NEW YORK -- The National Retail Federation is having a four-day gathering here this week, and it looks like the industry is taking a creative and optimistic approach to tackling a challenging consumer environment.
Former President Bill Clinton, one of the keynote speakers, warned a packed hall of about 5,000 yesterday: "We live in a world that is unstable, unequal, and unsustainable. Our job is to minimize these negatives."
Clinton said it could take five to 10 years for the economy to recover -- not exactly the brightest forecast for retailers. Shortly before his keynote, the NRF issued its sales forecast for 2012, and it acknowledged that growth will likely slow.
The NRF's 101st Annual Convention and Expo, which runs through tomorrow, features more than 420 exhibitors from 82 countries, along with a host of big-name speakers. But you have to look beyond the hype and the crowds -- which the trade group boasts are bigger than last year and the largest in its history -- to find some retail reality.
The fact is that 24,000 industry representatives haven't come to the Jacob Javits Convention Center this week to celebrate. They're here to try to understand the changing role of retail stores, as well as to stay a step ahead what they acknowledge to be smarter, more demanding consumers. At the very least, they want to keep pace with changing consumer demands.
Matthew Shay, the NRF's president and chief executive officer, says retail sales are expected to rise 3.4% to $2.53 trillion this year. Last year, sales grew 4.7%. (The NRF excludes auto, gas, and restaurant sales from its retail figures.)
In the past 18 months, retailers have been "on the forefront of the economic recovery -- creating jobs, encouraging consumer spending, and investing in America," Shay says. However, he also says retail spending is expected to outpace the growth of the overall economy. The gross domestic product is expected to increase about 2.1% this year, according to the consensus forecast from economists.
Consumer confidence remains fragile, and income growth is tepid, despite an uptick in employment. Retail sales edged up in December, but only because stores cut prices so sharply. And in the past few weeks, numerous retailers, including Target (NYSE: TGT), Kohl's (NYSE: KSS), J.C. Penney (NYSE: JCP), and American Eagle (NYSE: AEO), have cut their fourth-quarter earnings expectations.
So has Tiffany & Co. (NYSE: TIF), the world's second-largest luxury jewelry retailer and a major player in the US retail sector. This is an ominous sign for 2012, according to Michael Lombardi, lead contributor to the financial newsletter Profit Confidential.
But no one wants to bring up bad news at a party. So back at the NRF's Big Show, the DJs play on, models smile, and exhibitors of everything from inventory and supply chain solutions to workforce management systems and point of sale terminals try eagerly (anxiously?) to catch the attention of attendees.
Clinton, meanwhile, talks wistfully about how wonderful the world would be if we all embraced our common humanity. He didn't say too much specifically about retailers, but he mentioned the need for the US to cut its debt, solve the housing crisis, and restructure its tax system, perhaps by cutting the corporate tax rate from 35% to something closer to the average rate of other advanced countries -- about 24% to 26%.
But when it's all said and done, a few of Clinton's words may linger longer than others in the minds of this audience, like the warning to "minimize these negatives." The retail sector, which has been battered by low consumer confidence and high unemployment for several years, seems to have gotten pretty good at looking on the bright side.