecreasing unemployment numbers and a rise in U.S. payrolls appear to be contributing to a more confident shopper. But when we dig a little deeper it’s actually quite a different story – filled with dwindling hopes for improvement in the labor force, plans to spend less overall and a shift in the way consumers prioritize their budgets.

According to NRF’s May consumer survey conducted by Prosper Insights and Analytics, which gauges the level of impact the economy has on consumers’ spending plans, 54 percent of those surveyed said they are spending less to compensate for the state of the economy. Nearly another four in 10 say they are dining out less frequently for that same reason. Though these figures are both either flat or slightly down from the previous month, neither presents a terribly rosy outlook for consumer spending plans.

More highlights from the survey include:

  • 26 percent say they are shopping at discount stores more often, hoping to stretch their budgets as far as they can.
  • Nearly one-quarter will cut back on “small luxuries” and discretionary expenditures like gourmet coffee and high-end cosmetics.
  • Three in 10 will spend less on apparel.
  • Nearly one-third say they are travelling less or not at all – a trend to watch as important “travel” holidays such as Memorial Day and Independence Day approach.
  • 43 percent say they are shopping for more-frequent sales.

When it comes to consumers’ belief in a strong economy, the impact the calendar has on their spending demands, and their plans for investing in their savings this year, it seems consumer sentiment as a whole is still a bit unpredictable.

Although Reuters and the University of Michigan found earlier this month that consumers were much more confident about the economy, Prosper Insights and Analytics analyst Pam Goodfellow says “people want to believe in future growth for the economy, but they are having a hard time keeping the faith and are trying to be as conservative as their budgets will allow.”

For a bigger “Consumer Snapshot,” watch Prosper’s latest video below, and for more in-depth analysis and information on consumer sentiment and the economic landscape, visit the NRF’ Foundation’s Retail Insight Center.

 

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NRF Global Supply Chain Summit, May 19-21, DallasIn this morning’s opening keynote at NRF’s Global Supply Chain Summit, Jim Tompkins, CEO of Tompkins International, told retail supply chain executives what a wild ride they’re in for: Retail is at a crossroads, with a transformation occurring as supply chain leaders gain the ear of the CEO. The supply chain is becoming even more critical in either raising an organization to the top or sinking it to the bottom.

Jim Tompkins, CEO, Tompkins International

Jim Tompkins, CEO, Tompkins International

There’s no question that the current retail environment is intensely competitive and complex. Winning on price is tough, and many argue that price wars are simply a race to the bottom. Competing on selection can be difficult as well. So how will retailers distinguish themselves? Customer experience and convenience, Tompkins says. And the supply chain plays a huge role in both.

Have the wrong retail strategy or the wrong supply chain strategy, and retailers could end up going down the wrong path. But turmoil within the supply chain field will make for tough navigation. Over the last four years, retailers haven’t been addressing key challenges due to economic uncertainties, but Tompkins expects a flurry of changes and advancements in the next 18 months.

So what are the tipping points to the turmoil?

  1. Amazon. They can’t be ignored, so you need to understand why they’re winning.
  2. Online success. Your website is your front door, regardless of whether you make any money there.
  3. Technology. To do a buy/fulfill/return-anywhere model, you need the right tools.
  4. Social commerce. People don’t need to be together to shop together.
  5. Youth culture. Digital natives see shopping quite differently.
  6. Bad in-store experience. Service in the store needs to wow customers.
  7. Store relevance. Why should someone come to your store?

Tompkins points to the need to understand all of these in order to successfully navigate your organization. But he says the big one is undoubtedly Amazon, explaining that Amazon is winning for lots of reasons. They still run intensely like a startup, they’re persistent, they experiment and learn from their mistakes, they measure everything, and they focus on customers, not competitors. According to Tompkins, it’s very important to study Amazon.

Tompkins posed this question: What are you doing to align your supply chain with your business strategy to create supply chain value? It’s the answer that will guide you through the crossroads and on to success.

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“You are going to make our future,” NRF President and CEO Matthew Shay told the Wittenberg University graduating class last week – and he couldn’t have been more right. Of the 1.7 million college students graduating this year with a bachelor’s degree, the retail industry might find the next Mark Zuckerberg, or Terry Lundgren, or Sara Blakely.

In our work with universities – whether we’re trying to use the NRF Student Association to share insights on what a career in retail looks like, meeting with our Retail Recruiter Network about how to collectively promote our industry in a more compelling way to jobseekers, planning a student program for one of our conferences to give young people the opportunity to network with CEOs, or working to distribute more than scholarship monies to very deserving candidates – we hear and see every day how today’s college students are motivated and intelligent “change agents”, ready to leap headfirst into their career. And, of course, we hope that career is retail.

During Shay’s commencement at his alma mater, he shared five life and career lessons, some of which he’s learned the hard way (haven’t we all?). And while these were created with students in mind, they certainly apply to professionals at all levels:

  1.  When you make a decision, be committed.
  2. Clean up your own messes.
  3. Happiness is more important than money.
  4. Find a mentor.
  5. No one ever accomplished anything great alone.

And with that, he proposes a challenge: “Never let anybody outwork you.”

Watch a recap of his commencement speech below.

To see Shay’s entire speech, watch the video courtesy of Wittenberg University.

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There’s a well known proverb that “it takes a village to raise a child.” A small village in Honduras serves as an amazing example of just that.

As part of the Retail Orphan Initiative, retail executives from across the country traveled to La Entrada, Honduras in April to the Plan Escalon campus, a haven for more than 550 Honduran youth ranging from grades 6-12. Many of these kids come to the school from difficult circumstances, feeling lost and hopeless. But the Plan Escalon program gives children a chance to reclaim their future through education, faith and training. Plan Escalon means “A Plan to Escalate”, and the program’s success is undeniable. With nearly 50 percent of their graduates going on to attend a college or university, compared to the national average of just one percent, the importance of the school’s partnerships with groups like RetailROI and Lifesong for Orphans results in their continued success. In a nation with 70 percent overall unemployment, over 70 percent of these graduates have full time employment – a testament to the positive impact Plan Escalon has on the future of Honduras.

During my trip last month, I saw first-hand how one graduate’s journey is just beginning at the Plan Escalon campus. After she completed her education, the graduate returned to her home to start the village’s first elementary school, a truly remarkable accomplishment.

As part of Escalon’s weekly “Life in Action” village trips, we traveled up the side of a mountain with pickup trucks piled high with desks, chairs and Escalon students. It was apparent that our visit was the beginning of fulfilling another child’s opportunity to overcome obstacles and reach for their dreams.

With the emergence of new technology, a personal call-to-action can stretch from the United States to a village thousands of miles away. For almost five years, RetailROI has not only been able to make an impact on children’s lives domestically and internationally, this group of retail industry professionals has also touched hearts and encouraged others to become believers, leaders and champions for the cause.

Since 2008, the Retail Orphan Initiative has partnered with organizations on global missions to lend resources that change nations in 13 countries with over sixty projects. In Honduras, it started with building a computer lab and using the technology to connect students to a world of expanded learning, skills and opportunities. Similar projects have taken place in Liberia, Haiti, Zambia, Ethiopia and the United States through the construction of schools and the improvement of existing facilities. The purpose of RetailROI is to raise awareness and provide real solutions for the more than 400 million vulnerable children worldwide, and so far the organization has successfully donated more than 92 percent of their funds directly to the projects and missions at hand. In addition to the work in their professional lives, this group has adopted the motto “Find the need, Meet the need, Change a Nation.”

Ultimately, what we saw in Honduras was a perfect representation of the funds raised through RetailROI’s supporters. Our group did not just bring much needed resources to a village, but in many ways, those trucks served as vehicles to deposit seeds of inspiration and encouragement.

RetailROI

Students from the Plan Escalon school in La Entrada, Honduras.

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One truck piled high with desks and chairs for Plan Escalon students.

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Members of the La Entrada, Honduras community.

 

 

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While Overstock.com and Newegg might be breathing a little easier today having won their patent cases against Alcatel-Lucent earlier this week, the retail industry is nowhere near in the clear of patent trolls.

Patent trolls – companies that buy about-to-expire patents and go after companies using, inventing, or patenting similar software – are no longer only a tech industry concern. In fact, more non-tech than tech companies were targeted by patent trolls in 2012, and trolls are marching onto new targets every day with their operations funded by settlements and licensing arrangements achieved through the threat of litigation.

Patent trolls quickly figured out that casting a wider net than just tech companies could be more fruitful, and retailers and other end users are feeling the pinch of this new strategy. Trolls allege infringement not only on specific software but also on methods of doing business. For example, MacroSolve Inc. has filed numerous suits related to violating U.S. Patent No. 7,822,816, a “business method” patent that covers the process many businesses have used to develop their mobile apps. As retailers innovate and evolve, claims based on abstract ideas and general processes cut at this growth and ingenuity.

Trolls don’t just target national brands. Independent and smaller retailers are also receiving demand letters and being sued. These smaller businesses, just like national retailers, lack the resources (capital and manpower) and expertise in patent litigation to fight trolls and will often settle to avoid a lengthy and costly battle.

Although Democrats and Republicans don’t agree on much these days, there is bipartisan recognition on Capitol Hill that patent trolls are a problem. On Wednesday, the House Small Business Committee examined “patent reform implementation and new challenges”, with NRF and Shop.org providing comments for Wednesday’s meeting. Even the House Judiciary Committee’s Subcommittee on Courts, Intellectual Property and the Internet has already held two hearings on abusive patent litigation practices.

Lawmakers have also introduced legislation aimed at curbing the problem.  In February, Representatives Peter DeFazio, D-Ore. and Jason Chaffetz, R-Utah, introduced the Saving High Tech Inventors from Egregious Disputes Act, or SHIELD Act, which would require patent trolls to pay litigation costs when they lost in court.  Last week, Senator Charles Schumer, D-N.Y., introduced the Patent Quality Improvement Act, which would allow retailers to ask the Patent and Trademark Office to conduct a post-grant review of a patent involved in litigation. And on Thursday, Representative Ted Deutch, D-Fla., introduced the End Anonymous Patents Act. These are important first steps in combating patent trolls.

NRF supports the bipartisan approach Congress is taking to address this problem and is actively engaged with lawmakers to find a solution that alleviates the burden that retailers face.

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It’s been an interesting spring already. Slow March retail sales gave way to improved April retail sales, no thanks to the weather – I’m sure those in Colorado understand this more than anyone. Weather aside, consumers once again showed their resiliency last month.

As we move forward into late spring and early summer, many experts will take a close look at other essential economic indicators as they relate to the strength of the consumer. It is not surprising that media headlines are locked in on what is happening in the housing market, especially with seasonal sales of lumber, garden equipment and building supplies all faring well last month, as they typically do this time each year.

Housing starts in March broke an annual pace of one million for the first time since the beginning of the recovery in June 2009. Truth be told, no other sector in the economy plays such a dominant role in business cycles. The relationship between housing and the economy is crucial in every economic recovery because they both depend on the strength of growth in employment and incomes. Slowdowns and slumps in housing tend to foreshadow declines in economic activity, while housing upturns tend to be a key factor in economic recoveries that often set the pace for broader economic growth.

It’s important to note that economic activity is stimulated more by the purchase of a new house than an existing house because of the material and labor required in constructing that new family home. Housing prices also tend to move closely with consumer spending, almost directly impacting the retail industry. The latest S&P Case-Shiller 20 City Home Price Index has jumped 9.3 percent over the past year, a solid increase. Each time a home is purchased, consumers arrange financing, undertake renovations and/or make investments to improve their comfort or home values. This helps generate new sales of appliances, home furnishings, garden equipment and more. America is enjoying the fruits of a sustainable, relatively healthy housing market right now, but that wasn’t the case as recent as 2006 when the United States witnessed a significant collapse in the mortgage market. As a result, consumers pulled back on spending in almost every category except necessities like health and personal care grocery. Sectors like home furnishings, electronics, building materials and other specialty stores immediately felt the difference.

Chart: Home Sales, 2012-2013 (Annualized SA)Description: Tags: Author: charts powered by iCharts

As we stand now, the worst of the housing crumble is behind us and we are encouraged by the growth seen just these last few years. Finance options remain a challenge for many consumers, but prices are low enough that many Americans have a better chance of affording a new house now than they did at the peak of the market a few short years ago.

While the road to a complete recovery may seem long, we have seen substantial gains over the past year and expect another good year ahead, with many of the improvements coming directly from home builders and buyers. Nonetheless, the improvement in the housing market will continue to play an integral role in pace of the economy and the continued strength of the consumer. NRF members can access this month’s full Monthly Economic Review here.

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Graduation season is upon us, and high school and college seniors across the country are looking forward to their next journey in life. As graduates scramble to set their summer plans, whether it’s an internship in the big city or vacationing with friends, there’s one thing the rest of us are preparing for – purchasing graduation gifts.

According to NRF’s latest graduation survey conducted by BIGinsight, family and friends want to make this milestone special for their loved ones while also staying on budget. On average, consumers will spend $49 per recipient, a slight decrease from last year’s $51. For more graduation statistics, visit the Retail Insight Center to access the full data.

This year’s survey also found that gift-givers will purchase gifts for up to two graduates; shelling out an average of $94.

While these young adults are now on their way to making some of the most important decisions of their lives, consumers are willing to give them a push in the right direction with the most practical gift of all – cash.  An estimated 57 percent of consumers plan to give money. For grads, cash is the perfect gift for future needs from college expenditures to their first apartment.

Consumers will also say “congratulations” with gift cards (32 percent), apparel (11 percent), electronics (12 percent) and greeting cards (43 percent).

Total spending on graduation gifts is expected to top $4.6 billion this year, further illustrating that relatives and friends want to show their support and appreciation for the Class of 2013.

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WLC13_Social Graphics-Blog_80x80_1You know those big name brands that seem like industry giants? Well, most of them started on Main Street. From Sears to J.C. Penney to Best Buy and Walmart, each of these brands’ beginnings stem from entrepreneurs with small beginnings, big dreams and great business plans.

Kathy Doyle Thomas

Kathy Doyle Thomas, Executive Vice President of Half Price Books, listens to one retailer’s story during her Main Street Retailing Forum presentation.

During the Main Street Retailing Forum held as part of NRF’s Washington Leadership Conference last week, Half Price Books Executive Vice President Kathy Doyle Thomas shared the story of how her brand – just like those above – started on Main Street and has grown to a $250 million company with more than 100 stores across the country. Thomas noted that regardless of size, all retailers struggle with the same issues, such as how to execute smart social media, leverage localization as a competitive advantage, meet customer expectations, keep up with fast-paced technology changes, implement sustainable retailing initiatives and juggle it all with the same amount of resources at the quickest pace possible.

And while the challenges are the same, so are the opportunities for increased sales, profits and share of wallet, enhanced customer loyalty, improved competitive position, and the ability to make the world a better place. But where should small businesses even begin?

Thomas suggested that retailers find out who their customers are by asking questions on Facebook, leveraging Google analytics and using other low-cost resources, then developing that audience through blogs or other creative content. “You are the expert. You have credibility,” she said, adding that Half Price Books could directly attribute spikes in sales to blog posts covering certain products.

Thomas also shared how experimentation and investment have paid off dividends when it comes to community initiatives. Half Price’s “Decline a Bag” initiative was designed to help customers make environmentally sustainable choices as they shopped, and executives set a lofty goal of 1 million declines over a year. Instead, the company met the goal in six months. At the end of the program, Half Price donated $50,000 to charity in response, letting employees decide on charity options and offering customers the chance to vote on final selection. Thomas said the initiative was a great opportunity to engage with customers and build employee morale – a trend that isn’t going away anytime soon.

As the source of new ideas, job creation and community growth, Thomas told retailers who packed the room that Main Street is “where the history of retail starts and where the future of retail begins.”

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