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Q&A: National Retail Federation’s Matthew Shay

In advance of the NRF's “Big Show” in New York, Shay sets the tone for 2014 and discusses the most compelling issues ahead for the retail industry.

With marginal holiday gains leaving stores feeling deficient, the National Retail Federation’s “Big Show” next week in New York will attempt to pump up the mood by providing retailers with an earful of ideas for attaining growth in a tepid economy.

The convention, considered the industry’s largest gathering of the year, always overflows with a dizzying array of sessions, and this year the discussion centers on omnichannel strategies, capitalizing on social media and mobile shopping, mining data, getting up front and personal with customers in a digital age, and the future for brick-and-mortar.

In the spirit of expansion, the NRF for the first time is taking over the entire Jacob K. Javits Convention Center, and will have 555 exhibiting companies, up from 494 last year, and an anticipated turnout of 29,000, compared with 28,000 last year and 25,000 in 2012.

“I’m very confident that when I stand up on stage and address the convention, I will be able to say this is another record crowd,” said Matthew Shay, the president of the NRF, in an interview.

At the NRF’s award luncheon, Jim Sinegal, Costco cofounder and board member, will receive the NRF’s Gold Medal; South Korea’s Lotte Shopping will be awarded International Retailer of the Year; Nike Inc. will be honored as the Retail Innovator of the Year, and Half Price Books’ chief strategy officer Kathy Doyle Thomas has been selected as the Silver Plaque recipient for leadership.

On the speaker roster will be former President George W. Bush; Blake Nordstrom, president of Nordstrom Inc.; former Saks Fifth Avenue chairman Stephen I. Sadove, who is currently chairman of the NRF; Mindy Grossman, chief executive officer of HSN, and Macy’s Inc. chairman and ceo Terry J. Lundgren. The event runs from Jan. 12 to 15.

Here, Shay sets the tone for 2014 and discusses the most compelling issues ahead for the retail industry.

WWD: This was quite an unusual holiday season. What are the lessons to be learned?
Matthew Shay: I think the obvious takeaway from the holiday season was that shoppers are really still feeling the effects of this lagging economic recovery. The way it took such an enormous promotional effort to get people to come out and shop has implications for the broader economy. It does not demonstrate a high level of [consumer] confidence about the economy. The fact that it took such a promotional effort suggests things must not be so great in the overall economy.

WWD: Were they any winners?
M.S.: Consumers had a good year in terms of the service and the pricing provided by retailers. There were so many fabulous deals. Retailers worked so long and so hard with their suppliers to deliver so many opportunities.…Online really exploded this year. We’ve been talking about online for four or five years, but this year we really saw it boom, in such a big way no one predicted it.”

WWD: Aside from plenty of promoting for holiday, stores stepped up service such as with free shipping deals and guarantees for delivery before Christmas even if you shopped right down to the wire. That sometimes backfired with late deliveries. What happened on the service front?
M.S.: There were supply chain issues arising from retailers’ efforts to provide new opportunities and service those customers. There will be a lot of discussion about what worked and didn’t work, and all that can be incorporated into next year’s plans. This [late deliveries] was not something anybody experienced before due to trying to provide a new level of convenience, value and service to shoppers. Mostly, it worked.

WWD: Do you think retailers will retreat from offering Christmas deliveries at the 11th hour?
M.S.: It’s still an advantage to give customers the ability to shop at the very last minute. Retailers are not going to give that up. They’ll do whatever it takes to ensure they can still provide that service. It’s going to be a real point of competitive distinction next year. Remember, customers are not all going to change [their shopping habits] and decide not to be procrastinators next year.

WWD: Aside from a record crowd you expect this year, what’s another big difference with the Big Show this time around?
M.S.: The Big Show will encompass the entirety of the convention center, without any smaller shows taking a piece of the real estate. The board pushed hard to negotiate this new deal. Last year, the Big Show occupied 166,000 square feet. Now it’s 205,000 square feet and a significant part of that increase is for exhibitors. The booths are getting bigger and they can get a lot more creative.”

WWD: What are the key issues confronting retailers this year?
M.S.: The number-one objective is job creation and return to consistent economic growth. There are a variety of ways to encourage job creation. We have several things that ought to be done. The whole issue revolves around uncertainty in the economy and lack of momentum. It really begins and ends here in Washington, D.C. [where NRF is based]. It’s the lack of leadership that is stalling the economy. It’s not about the fundamentals of the economy. The general indices, which ought to portend a growing and robust economy, are there. But job creation, consumer spending and business investment is lagging. The things required to get the economy really moving again aren’t happening. We always have gridlock, which is an oversimplification [of the problem]. The lack of leadership is preventing us from doing three simple things to do to heighten confidence: simplify and modernize the tax code, really support bilateral and multilateral trade deals and replace a broken system of immigration. If we did those three things, the economy would be growing at 4, 5 or 6 percent.

WWD: What’s your feeling about the debate over minimum wages?
M.S.: It’s a complete cop-out. We should be talking about how do we improve people’s chances to move up. We should be talking more about education and training. The minimum wage was designed to make sure young people have a way to get into the marketplace and get started. It’s an entry. It’s not supposed to be a permanent place to raise a family. Of our workforce of 155 million, two million are on minimum wage. To talk about this is to basically admit we have failed on everything else.