NEW YORK — In retailing, size won’t matter as much, and fashion will take a toned-down turn this year.
This story first appeared in the January 11, 2011 issue of WWD. Subscribe Today.
Those prognostications came out of day one of the National Retail Federation’s convention at the Jacob K. Javits Convention Center here, running through Wednesday. More than anything, the thousands of retailers who attend NRF’s “Big Show” want to know what the future will bring for their businesses.
For retailing’s juggernauts such as Wal-Mart Stores Inc., Carrefour and Tesco, bigger won’t always be much better, according to Richard Hyman, Deloitte’s strategic adviser.” Big is still beautiful, but it’s getting less attractive,” Hyman said at a morning session Sunday. “Scale is an enormous advantage, but it’s becoming a slightly less potential advantage on its own.” Retailers with superior scale “may need to think about adding a few more ingredients to their strategic array.…Branding remains relatively undeveloped in retailing.”
According to Deloitte’s report on the world’s top 250 retailers, “Going global is not a surefire strategy for sustainable growth. Sales growth for domestic-only retailers [in 2009] outpaced retailers with a more global base of operations. On the other hand, retailers with a large global presence were more profitable.” Retailing worldwide in 2009 generated $15 trillion in sales, with the largest 250 chains accounting for $3.7 trillion of the volume, according to Deloitte.
David Wolfe, creative director of The Doneger Group, sees “an emerging minimalism” in fashion starting this spring. He sees the fast-moving women’s fashion industry soon “operating the way men’s wear has always operated, with subtle shifts in fashion,” season-to-season to reflect changes in what women want and lifestyles that are becoming less fashion-driven.
The global economy has stabilized and the luxury market is rebounding, but several significant concerns remain, particularly the creation of jobs and continued sluggishness among the mainstream consumer. In a Super Session Monday at the National Retail Federation’s 100th annual convention entitled “Retail’s Road to Recovery: Status Report on the Global Economy,” a panel of experts weighed in on the challenges and opportunities facing retailers in 2011.
Consumers do not feel good about the future yet since they are still tentative about job security, said Mark Greene, chief executive officer of FICO. He added that emerging markets such as Brazil, China and India hold the most promise for future retail growth.
“Premium brands had a spectacular holiday season,” said Matthew Rubel, chairman of Collective Brands Inc., who noted, however, that business at the lower end was much more challenging.
When customers saw merchandise that they liked, price was not an issue, said Claudio Del Vecchio, chairman of Brooks Brothers.
Policy makers need to be aggressive to turn the current economy into a self-sustaining recovery by spurring job growth among mainstream consumers, said Mark Zandi, chief economist of Moody’s Economy.com. “It’s a very big hole to dig out of, but we’re on the way,” he said.
New technologies to enhance shopping bowed at the convention. The LiminAr, an augmented reality system developed in partnership with Intel Corp., was demonstrated on Monday by Pattie Maes of the MIT Media Lab. The device, a gizmo about the size of a loaf of bread, plugs into a light socket and can project information onto any surface beneath it, as well as read objects placed in front of it. So if a shopper placed a camera beneath the device in a store, the LuminAr could give the shopper data on similar cameras. “What we intend to show with this technology is how augmented reality will transform the shopping experience in the store,” said Maes. “It combines all the possibilities of the online world with the advantages of the physical store.”
Mobile technology was the star of several sessions. One was devoted to avoiding the me-too trap with differentiation. Target, which has launched iPhone, Android and iPad apps, is piloting the Shopkick app in several stores, said Phil McKoy, vice president of marketing and technology for Target Corp. Macy’s and BestBuy also use the app, which lets users check in and receive special offers based on where they are standing in the store. Mobile shoppers spend more than other Target consumers in all the channels and make more store trips, he said.
Meanwhile, Wal-Mart in the U.K. has answered the Groupon challenge with its own homegrown program on Facebook called CrowdSaver that lets large groups of shoppers band together to get discounts on Wal-Mart merchandise such as laptops, according to Kate Ancketill, managing director of GDR Creative Intelligence.
A Monday Super Session panel tackled the broad question of what lies ahead for the retail industry. Tesco said it’s installing free Wi-Fi in its stores. Peter Sachse, chief merchandising officer of Macy’s Inc. and chairman and ceo of macys.com, said the retailer is considering doing the same.
With regard to the shopping center of the future, Daniel Hurwitz, president and ceo of Developers Diversified Realty Corp., lamented the dearth of new retail concepts. “We have tremendous capital and we’re more than happy to help incubate businesses,” he said. “It’s shocking that so few ideas are asking for that kind of help.”