What a Happy “New” Year!

It is a natural exercise of the human condition to take a deep breath and reflect on the year that was. We always wish each other a very, “Happy New Year,” with the thought of reaffirming and reestablishing our relationships for another calendar year. Yet I can’t help but think of a different meaning for last year. At NARMS International, 2008 was really a happy “New” year with all of the new and exciting developments designed to propel our association into the future. Never before in its history has NARMS been in a better position to serve the members of the at-retail merchandising and marketing industry, those who are seeking great retail jobs with our members, and the outstanding manufacturers and retailers who comprise the end customer of our unique and diverse services.

Early in the year, our leadership decided that it was time for another look at our association’s strategic direction. Our Board of Directors came together and took an in-depth look at who we are, what we do and what we want to be. The outcome is what we now call our Strat Plan and is the genesis for the many new features and services that you have experienced this year. Great strategy yields powerful tactics, of which I will only name a few. And rest assured there is more to come.

The most visible of the new developments is our adoption of a Web 2.0 platform for www.narms.com. And while the look and feel of the website is enhanced, it’s the tools and techniques in the background that make the real difference. Without getting into numbers, the end result is that much more traffic is being generated. Many more people are visiting and they are staying for longer periods of time enhancing our member’s opportunities for exposure to new customers and to new field representatives. Those who list jobs now have their ad pushed out via RSS feeds to many other job seeking sites, as well as JobBank. We also enhanced our human resource generating tools through introduction of One Call Now and Twitter, which both push opportunities out to professional field reps via their cell phones, PDAs and PCs. It’s a mobile solution for a mobile audience. Simply stated, there is no better time to use The Recruiter and to list a job in the JobBank.

Based on those who are taking advantage, our monthly Webinar Series has been a great success with our members who are enjoying the opportunity to spend an hour of education without having to leave the friendly confines of their offices. Content has been planned for this new vehicle through mid-year, and there are many more prospects in development.

Of course, we are looking forward to another great conference in Colorado Springs , but this year will be different as we will be including a virtual trade show opportunity for our exhibitors. This experience will enhance the networking opportunities past just a few days in the Spring and will bring a new power to our relationships with our vendors. And speaking of that, NARMS Associate Members now have their own official division with the walls of NARMS. It is a sign of an even deeper commitment between our service members, and those companies who continue to development new tools and services to make our lives easier and our value greater.

And did I mention individual memberships? How about our charter memberships in the Center for Retailing Excellence at the University of Wisconsin – Madison? And what about the growing NARMS social network on Facebook? GlobalShop? The IFBA Top-to-Top Conference?

Whew! It’s been one heck of a “New” Year.

Study is an Early Christmas Present

While perusing the pages of Progressive Grocer, well the electronic version anyway, I came across a bit of information that hit me like a shiny new bicycle on Christmas morning. A research group called IHL has released a study called, “What’s the Deal with Out-of-Stocks,” which examines why retailers lose sales to consumers who want to spend money at their stores. Add this study to your deck of information exhibiting issues that can be solved by the professional at-retail marketing and merchandising companies that make up the membership of NARMS.

As if the economy isn’t bad enough, the study tells us that retailers are losing the sale of at least one item to as many as 20% of the customers who visit their stores. And that’s just the tip of the iceberg. IHL notes that the negative shopping experience may drive the consumer away from the store entirely. With as much information as we have on out-of-stocks, it appears that the message is not getting through, or rather not getting executed.

The story says that consumers are coming to the store with money that they have budgeted to spend and leave without spending it because they can’t find an item, can’t get access to a locked item, or can’t get help to get an item that is not on the shelf, but may be in-stock. Because of the problem, 9% of polled consumers said they have stopped shopping at one or more stores in the last 12 months.

To further illustrate the lost opportunity, Consumer Electronic stores are losing $1.35 for every customer that comes in the store due to the level of out-of-stocks. Warehouse clubs lose $1.78 and grocery stores 68 cents in sales for every customer that can’t find the product or a replacement. The differences in the losses per channel are caused by the merchandising mix and average transaction of the store. If you multiply $1.35 times the number of consumers that come though the store during a day, week or month, the cost of an hour service call here or there to recover the loss seems like pretty good return-on-investment.

The study is available for a fee at www.ihlservices.com. There are also some free preview summary pages available. The study goes into specifics of OOS performances at Wal-Mart, Kroger, Best Buy, Circuit City , Costco, Albertsons, The Home Depot, Lowe’s, and others in the food/grocery, home improvement, or electronics channels. This information, and other similar afforts available in the NARMS InfoShare Library, is a gift in our efforts to demonstrate value and be part of the solution.

Looking Past the Headlines

Recent content here, on other blogs and the NARMS Webinar Series has centered on how to survive and even thrive in a rotten economy. A recent Wall Street Journal article signaled a beacon of hope in the retail sales sector that serves as a lesson to all. When reading and hearing economic reports, make sure to read past the first paragraph to find the meat of the story. This particular article reported that retail sales for November declined for the fifth straight month, but this figure included automobile sales which offset gains in consumer electronics, sporting goods, books, music, clothing, furniture and food. In short, those are categories that are in the wheel house of NARMS members, who provide world class at-retail marketing and merchandising services. And although growths in these categories are slower than usual, it is a point of light for NARMS members, their customers and for field personnel looking for retail jobs.

Some of these increases can be attributed to deep discounts and seasonal sales, but the activity of CPGs does seem to be holding fast in some sectors. The challenge now is to convince our customers that we can help them rise up out of flat growth and start achieving sales goals consistent with the recent past. For months, fuel prices were blamed for the decrease of growth as consumers were driving less. Consumer driving habits changed so sharply, that gas stations are still experiencing a 15% drop in sales, even though gas prices has fallen and have stabilized for several weeks now. No doubt that will trend back up with the easing of prices, but all evidence suggests that consumers are making less frivolous trips, but still making the drives to the market for essentials.

While looking for opportunities for your company to continue to be successful, it’s often necessary to dig beneath the surface clutter and get a view of the real picture. Until all the factors of glum economic reports and articles are understood and measured, we should take them with a grain of salt. That is not to downgrade serious market concerns being experienced by some of our members, but simply to point out that certain retail sectors that are the specialty of many of our members continue to experience some measure of success. And one last upbeat note from the Journal, “The University of Michigan’s index of consumer sentiment, released Friday, rose to 59.1 this month from 55.3 in November. Consumers’ expectations for inflation over the next year fell to 1.7% from 2.9% in November; the figure had been as high as 5.2% this year.”

It looks like consumers are keeping the faith, we should too.

Understanding is Key to Survive Glum Economy

The message from the fifth installment of our NARMS Webinar Series, which took place on Monday, was clear. Understanding exactly what is happening during the recession, yes recession, is the only real way to chart a strategy for success. During the event, Anthony Miyake of Group M reflected on consumer spending and the net effect on retailers. He was also kind enough to share some of the Group M information and methodology for assessing the economy. His advice to brand marketers was to ramp up efforts to define their value proposition as a tactic to insulate themselves from competitive price pressures and maintain brand equity. As providers of at-retail marketing services, we should also listen to that advice. We must ask ourselves which of our services are best positioned to help our customers define value. We must also find ways to remind our customers of our value to them.

The chain reaction of a downturn in consumer behavior could definitely have a negative effect on our members. But it doesn’t necessarily have to. It is no secret that sales promotion tactics such as coupons and mail-in rebates are counter-cyclical because their use is much more prominent during down economic times. I would bet that coupon clearing houses and rebate fulfillment companies are not currently complaining about the economy. We know that there are many sales building activities that take place at-retail and that we are well-positioned to help our customers maximize their investments by ensuring execution at shelf-level. Depending on store management and personnel to carry out important initiatives simply does not work.

If you are looking for ways to effectively communicate the value of NARMS members, revisit our NARMS InfoShare series for various publications that contain facts, figures and ideas that you can use in your sales pitch. And remember that you are always selling, even after the program or project is complete.

We again thank Anthony Miyake and associate member Group M for sharing their time and information with us. In fact, Group M has just released their second in a series of five articles published by GroupM Business Science to help businesses and marketers assess and optimize their marketing spending. We also once again thank ReadyTalk for their outstanding support and excellent technological tools. And don’t forget to tune in on Thursday, December 11 at 2:00 PM EST when Carolyn Weiland of StarWorks will lead a discussion on, “Marketing Tools That Work in Challenging Times.” The Webinar series is free to NARMS members and is a great way to add to your understanding of the current marketplace.

Giving Thanks Anyway

Many retail industry leaders might not be feeling exceptionally thankful this holiday season for all the obvious reasons. But there are always some signs of hope. Just recently, I’ve read some articles, which were clipped as part of our NARMS Newsfeed service, that provide a glimpse of light at the end of the tunnel. One had to do with the performance of the grocery channel and the other was a study that once again pointed to the absolute effectiveness of at-retail displays. So we can be thankful that there are opportunities out there and we, as world-class providers of at-retail marketing services, can seize the moment by positioning ourselves as part of the solution. To that end, there are some amazing things going on at your trade association that can help you attain that lofty goal.

It has been a tremendous year of change at NARMS International, so let’s start by giving thanks to our members and leaders who have brought tremendous insight and helped us prepare for the challenges that lie ahead. A good deal of this manifested itself in the extensive Strategic Planning Process led up by Phil Lauria of Pelcos Advisors. This exercise yielded many short and long term action items, some of which have been attained and many that will be introduced in the weeks and months ahead.

Although we must always be careful no to leap to tactics before a firm strategy can be defined, I would like to point out a few initiatives that have resulted from the Strat Plan. NARMS has always prided itself on being a teaching organization. It is safe to say that we have a tremendous new learning tool in our monthly NARMS Webinar series. Over 80 members have registered for each of the four sessions so far and there are two more planned for December! The new look Web 2.0 www.narms.com has evolved into a true interactive experience which improves not only the interest level, but also the effectiveness and reach of the Recruiter and JobBank. This is achieved through the use of One Call Now, RSS Feeds and Twitter as we now employ a comprehensive push-pull strategy to our staffing appendage. We are also excited to investigate our relatively new charter membership in the Retail Advisory Board of the Center for Retailing Excellence at the University of Wisconsin – Madison. We are the first non-retailer of this group and can look forward to a multitude of upcoming activities.

These are just a few of the latest and greatest happenings, and of course, we look forward to another exciting and jam-packed agenda at the Spring Conference in Colorado Springs . The event also has an exciting new feature in the NARMS Virtual Trade Show in which all members and non-members will have the opportunity to visit with the exhibitors that present their services and products 24/7 on the NARMS website.

So at this time of Thanksgiving, we give thanks to you the members who, with your continued membership, give us the opportunity to serve, grow and evolve to meet your needs. So from the staff here at NARMS International HQ, Happy Thanksgiving to you, your staffs and your families!

Embracing Inclusion in Ethnic Retailing

As retailers and manufacturers stare down the reality that even early Black Friday sales may not be enough to lift them out of dark economic times, the optimist in me is looking for some good news. There has to be some good things happening out there. Then I happened along an editorial by Supermarket News Editor-in-Chief David Orgel who has written about the momentum surrounding Ethnic Retailing. Indeed, recent news points to expanded initiatives catering to Hispanic customers from Sam’s Club, Nash Finch, Food Lion and United Supermarkets. Orgel says that these are more than just demographic trends and the fact that retailers are spending significant capital on new formats during tough economic times supports his conclusion.

The key to the recent success of the ethnic format is inclusion. What may have started as a niche concept has quickly evolved as a way to grow overall base by catering to the needs of the Hispanic and other ethnic communities, and yet still invite in the mainstream shopper to experience new items.

What this may be nurturing is a new playing field for our customers and an opportunity for us to provide at-retail merchandising and marketing programs to support them. As Orgel point out, “Ethnic retailing is a sector that is far from maturing, isn’t hurt by new competition and appears to thrive in any economy. How many other sectors can you name that meet all of those criteria?” While much of his commentary zeroes in on the Hispanic market, he is quick to point out that many of the same points can apply to other ethnic segments. The increase in options has proven to be an enticement for mainstream shoppers to visit stores more often.

Since capital expenditures, format expansions, category resets, and new item introductions have a positive result on the business generated by NARMS International members, it behooves us all to become better versed on the retailers and manufacturers that are choosing this path to build their base business. Applying the principle of “Inclusion” could open up doors that go well beyond a niche or a fad.

Election Results Fuel Upcoming Webinar

There is no other way to say it. The classification of Independent Contractor (I.C.) labor is of paramount importance to the members of NARMS International. Almost 30% of our members’ workforce is made up by I.C.s, according to data from our members as reported in the 2008 MSO Benchmark Study. Many of our members depend on this flexible labor resource as they execute at-retail merchandising and marketing programs for manufacturer and retailer clients around the world. With the election of Barack Obama, legislation originally introduced by the then Democratic Senator from Illinois may threaten to make it more difficult for our members to manage this vital resource. Luckily, we have just the resource for you to learn more about this potential industry paradigm shift. It’s not too late to sign up for the November 20 NARMS Webinar with presenter Russ Hollrah, ESQ. This event will take place at 12:30 p.m. Central time with Russ addressing the subject of “Independent Contractor Status, 2009 & Beyond!” You can register now by clicking here.

Although it’s not Wolf Blitzer on CNN talking to a hologram, our webinar series has proven to be a convenient and valuable resource for our members. The November installment will offer a broad overview of the current environment for independent contractors and cover related developments at the Executive Branch of government and how those developments might be affected by the new political leadership. The webinar is sponsored by Synergy Systems, Inc. and powered by ReadyTalk.

One of those developments is the Independent Contractor Proper Classification Act of 2007 (S. 2044), which was introduced on September 12, 2007, by Senator Barack Obama (D-Ill). This bill would repeal an invaluable safe-harbor provision that allows a qualifying business to obtain certainty, for the future, that its relationships with independent contractors are proper for federal employment-tax
purposes. The bill would eliminate that certainty and leave all businesses vulnerable to the Internal Revenue Service prospectively reclassifying the independent contractors with whom they do business as employees – regardless of whether the IRS has already examined the relationships and found them to be proper. Talk about a moving target!

The end result of this legislation could be to require clients to either hire as employees the independent contractors with whom they do business, or do business only with incorporated vendors. Obviously, the bill would hinder an individual’s ability to offer his or her services as a self-employed independent contractor.

I hope you take advantage of this opportunity to hear from Russ on the matter. He is an unparalleled expert on the subject and will bring years of experience to the table. The timing could not be better.

Tax News Not All Bad News

It’s the day after Election 2008, and I don’t know about you, but I’m glad it’s over. In the end, the will of the people selected Democratic Senator Barack Obama over Republican Senator John McCain. As is the custom in our great republic, it’s time to undertake the peaceful transition of power, and tackle the pressing issues of the day. Taxes are always a key issue in any campaign and I am pleased to remind you that not all the taxation news is bleak. When Congress passed the Economic Stimulus Act of 2008 in February, it contained section 179 which significantly increased the deduction on purchased or leased office equipment in 2008. The tax deduction is as high as $250,000. Eligible equipment includes new computers and computer software. If you are in need of updated equipment, the time to act is now.

Obviously, Section 179 could mean great savings for NARMS member companies, whose headquarters depend on computer and office equipment and software to help them manage their decentralized at-retail merchandising and marketing field organizations. Additionally, many of our members have issued equipment out to the field management and reps. The migration of equipment to the field is often a painful expenditure, yet necessary to land certain assignments. The extra deductions could help ease the pain. Another provision of Section 179 is one time bonus, first year depreciation of 50% on qualifying equipment. This is after the deduction limit is reached. In other words, if you buy enough equipment to exceed the $250,000 deduction, you can take a bonus 50% depreciation on the rest.

A story in the Chicago Tribune yesterday said that the tax break may unfortunately go unused for many businesses because they simply can’t afford to buy the equipment. According to one expert, “People aren’t pulling the trigger on large capital purchases… businesses don’t have good cash flow or cash reserves, so they probably have to postpone purchases.” If you find yourself in this situation, do as one accountant suggests, “Look at 179 and depreciations and capital outlays as economics first and tax second.” In other words, if your business needs additional equipment, now is a great time to buy, but don’t buy just to get a tax break. If you find yourself cash strapped, leasing may be a good option to still qualify for the deductions.

The economic crisis is unfolding in front of our eyes. Whether the new administration will be able to turn the tide is yet to be seen. Our best bet is to remain vigilant and look for opportunities for growth, efficiency and savings. Section 179 may be just the break your company is looking for.

Seeking the Silver Lining

Many thanks go out to Bryan Gildenberg for supplying NARMS International with the latest report from the MVI research team entitled, “The Week That Was: How Will Market Turmoil Change the CPG/Retail Marketplace.” The report is a quick four page synopsis of what we find ourselves in and predictions for the near term. Gildenberg, Chief Knowledge Officer at MVI, will again be one of our Keynote Speakers at the NARMS Spring Conference. Some of you may recall that he last appeared in 2006. Gildenberg is often cited as a global expert in retail insights by leading publications and electronic media outlets, so his perspective is valuable and appreciated. Here are some highlights of the report, and what they might mean to NARMS members as we provide at-retail merchandising and marketing support to the CPG/Retail Industry.

One of the report’s Top 10 Key Conclusions is, “The dollar’s long-term revaluation versus other currencies in the world should create opportunities for supply chain realignment, especially with increased manufacturing in dollar-based economies.” Now more than ever, it is important that NARMS members position themselves as cost effective members of the supply chain. We can help reduce waste and redundancy and help increase efficiencies.

Another conclusion, “Uncertainty may place greater value on brands, retailers, and suppliers that can communicate stability to shoppers.” Insuring that product is on shelf and available and that POP/POS gets out of the back room and is prominently displayed in the desired area can make a bold statement to consumers. Stability is not something that our customers’ brands can afford to lose.

We know from reading the news that many retailers are cutting back on expansion plans and remodeling initiatives. Another conclusion from the report states that, “Retailers that rely on capital for key strategic initiatives or operational stability are most at risk in this environment. Across the board, any retailer pursuing an aggressive expansion strategy will find that strategy more expensive in the short-medium term.” At the outset, this seems to be very bad news for our PIC members. However, after some thought, some opportunity does exist. The key will be to position ourselves as a way to maximize expansion plans though expertise, knowledge and efficiency. Just as consumers are looking for, “more bang for the buck,” so are our customers. NARMS member companies that I have spoken with take great pride in this approach. The key will be communicating the message.

These observations are only a couple of the key conclusions in the MVI report. As you read the rest, remember to look for the areas of opportunity. It may be necessary to reposition your company to meet the new challenges. To hear even more, make sure you register for NARMS Spring Conference and check out Bryan Gildenberg in person.

Value Provides the Ultimate Competitive Edge

The Tampa Bay Rays seemed to have everything going their way with a 3-1 lead in the best-of-seven American League Championship Series against the Boston Red Sox, and a 7-0 lead late in game 5. That is about the time when the force of nature known as the Red Sox mighty offense caused a significant shift in the competitive environment. The Sox came back to win game 5 and game 6 to force a pivotal game 7. But this didn’t turn out to be a crash and burn story for the Rays. They overcame the momentum shift and got back to the doing the things; namely starting pitching, solid fielding and timely hitting; that helped them win the American League East title. The result is that they are going to their first World Series against the Philadelphia Phillies. There are many CPG companies who have experienced the same thing recently. Good times have been derailed by force of nature type economic factors and unprecedented competitive forces. The October issue of Willard Bishop Consulting’s Competitive Edge suggests that manufacturers can follow the Rays example by sticking to the knitting (or hitting as it were). In this case it is providing value to their customers. Doing so can help them overcome the tough times and ultimately win the day.

As we were reminded in yesterday’s monthly NARMS webinar hosted by Mark Hunter, “Winning Sales Strategies in Difficult Times,” value is defined not by what the customer pays for a good or service, but by the benefit they derive from the service. Mark reminded us that this is quickly forgotten as competitive pressures mount. In the article for Competitive Edge, author Jim Hertel concurs, “Economic pressures on retailers can quickly translate into margin pressures and price increase pushback for suppliers. As a result, suppliers need to understand, improve, and get credit for the total value they create beyond product and price.” Hertel says there are four major levers that suppliers can use to add value and get credit for it: increase demand, reduce cost, increase merchandising impact and develop an effective go-to-market approach. It is in the latter two where NARMS members have an opportunity to add value to our customers, as they add value to theirs.

Hertel goes on to say that in order to accomplish this, suppliers may need to change the way they engage their customer, and key among these are shopper insight and shopper marketing capabilities. Again, NARMS member ears perk up.

Now that we have the point in scoring position, it’s time for the big two-out hit. Tuning in to resources like the NARMS Webinar Series, Willard Bishop’s Competitive Edge, and other such studies and publications can be a great aid in identifying areas where we can help our customers add value. In doing so, we establish our companies as a vital and reliable part of the go-to-market system and not just a switch-on service that is far too susceptible to competitive and economic pressures.