Big Doings in the Big Apple

Is retail poised to emerge from its economy-imposed doldrums? Visitors to the NRF 99th Annual Convention & EXPO – Retail’s BIG Show – in New York City last month would likely offer a qualified “yes.”

Overall attendance at the BIG Show matched the 2008 record of 18,500, and the number of retailers in attendance rose 20 percent from 2009.

While not all speakers and presenters are ready to declare the “consumer recession” officially over, the general sense is that merchants and vendors are much more optimistic and encouraged than they were mere months ago.

Following are highlights from four days of Super Sessions and Breakout Sessions – many of which played to standing-room-only crowds.

Redesigning Luxury
Designer Tory Burch, barefoot in an airport in early January, sent out a tweet asking if anyone else was “grossed out” by having to walk through security sans shoes. “Should I design a line of travel socks?” she asked.

The response was fast and furious; according to a subsequent tweet, it proved there was an “epidemic” of grossed-out travelers. But it also proved a point: Today’s luxury shopper expects to connect with brands on a whole new level.

Burch said that “luxury means something different than it used to.” Instead of being about wealth or price, it’s now about personal choices, individualization and “touching” the brand — not to mention the designer.

“People are not buying products,” said Marc Gobé, president, emotional branding. “They’re buying ideas. They’re not buying brands. They’re buying the culture behind these brands.”

Saks chairman and CEO Stephen Sadove said there are “four pillars to the way we do business — products, selling environment, cost structure and marketing. Every one of them has been redefined. In terms of products, people want value. … They want to feel like whatever they’re buying, it’s worth it. So what we’re focused on is bringing that value with exclusivity differentiation.”

A year ago, Sadove said, the question on everybody’s mind was: Is luxury dead? “The reality is that people still love shopping. They love value, and they want to touch and feel, and be a part of that lifestyle. That hasn’t changed. What has changed is the expectation.”

"Tesco’s Tale"
As we emerge from the recession,” said Tesco chief executive Sir Terry Leahy, “we all want to know what’s next. I don’t know the answer to that any more than you do. I want to go back to the last recession, in the early 1990s, and look at some management lessons we learned in coming out of that one.”

In 1992, there were two dominant retailers in the U.K., Marks & Spencer (clothing) and Sainsbury’s (food); each was the world’s most profitable retailer in its category, and each had market capitalization of around £5 billion. At the time, Tesco was struggling to establish its identity, was significantly less profitable and had a market cap of around £2.5 billion.

Nearly two decades later, Marks & Spencer and Sainsbury’s remain roughly the same size, while Tesco is now the world’s third-largest retailer with a market cap of approximately £35 billion. Leahy presented some of the principles Tesco followed along the way.

• Find the truth. “The best place to go is to your customers. They’ll tell you what’s good or bad about your company — and if you keep listening, they’ll tell you what to do about it.”

• Audacious goals help. Tesco had four of them: become the No. 1 retail choice in the U.K.; become as strong in general merchandise as it was in food; find a way to add services like banking; and become a leader in global retail.

• Vision, values and culture matter more than strategy. The company brought thousands of employees together in small groups and asked them two questions: What does Tesco stand for? What do you want as an employee? The answers: No one tries harder for the customer; I want to be treated the way I treat people.

• Simple beats complex. You need a culture of simplicity to navigate a complex environment.