NEW YORK — Retailers will head into the 83rd annual convention of the National Retail Federation next week buoyed by decent Christmas results and the NAFTA victory, but troubled by weak apparel sales and the specter of new taxes.
Despite being plagued by economic uncertainties, however, the industry, as represented by the NRF, seems more united on key issues and more politically motivated than usual.
The passage of the North American Free Trade Agreement and the expected liberalization of world trade under the Uruguay Round of GATT are “two major victories,” said Tracy Mullin, president of NRF.
“The industry did more letter writing than ever before, the administration is willing to meet with the NRF and our ceos, and we think it’s having payoffs,” Mullin said. “There are 20 million employees in the retail industry. They’ve got to pay attention to us.”
According to Mullin, major themes during the convention will be interactive shopping, international expansion and the tax implications of national health care reform. “We’re looking at about a $15 billion dollar tax increase for our industry for the first year, principally because we are an employer of part-time and seasonal workers [who aren’t covered],” Mullin said.
“The goal is really education — so retailers understand the impact and are prepared to make decisions,” Mullin explained. “The President’s health care proposals are not necessarily final, so it’s premature for us to cut deals.”
The convention, being held Sunday through Wednesday at the Hilton and Sheraton hotels here, traditionally focuses on the uneasy relationships with suppliers. Now retailers are pressuring them to ship “floor-ready” merchandise and on Tuesday will hold an invitation-only meeting with three dozen department store ceos, according to W. Thomas Gould, ceo of Younkers Inc.
“We are seeking 90 percent or better floor-ready merchandise by spring 1995 — merchandise that is UPC bar-coded, with the price on it, and with standardized hangers in cartons that are labeled for scanning,” Gould said. This could cut the time merchandise sits in distribution centers from four days to one, speeding deliveries to stores, he added.
“We hope to draft a program and implement it over the next year,” said Gould, who will be honored at the Green Thumb luncheon Tuesday. Gould said the ceos will also consider developing a standardized procedure for chargebacks to manufacturers for damaged merchandise. It could involve prearranged deductions based on a percent of the overall volume shipped, and giving defective merchandise to charities, instead of shipping it back to suppliers, Gould said.
The NRF convention is a huge forum, expected to draw about 15,000 retailers, suppliers and consultants, who typically debate strategies in open sessions or private meetings. They also examine new technology, and endure two-hour luncheons where some high achievers receive NRF awards and meet again later for cocktails.
The event should be lively, considering that retailing has already made lots of headlines this year. Merry-Go-Round filed a Chapter 11 petition to reorganize this week, Woodward & Lothrop looks like it might do the same, and Federated Department Stores has made a play for the beleaguered R.H. Macy & Co.
And what about women’s wear, one of the worst-selling categories last Christmas. That has merchants shifting to home goods.
According to NRF statistics provided by Management Horizons, apparel sales will rise 6 percent through Easter and grow moderately in the next couple of years. Home goods will grow by 9 percent through Easter.
The NRF projects total retail sales, excluding automobiles, to rise 5.5 percent in the first quarter, with inflation accounting for 1.5 percent of the increase and remaining low.
Consumer electronics and furniture stores will do the best, while department stores are doing better than a few years ago, the NRF said.
The report added: “Consumer confidence is improving, retail sales are booming in the Rocky Mountain region, the picture in the Southeast looks bright, Southern California is the weakest part of the economy, while the Northeast continues to struggle but shows signs of recovery.
Smaller retailers will have a particularly rough time this year. According to Barbara Rackes, ceo of Rackes Inc., a $9 million, three-unit women’s specialty store in the Carolinas, “Many smaller retailers will get tired and quit, and won’t make that leap into the future. Too many try to compete with department stores, doing price promotions day in and day out, but they don’t have the pencil to go in with large margins from the outset.” Rackes will receive NRF’s Small Store Retailer of the Year award.