2 0 0 2 ANNUAL REPORT
The Voice of RetailWorldwide
In Uncertain Times
Retailing has come a very long way since the first merchants sold their wares frompushcarts. Today we shop around the world for the perfect goods to satisfy ourcustomers ever-changing tastes, we rely on increasingly sophisticated technologyto run our businesses and anticipate new trends, and we have training programs toensure our sales staff provide consumers with a satisfying customer experience. Yet the pace of
competition continues to increase.
Today, the typical customer has more options than ever before. Stores proliferate and access to the
Internet and its myriad shopping venues is growing rapidly. Despite this competition, there are
many areas where retailers benefit from working together, sharing information and best practices
and joining forces to influence pressing public policy issues.
Through NRF, the industry gains a collective voice that is exponentially more influential and
effective than could be achieved autonomously or in smaller coalitions. Many of the activities
under the NRF umbrella, such as providing critical research, advocating industry messages to
elected officials and the media, and developing industry conferences, are vital to our industry
and would not be possible without NRF.
I encourage you to read more about NRF and these activities in the following pages. And I thank
the businesses and individuals that are contributing to the organizations success.
Gordon I. Segal
Chairman of the Board and
Chairman of the Executive Committee
CEO, Crate & Barrel
Throughout 2002, as a nation we recognized and acknowledged the importance of leader-ship. We embraced national leadership to help us put thoughts of terrorism behind usand shift our thinking toward a more optimistic future. We agonized over the failure ofcorporate leadership that became so obvious in the wake of the Enron and WorldComscandals. We experienced church leadership fall from grace. And we watched the incredible speed
with which congressional leadership could be turned on its head. The retail industry exerted its own
brand of leadership as it continued to do what it always does so well, meeting economic challenges
head on and reaching out to communities and consumers in times of need.
In 2002, many economists credited consumer spending and retail sales as the Atlas holding aloft the
U.S. economy. So, retailers ability to attract customers and generate sales served as a major source
for optimism. Retailers knew the year would not be an easy one, but the industry continued to look
forward, constantly striving to identify unique products to meet consumers increasingly fickle tastes,
implement new merchandising strategies, and adopt technology enhancements now that will shape
the future of the shopping experience.
NRF continued to assert its leadership as a source for retail information, education and training and
as an innovator by assisting retailers multi-channel initiatives and driving IT systems standardization.
NRF also continued its proud tradition of serving as the retail industrys foremost advocate. Our ability
as an organization to quickly and substantively address retail industry issues is crucial to our mission
and proved essential throughout 2002. Our programs were both timely and informative, and we created
several important new benefits that will make the Federation even more valuable to members in
2003 and the years ahead.
As we move forward and the marketplace becomes more favorable for retailers, we will continue to call
on our members to participate actively in our programs and contribute to setting the organizations
agenda. Working collectively through NRF, we can influence the direction of our industry and the
policies that affect us. And, thats what leadership is all about.
THE YEAR INREVIEW
President and CEO
National Retail Federation
NRF was the industrys mostvocal advocate in the nations
capitol, securing Bush Administrationaction to re-open the West Coastdocks in time for the vital holidayseason, and winning numerousbattles in Congress and Federalagencies. (Page 4)
NRF Foundation continuesits efforts to add skilled
workers to the pool of potentialretail employees, by providingtraining and education as wellas encouraging careers in retail.(Page 30)
Retails Big Show remainsthe premier retail industry
gathering, and in 2003 it will get even bigger. (Page 10)
In partnership with KPMGConsulting, NRF produced
a remarkable annual study,Retail Horizons, which willbe the definitive source ofbenchmarking informationand in-depth analysis forretailers. (Page 17)
NRF positioned itselfas a vital source for
online retailers and a leadingconduit for retail technologystandardization, through itsShop.org and ARTS divisions,respectively. (Page 26)
New conferences onCustomer Relationship
Management, technology and merchandising are increasing NRFseducational offerings and furtheringits role as the leading source forindustry programming. (Page 13)
David Petiford,General Manager,IBM GlobalRetail Industry
Government Relations 4
Public Relations 8
Member Services 17
Advisory Committees 22
NRF Divisions 26
NRF Foundation 30
STORES Magazine 32
Financial Information Inside back cover
Statement of Purpose Back cover
The Year in Review ..............................................................................iii-iv
Officers and Board of Directors............................................................2-3
2Howard S. AbramsPresident and CEOdeJongs, Inc.
Michael AnthonyChairman, President, and CEOBrookstone, Inc.
Donald BalfourVice PresidentWaffle House Inc.
Thomas J. BataHonorary ChairmanBata Limited
*Robert M. Beall, IIChairman and CEOBealls, Inc.
John M. BelkChairman and CEOBelk, Inc.
Adrian BellamyChairmanThe Body Shop, Inc.
Raphael BenaroyaChairman, President and CEOUnited Retail Group, Inc.
*Robert M. BenhamPresident and CEOBalliets LLC.
Henry BerlinCEOBerlins Brothers, Inc.
Cem BoynerVice Chairman and CEOBoyner Holding A.S.
Paul R. CharronChairman and CEOLiz Claiborne Inc.
*Evan ColePresident and CEOABC Carpet & Home
*A. F. DawaharePresidentDawahares, Inc.
Andre L.S. de BottonPresidentACV Comercio e Participaes
Brian DevineChairman, President and CEOPETCO Animal Supplies, Inc.
John L. DunhamPresidentThe May Department Stores Company
John EylerChairman, President and CEOToys R Us, Inc.
*Donald G. FisherChairmanGAP, Inc.
Joseph A. FlanneryPresidentWeavers, Inc.
*Louis FortunoffEVP, Customer ServiceFortunoff Fine Jewelry & Silverware, Inc.
*Craig L. FullerPresident and CEONational Association of Chain Drug Stores
*Marvin J. GirouardChairman, President and CEOPier 1 Imports Inc.
Robert A. GlickChairman and CEODots, Inc.
John M. HancockChief ExecutiveMFI Furniture Group PLC
Lisa M. HarperVC and CEOThe Gymboree Corporation
George HellerPresident and CEOHudsons Bay Company
Philippe HouzCo-CEOGaleries Lafayette Group
Elliot S. JaffeChairmanThe Dress Barn, Inc.
BOARD OF DIRECTORS
CHAIRMAN OF THE BOARD AND CHAIRMAN OF THE EXECUTIVECOMMITTEE
*Gordon I. SegalChief Executive Officer Crate & Barrel
FIRST VICE CHAIRMAN OF THEBOARD AND CHAIRMAN OFTHE FINANCE COMMITTEE
*James M. ZimmermanChairman and CEOFederated Department Stores, Inc.
SECOND VICE CHAIRMAN OF THE BOARD
*Arnold B. ZetcherChairman, President and CEO The Talbots Inc.OFFICERS
3Stephen I. KahnChairman and CEOdELiA*s Corp.
*M. Farooq KathwariChairman, President and CEOEthan Allen Inc.
James L. Kittle Jr.ChairmanKittles Home Furnishings
*Daniel S.C. KooChairmanShui Hing (HK) Limited
Kazumasa KoshibaPresidentIsetan Company Limited
*Alan J. LacyChairman, President and CEOSears, Roebuck and Co.
Steven D. LadwigPresident and CEORetek Inc.
Joseph W. LevyChairmanGottschalks Inc.
Lovro MandacChairmanKaufhof Warenhaus AG
*R. Brad MartinChairman and CEOSaks Incorporated
H. Michael MayPresidentMay Brothers Clothing Company
James F. McCannChairman and CEO1-800-FLOWERS.COM
*Michael F. MoormanChairman and CEOPeebles Inc.
Tom MoserVice ChairmanKPMG
Edwin T. MosherPresidentMoshers Ltd.
*Shelley NandkeolyarEVP and President, Internet and Direct CommerceMartha Stewart Living
*Bruce NelsonChairman and CEOOffice Depot, Inc.
Allen QuestromChairman and CEOJ.C. Penney Company, Inc.
*Leonard H. RobertsChairman and CEORadioShack Corporation
*A. Daryl RoutzahnPresident and CEORoutzahns
Walter J. SalmonEmeritus Professor of RetailingHarvard Business School
Rowland SchaeferChairman, President and CEOClaires Stores, Inc.
Kenneth E. SeiffChairman, President, CEO and TreasurerBluefly.com
Robert A. SmithCo-Vice ChairmanThe Neiman Marcus Group, Inc.
*Robert J. UlrichChairman and CEOTarget Corporation
Dr. Barton A. WeitzExecutive DirectorCenter for Retail EducationUniversity of Florida
Leslie H. WexnerChairman and CEOLimited Brands
*Jerry WheelerExecutive DirectorSouth Dakota Retailers Association
Martin ZaepfelVice Chairman, President and CEOThe Spiegel Group
*denotes members of the
THIRD VICE CHAIRMAN OF THE BOARD
*J. Hill StocktonPresident Norman Stockton, Inc.
CHAIRMAN OF THEAWARDS & NOMINATIONSCOMMITTEE
*Arnold B. ZetcherChairman, President and CEO The Talbots Inc.
PRESIDENT AND CEO
*Tracy MullinPresident and CEO National Retail Federation
*H. James BaumPresidentBaums Inc.
CHAIRMAN OF THE NRF FOUNDATION
*Robert J. CorlissPresident and CEOThe Athletes Foot Group, Inc.
4Government Relations1NRF Protects Retail Interestsin the Public Policy ArenaNRF is consistently rated as one of the most influential andeffective trade associations in Washington, offering policyexpertise and representation on all legislative, regulatory andpolitical affairs at the federal level. In 2002, NRF lobbiedCongress and federal agencies on dozens of issues directlyaffecting the retail industry. NRF representation both proactive and defensive brought the industry billions ofdollars in economic benefits.
" When labor unrest shut down West Coast ports and threatened to cut offthe supply of billions of dollars worth of merchandise to retailers duringthe crucial holiday sales season, NRFs Government Relations Departmentwent straight to the top. A letter to President Bush and meetings with topWhite House staff and congressional leaders underscored the devastatingimpact a protracted work stoppage would have on retailers. Due in partto political pressure exercised by retailers, a new labor contract wasfinalized.
" Following the tragedies of September 11, 2001, affordable insurance cover-age for terrorist attacks on stores, shopping malls and other commercialreal estate began to rapidly dry up. NRF successfully fought for legislationthat will create a federal backstop program making coverage once againavailable at affordable prices.
" Several of retails biggest trade objectives were realized at once whenPresident Bush signed the Trade Act of 2002 into law. The cornerstone wasTrade Promotion Authority, which will make it easier for the United States
to participate in trade agreements that reduce tariffs on consumer goodsand let retailers do more business abroad. The new law also saves retailers$700 million a year by reinstating the Generalized System of Preferencesfor a period of five years, and increases the amount of clothing that can beimported duty-free from the Caribbean Basin, Africa and Andean countries.
" For the third congressional session in a row, bankruptcy reform legislationthat would save the business community $4 billion a year was passedoverwhelmingly by the House and Senate with NRFs support, only to godown to defeat at the last minute. NRF is assessing whether the industrywants to pursue this Sisyphean task again when the 108th Congressconvenes in January.
" A federal judge certified NRFs class-action lawsuit against Visa andMasterCard over attempts to force retailers to accept signature-based debitcards that carry much higher transaction fees than PIN-protected cards.The case goes to trial next spring.
Retail industry leaders chat with Speaker of the HouseDennis Hastert (R-IL).
Paul Charron, Chairman and CEOof Liz Claiborne (right), chatswith influential Senate leaderJohn McCain (R-AZ).
5" NRF worked with the Streamlined Sales Tax Implementing States organi-zation on a plan to simplify the nations complex web of sales tax laws.Simplification will lessen compliance burdens for multi-state companiesand could ultimately pave the way to a requirement for mail-order andInternet merchants to collect sales tax.
" NRF won a two-year extension of the Welfare to Work and WorkOpportunity Tax Credit programs, which have helped retailers hiremore than 250,000 workers.
" NRF worked with the Federal Trade Commission and FederalCommunications Commission to ensure that proposed federal do-not-calllists for telemarketers dont keep retailers from making legitimate calls toexisting customers.
" Normal Trade Relations status for Vietnam was extended by one year,allowing Vietnam to grow as one of retailers major sources of textiles,apparel, footwear and consumer electronics.
" NRF worked to have a new user fee removed from the port security bill,saving retailers and other importers $650 million annually.
" NRF fought the CHIP Act, legislation that would force retailers to collecta $10 recycling fee on every computer sold.
" NRFs RetailPAC augmented legislative efforts by raising nearly $130,000 in2002. Seventy of the 73 retail-friendly candidates supported were elected an incredible 96 percent! In addition, NRF held seven retail industryfundraising events that raised more than $90,000 for prominent lawmakerssuch as Senate Finance Committee Chairman Max Baucus, House JudiciaryCommittee Chairman James Sensenbrenner, and Senators-electNorm Coleman and Lindsey Graham.
House RulesCommitteeChairman DavidDreier (R-CA)(above) and SenatorRick Santorum (R-PA) (below) discuss issues withretail executives.
Senate Minority Leader Trent Lott (R-MS) discusses key legislation with retailleaders. Front: Tracy Mullin, NRF President and CEO, and Arnold Zetcher, Chairman,President and CEO of Talbots. Back (from right): Gordon Segal, CEO of Crate &Barrel and NRF Chairman, Paul Charron, Chairman and CEO of Liz Claiborne, HenryBerlin, CEO of Berlins Brothers, Ed Mosher, President of Moshers Ltd., and SteveLadwig, President of Retek.
Senator John Ensign (R-NV) voices support fortrade and terrorism insurance legislation soughtby NRF on behalf of the retail industry.
For more information visit www.nrf.com
6NRF Washington Leadership Conference Takes Retail Issues to Capitol Hill
NRFs 67th annual Was...