WASHINGTON — Retailers will have a new voice in the capital as the industry’s two largest and most powerful trade groups agreed to merge against the backdrop of a shrinking retail landscape hit hard by the recession.
The executive committees of the National Retail Federation and Retail Industry Leaders Association said Wednesday they had unanimously agreed in principle to the merger, which is expected to be completed by the summer.
The new association, which has not yet been named, will join together the memberships and financial clout of the industry’s trade and industry lobbying associations. The NRF’s annual budget is $35 million, and RILA’s annual budget is an estimated $13 million.
Sandy Kennedy, president of RILA, will lead the transition, but a head of the new trade association has not been selected. Tracy Mullin, president and chief executive officer of the NRF, who has been with the group for more than 30 years, will retire.
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“We are in an unprecedented time economically and there are many challenges facing retailers, and both of the memberships saw the benefit and enhanced value provided by the organizations coming together,” Kennedy said. “Both organizations have great talent and strengths and I think the time was just right.”
Mullin’s contract with the NRF expires at the end of the year, and she said at the age of 65 it is time to move on.
The merger “makes perfect sense for the industry,” Mullin said. “With public policy at the forefront, the industry needs a strong advocate. With the combination of the two groups, we will be creating an absolute powerhouse.”
Both associations’ boards must give final approval for the merger, along with the memberships. Kennedy said the process should be completed by August. Since both organizations are registered as not-for-profit entities in New York, state Attorney General Andrew Cuomo must also give his approval.
Kennedy said the new association will provide a more cohesive front in tackling crucial issues, including support for legislative proposals to crack down on organized retail crime and credit card interchange fees, and opposing a bill known as the Employee Free Choice Act that would make it easier for workers to organize a union.
“I am confident with one voice we will certainly have a greater impact as an industry,” Kennedy said. “There have always been challenges having multiple groups in town representing the same constituency.”
RILA and NRF were part of a coalition that sent letters to congressional leaders and U.S. Trade Representative Ron Kirk Wednesday proposing to combine four U.S. trade preference programs into one and include all developing countries, such as Cambodia and Bangladesh, that do not currently receive unilateral duty free treatment from the U.S. The coalition of importers cited a dramatic decline in imports from sub-Saharan Africa and a rapid downsizing of Cambodia’s garment industry as reasons for the proposal, which suggests providing duty free, quota-free market access for all products and a simple rule of origin common to all products form qualifying countries.
The merger will provide the two groups more economies of scale and allow them to eliminate overlapping dues paid by some retailers that belong to both associations, as well as combine events that each sponsored and funded. Kennedy said the meetings and events for both organizations this year are on schedule. NRF’s “Big Show” for next January and RILA’s annual Logistics Conference in February will go forward.
However, she noted that if the transition moves forward, one duplicative event — a loss prevention meeting held in June by the NRF and in early May by RILA — will be combined.
The staffs of both organizations will be integrated. RILA has 34 staffers and the NRF has 100.
RILA represents 65 retailers and 200 members, including most major discounters and mass merchants such as Wal-Mart Stores Inc., Home Depot Inc., Best Buy Co. Inc., J.C. Penney Co. Inc., Target Corp., VF Corp., Lowe’s Cos. Inc. and Safeway Inc.
Kennedy said the composition of the groups’ memberships is “very different,” noting that 86 percent of RILA’s members have revenues of $1 billion and higher, while a much smaller percentage of NRF’s membership has revenues over $1 billion.
The NRF includes 2,500 members such as Chanel Inc., Macy’s Inc., Penney’s, J. Crew Group, Kohl’s Corp., Levi Strauss & Co., Limited Brands Inc., Liz Claiborne Inc., Neiman Marcus Inc. and Polo Ralph Lauren Corp.