Make no mistake about it. The number one factor affecting the retail environment in 2011 and 2012 is the economy. Included under that economic umbrella is unemployment, something speakers often mentioned in 2009 and 2010. Matthew Shay, new president and CEO of the National Retail Federation, stressed that point during NRF's 100th annual show, which drew more than 21,000 people at the Jacob Javits Convention Center in New York City. "Will we see Congress and the administration think more seriously about legislation that will truly stimulate job growth?" he asked. "Will they focus on investment and consumption? It's too soon to tell. For our part, we will redouble our efforts to build the relationships with the administration and members of Congress on both sides of the aisle….We will spend that time encouraging them to adopt policies for investment and consumption."
Shay added that, while the economy was challenging in 2010, retailers such as you got the job done. Some of the ways that was accomplished was by having tighter inventory controls, launching more private-label goods and more. However, "the relatively strong finish to 2010 does not diminish the economic challenges we face. Unemployment remains stubbornly high. There's a possibility for increased inflation. Nevertheless, I believe the retail industry is poised to lead the economic recovery when it comes. The National Retail Federation will be with you every step of the way."
Shay's comments were followed by a panel discussion on similar topics led by Dr. Mark Greene, CEO of FICO, known as a provider of credit scores. "We had a good holiday season," said Dr. Greene. "There was evidence that consumer spending returned. Retailers saw 4 to 6 percent growth in same-store sales. But the numbers were a bit muted compared to some expectations. The recovery is taking hold, but we continue to face challenges. Chief among them is unemployment. There's ongoing difficulty in consumer sentiment. Consumers do not feel good about the economy just yet. They are cautious because they are worried about job security. The picture outside the U.S. is stronger, though. Brazil, China, India and other select markets across Europe are seeing much stronger growth....In the U.S., we're seeing a new consumer. You've heard the phrase 'the new normal economy.' With new normal comes a new consumer. One who is pickier, looking for a better price, and one who is more likely to comparison-shop. One who is perhaps less loyal than they were before."
Joining Dr. Greene were Ian Cheshire, CEO of England-based  Kingfisher; Claudio Del Vecchio, CEO and chairman of Brooks Brothers; Matthew Rubel, chairman, CEO and president of Collective Brands (operator of Payless ShoeSource and Stride Rite); and Mark Zandi, founder and chief economist at Moody's Analytics. Rubel said that "conversion" was "incredible" for Collective Brands during the holiday period. "When people came out to shop, they purchased items," he said.
"When people saw something they liked," they bought it right away. "Price was not an issue," added Del Vecchio. "If they didn't think they needed it right away, price was an issue. I think people are becoming more aware of the quality of a product and are less influenced by marketing."
Zandi, who crunches numbers as one of his duties, said the holiday retail season was good. "Five or 6 percent retail sales growth is good," he said. "Last year was 3 or 4 percent. The year before was an outright decline. We're making progress. The stock market recovery has helped a lot. I think fiscal policy is very important. Policy makers must be aggressive. They need to make sure the economic recovery evolves into a self-sustaining economic expansion. We need that growth. I'm confident we will get it. I think 2011, 2012 and 2013 will be very good years."
"We see things stabilizing," said Rubel. "Our [job] turnover rate has increased. That's actually a good thing because it means there are more job opportunities."
 The Customer is Always Right
All four panelists emphasized the need to know your customers better today. End users have changed dramatically during the past several years. However, you can get to know your customers' interests more easily than ever before.
"Social networking sites have made all the difference," said Rubel. "Customers can talk about your products and get information about them more easily than ever before."
"Social networking sites let you get much closer to the customer," said Del Vecchio. "You can really get to know them. We never had that information before. That is a place we go to find the information."
"If you present the customer with the same product as your competitor, it will get you nowhere," Cheshire said. "But if you get the customer involved on a social networking site, they can really feel they are getting closer to a product. They can feel they are part of the process. And that customer can sell your brand to their friends."
Lessons Learned
Dr. Greene wondered whether, if economic times return to a "boom" stage, retailers would forget about some of the lessons learned during these dark times. Here were some thoughts from the panel:
"Focus on your customer," said Rubel. "Innovate for them. Focus on where they shop, how they shop and why they shop. Innovate for them every day."
"One thing we don't want to do for the future is to look too much  inside the company," Del Vecchio said. "We tend to like something we do very much and want to continue it. But you have to focus on what the customer really needs and become their partner. You have to make the customer experience great for them."
"The one good thing about a recession is you have to create your own worth," said Cheshire. In good times, you tend to assume you'll grow with the market. It's been a painful, but good, experience for us. We were able to put our hats in order. As has been said, you have to focus on the customer. You also have to look for market share gains. Create your own growth. Growth through initiatives is the key thing to take from this painful experience. There are a lot of growth opportunities. But you have to focus on them and get serious about them."
Creating your own growth is certainly a key. However, help from the U.S. government never hurts. "The next big policy will focus around how we will address our fiscal problems," Zandi said. "It's going to require spending restraint and tax increases. On the spending side, it's very important to focus on education, skills and infrastructure. The key to the U.S. economy is talented people."
 "We need to focus on job creation," said Rubel. "Free trade is very important, as well. You need to take away tariffs to make it easier to export goods elsewhere. I do believe the government has been focusing on that much more recently. But we must move away from the rhetoric and focus on the policy."
"The key focus in Europe is [also] on creating jobs," Cheshire said. "Private sector investment is vital for growth."
"We've heard some really consistent answers," concluded Dr. Greene. "We need to focus on investing in capital, job skills and making sure we don't encumber the free-trade process. All are certainly important for retail."
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