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2 0 0 2 ANNUAL REPORT

The Voice of RetailWorldwide

Retail

In Uncertain Times

NRFThe Voiceof

i

CHAIRMAN’S MESSAGE

Worldwide

Retailing has come a very long way since the first merchants sold their wares from

pushcarts. Today we shop around the world for the perfect goods to satisfy our

customers’ ever-changing tastes, we rely on increasingly sophisticated technology

to run our businesses and anticipate new trends, and we have training programs to

ensure 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 organization’s 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 us

and shift our thinking toward a more optimistic future. We agonized over the failure of

corporate leadership that became so obvious in the wake of the Enron and WorldCom

scandals. 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 industry’s 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 organization’s

agenda. Working collectively through NRF, we can influence the direction of our industry and the

policies that affect us. And, that’s what leadership is all about.

PRESIDENT’S LETTER

THE YEAR INREVIEW

Tracy Mullin

President and CEO

National Retail Federation

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NRF was the industry’s mostvocal advocate in the nation’s

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)

Retail’s Big Show remainsthe premier retail industry

gathering, and in 2003 it will get even bigger. (Page 10)

2002Highlights

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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 NRF’seducational offerings and furtheringits role as the leading source forindustry programming. (Page 13)

2002Highlights

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RetailHorizons

David Petiford,General Manager,IBM GlobalRetail Industry

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Government Relations 4

Public Relations 8

Conferences 10

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

Contents

Chairman’s Message..................................................................................i

President’s Letter......................................................................................ii

The Year in Review ..............................................................................iii-iv

Officers and Board of Directors............................................................2-3

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CHAPTER

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Howard S. AbramsPresident and CEOdeJong’s, 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 CEOBalliet’s LLC.

Henry BerlinCEOBerlin’s Brothers, Inc.

Cem BoynerVice Chairman and CEOBoyner Holding A.S.

Mark BozekCEOHSN

Paul R. CharronChairman and CEOLiz Claiborne Inc.

*Evan ColePresident and CEOABC Carpet & Home

*A. F. DawaharePresidentDawahare’s, Inc.

Andre L.S. de BottonPresidentACV Comercio e Participações

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. FlanneryPresidentWeaver’s, 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 CEOHudson’s Bay Company

Philippe HouzéCo-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

NRF

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Stephen I. KahnChairman and CEOdELiA*s Corp.

*M. Farooq KathwariChairman, President and CEOEthan Allen Inc.

James L. Kittle Jr.ChairmanKittle’s 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. MosherPresidentMosher’s 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 CEORoutzahn’s

Walter J. SalmonEmeritus Professor of RetailingHarvard Business School

Rowland SchaeferChairman, President and CEOClaire’s 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

Executive Committee

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

CORPORATESECRETARY

*H. James BaumPresidentBaum’s Inc.

CHAIRMAN OF THE NRF FOUNDATION

*Robert J. CorlissPresident and CEOThe Athlete’s Foot Group, Inc.

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Government 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.

LEGISLATIVE/REGULATORY ACTIVITY

" 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, NRF’s 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 retail’s 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 NRF’s 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 NRF’s 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).

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Paul Charron, Chairman and CEOof Liz Claiborne (right), chatswith influential Senate leaderJohn McCain (R-AZ).

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" NRF worked with the Streamlined Sales Tax Implementing States organi-zation on a plan to simplify the nation’s 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-call”lists for telemarketers don’t 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.

POLITICAL ACTIVITY

" NRF’s 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 Berlin’s Brothers, Ed Mosher, President of Mosher’s Ltd., and SteveLadwig, President of Retek.

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Senator John Ensign (R-NV) voices support fortrade and terrorism insurance legislation soughtby NRF on behalf of the retail industry.

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For more information visit www.nrf.com

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NRF Washington Leadership Conference Takes Retail Issues to Capitol Hill

NRF’s 67th annual Washington Leadership Conference brought dozens ofCEOs, government affairs executives, state retail association officials andindependent retailers together to meet with members of Congress oncritical retail industry priorities.

Five of Congress’ most influential law-makers were among the speakers at this year’sconference, which also featured U.S. Secretaryof Labor Elaine Chao and a private WhiteHouse briefing on the economy by R. GlenHubbard, chairman of President Bush’sNational Economic Council.

Senator Orrin Hatch, R-Utah, opened the two-day conference whileSenators John Ensign, R-Nev., and Rick Santorum, R-Pa., joined House RulesCommittee Chairman David Dreier, R-Calif., in speaking before retailers thesecond day. Senator Bob Bennett, R-Utah, spoke at a private dinner for retailCEOs.

Trade, bankruptcy reform, terrorism insurance, welfare reform andthe economy were among the topics discussed as more than 100 retailersgathered in Washington for the annual event.

In addition to the briefings and speeches, retailers fannedout across Capitol Hill for more than 80 lobbying meetingswith lawmakers and their staffs. The conference wrapped upwith a congressional reception at the U.S. Capitol attendedby key lawmakers.

U.S. Secretary of Labor Elaine Chao,left, speaks with National RetailFederation President and CEOTracy Mullin at NRF’s 67th AnnualWashington Leadership Conference.

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Senator Don Nickles, left,speaks with Bob Benham,President of Balliet’s depart-ment store, and his wife,DeDe Benham.

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U.S. Senator Rick Santorum (R-PA) speaks with Macy’s EastVice President for GovernmentAffairs Ed Goldberg, right, atthe Washington LeadershipConference.

Senate Majority Leader Tom Daschle, center, meets with (left to right)NRF Senior Vice President of government relations Steve Pfister, SouthDakota Retailers Association President-elect Phil Lampert, SDRAPresident Kent Baker and SDRA Executive Director Jerry Wheeler.

Ed Mosher (left) and Gordon Segal (right) chatwith U.S. Senator Bob Bennett (R-UT).

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State and National Conference Highlights State-Level Retail Issues

More than 100 retail executives from across the nation gathered in Napa,California this year for NRF’s 26th Annual Conference of State and NationalRetail Executives.

While NRF’s government affairs efforts in Washington are focused primarilyon federal issues, the state and national conference provides an annualforum for retail executives to network and discuss issues of concern to theretail industry on the state level. All 50 state retail associations are invited toattend. In addition to the state associations, a number of specialized nationalassociations participate, such as NRF’s National Council of Chain Restaurants,the National Association of Chain Drug Stores, the Food Marketing Instituteand the Direct Selling Association.

The conference also enjoys strong participation from major retailersand companies that provide services to retailers.

A highlight of the four-day conference was the presentation of NRF’s annualLegislator of the Year award to Ohio Senate President Richard H. Finan for hisnational leadership on sales tax simplification. Finan addressed state budgetissues and was introduced by New York state Senator Steven Saland, the 2001-2002 president of the National Conference of State Legislatures.

The conference also featured discussions on electronics recycling, tele-marketing “do-not-call” lists, sales tax holidays and sales tax simplification,port security and trade issues, and food safety and labeling. The NRF PolicyCouncil met as part of the conference, as did the National Association ofState Retail Association Executives. In a major move for state associations,NASRAE voted during its meeting to rename itself the Conference of StateRetail Associations (CSRA).

South Dakota Retailers Association Executive DirectorJerry Wheeler, left, speaks with Texas Retailers AssociationPresident and CEO Chuck Courtney, right, during theNational Retail Federation’s 26th Annual Conference of State and National Retail Executives.

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Michigan state Senator Joanne Emmonsspeaks at a panel discussion on sales taxsimplification.

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Ohio Senate President Richard H. Finan, right, receives the NationalRetail Federation’s Legislator of the Year award for his national lead-ership on sales tax simplification. From left are Ohio Council of RetailMerchants President and CEO John C. Mahaney Jr.; NRF Presidentand CEO Tracy Mullin, and Finan.

NRF Drives Media Coverage of the Industryand Diffuses Potential Crises with StrongPublic Relations CampaignsNRF has continued its tradition of being a thought leader on retail issuesin the media. Through our media outreach efforts, NRF spokespeople haveprovided consistent commentary in key news outlets such as the Wall StreetJournal, New York Times, Washington Post, USA Today, FORBES, Business Week,CNN, CNBC and FOX.

Scores of radio, television and print stories arranged by the NRF publicrelations team helped build the public pressure that led President Bush toreopen West Coast ports after a waterfront labor dispute threatened retailers’supply of merchandise during the crucial holiday sales season.

NRF’s public relations team put together a major radio and print advertisingcampaign in support of NRF’s efforts to win passage of bankruptcy reformlegislation that would have helped save retailers billions of dollars in baddebt each year.

NRF routinely drives stories and provides vital commentary and statisticsfor virtually every holiday, from Halloween to the Holiday season.

Working with the media and member companies, NRF has:

" Developed a Public Relations Committee, providing a forum to identifykey retail issues, create best practices in retail PR and develop messagingfor the press.

" Further positioned itself as an industry thought leader by developingand promoting new original research such as the Retail Executive OpinionSurvey and the Consumer Intentions and Actions Survey.

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Public Relations2

▼Tracy Mullin with “Today’s” Matt Lauerfollowing Black Friday.

Secretary of Commerce Don Evans and NRF President and CEO Tracy Mullin hold ajoint press conference to release retail salesnumbers for November.

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"Created the NRF Update, a new monthly e-mail publication to keepmembers plugged in to the latest NRF news.

"Begun publication of Retail CEO Insider, a new newsletter exclusivelyfor CEOs of NRF member companies.

" Added a new News Photo Service that allows the print media to obtainpublication-quality photos from NRF news events in time for same-daypublication.

" Created a new Radio Actuality Line expanding NRF’s outreach to thebroadcast media by making it possible for deadline-driven radio stationsacross the country to download sound bites to accompany news releasesday or night, 365 days a year.

In 2003 and the years ahead,the media will continue toturn to NRF as a credibleand informed source ofinformation about theretail industry. NRF’shistorical success workingwith the media continuesto thrive and expand,with new opportunitiesgenerated daily.

Erik Autor, NRF Vice President andInternational Trade Counsel discusses theWest Coast Port dispute on Bloomberg TV.

▼Maria Bartiromo interviews NRFPresident and CEO Tracy Mullinon CNBC’s “Closing Bell”.

▼Mallory Duncan, NRF Senior Vice Presidentand General Counsel is a frequent industryspokesperson.

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A bird’s eye view of the NRF Annual Convention EXPO Hall.

Gordon Segal, CEO of Crate & Barrel becomes the newChairman of the NRF Board of Directors.

U.S. Secretary of the TreasuryPaul O'Neill speaks to theNRF Board of Directors.

Phil Francis, President andCEO, PETsMART addressesthe Annual Convention.

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Mark Bozek, CEO, HSN (second from left),Terry Lundgren, President, COO and CMO,Federated Department Stores, Leonard Lauder, Chairman, The Estée Lauder Companies,Roger Farah, President and COO, Polo Ralph Lauren Corporation, and Jonathan Lipsky,Chief Economist, JPMorgan, Chase andCompany discussthe Economic Outlookfor the Retail andConsumer ProductsSector for 2002 withPeter Brown (farright) and StephanieShern (far left) of KurtSalmon Associates.

NRF 91st Annual Convention & Expo:Retail’s BIG ShowThe “Big Show” lived up to its esteemed moniker in January 2002,when the retail industry descended en masse on New York City forthe NRF 91st Annual Convention & EXPO. Although the strugglingeconomy and widespread fears about traveling put a major dent inattendance at most trade shows and conferences during the year,Retail’s Big Show was only slightly off the record attendance reachedin January 2001 and traffic in the EXPO Hall grew this year.

2002 STATISTICS:

" Overall attendance was 12,500

" EXPO Hall traffic exceeded by 7% the record set in 2001

" International attendees came from 42 countries, constituting14% of total attendance

" Registered guests represented 46 states in the U.S.

" 250 companies filled the EXPO Hall to capacity

" 94% of all attendees can recommend, suggest or have final sayin purchasing decisions. This is 11% above the national average.(According to Exhibitor Magazine, July 2002)

Loss Prevention and Internal AuditProfessionals Converge in Texas for2002 LP ConferenceMore than 1400 loss prevention professionals attended the Loss Prevention(LP) Conference & Exhibition and Internal Audit Executives Conference, inJune 2002. They experienced three days of educational programs, peer-to-peer networking, guest speakers and product demonstrations from the 150companies in the exhibit hall.

Holly Reynaldo, a Raleigh-Durham Police Department Investigator,received the NRF Law Enforcement Retail Partnership Award at the confer-ence for her outstanding efforts to help Carmax recover stolen assets. Thisaward has been established to help foster stronger working partnershipsbetween the loss prevention community and local law enforcement agencies

Conferences3For more information visit www.nrf.com

that work to help retailers in their fight to reduce losses to theircompanies.

The Internal Audit Executives Conference is co-located with theLoss Prevention Conference each year. This is the conference ofchoice for retail-specific education on the issues and challenges thatface auditors in today’s retail environment. This conference hasgained momentum as a result of recent changes in legislation andSEC regulations.

The 2003 NRF Loss Prevention Conference will be hosted inSan Antonio, TX in June 2003. For the first time in its history,the conference will take place from Tuesday through Friday,instead of Sunday through Wednesday.

RACThis year’s Retail Advertising Conference drew retail marketing and advertisingprofessionals from across the nation. Celebrating its 50th year, RAC salutedthe many supporters who have helped create a friendly environment ofexchange and sharing for the retail industry. The theme “The Art ofStorytelling” focused on the story of some of the most successful brandsin the industry.

At the 2002 RAC we heard the story of severalsuccessful brands from speakers like M. FarooqKathwari, Chairman, President and CEO,Ethan Allen; Bob Rodgers, President, The Great Indoors; Roy Spence, President,GSD&M/Krispy Kreme Doughnuts;

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Lee Eisenberg, EVP, Lands’ End,speaks on creativity and how wellchosen words and pictures combineto tell the real story.

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Loss Prevention Conference

Attendees hearinsights fromStuart Varneyat 2002 LossPreventionConference.

Scenes From the 2002 Loss Prevention andInternal Audit Professionals Conference.

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Ron Kirk, a candidate for GovernorofTexas in 2002, speaks at theLoss Prevention Conference.

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John Kimball, Senior Vice President, CMO,NAA presents the newspaper partnershipaward during the 2002 RAC Awards Dinner. ▼

Tina Wilcox, FAME/Wilsons — The Leather Experts; Lee Eisenberg, Lands’End; Paul Higham, Wal-Mart; Rob Gruen, President and CEO, Parisian; PatMitchell, CEO of PBS, and more. This year also marked the loss of long-timeretail industry expert, visionary and motivator, Peter Glen. RAC took amoment to reflect on Peter’s contribution to retail marketing over severaldecades with a video tribute to his work.

RAMA Chairman Marcia Tabler of Lands’ End emceed the annual RACAwards Dinner with an introduction from Harry Smith of A&E’s Biography.Target Corporation was once again recognized by the panel of judges as bestof show for their clever execution and creativity.

CRMretail

The National Retail Federation launched a new conference this year,CRMretail, designed to bring industry experts together to begin anongoing dialogue around the issues and challenges that face retailersas they implement and develop Customer Relationship Management(CRM) in their companies. This conference was produced in closepartnership with Ogden Associates Inc., which was instrumentalin gathering knowledgeable speakers and developing the latest retail-specific research on the status of CRM in the industry.

The conference was held in Baltimore, Maryland and drew anaudience of over 175 participants from across the country, withtwenty international members in attendance. Generous sponsorshipsand exhibitors were critical to thesuccess of CRMretail. Blue Martinihosted the opening reception as wellas participating in the conference.

At the inaugural conference, theCRM Retail Idea Exchange WorkingGroup was launched. The groupof retailers will meet regularly todiscuss issues, topics, technologyand challenges in CRM, anddetermine the content forfuture conferences.

CRMretail provides a greatenvironment for retailers tomeet other retailers and ven-dors who are champions ofCRM in the retail industry.The conference focused on newresearch, best practices and the impact of CRMin generating profits in the future for retailers.

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Peter Schmid, Senior VicePresident, Marketing and SalesDevelopment, Television Bureauof Advertising (TVB) presentsthe Innovative Retailer of the YearAward at the RAC Awards Dinner.

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NRFtech: IT Leadership Summit DrivesFuture of Retail Technology

NRF’s CIO Council ran a new kind of meeting this past August in San Diego.Members gathered with peers to talk with influential technology providersabout where retail technology is going and what’s needed to make it better.NRFtech: IT Leadership Summit attracted key technology leaders from fiftymajor retail companies; they met to examine industry best practices and todiscuss how to improve the landscape. Using an audience response systemto capture answers in real time, participants agreed on important trendsthat will define the retail technology experience in the next year. The trendsmembers noted include:

" This is the “season of delivery.” Projects must be brought in successfully,on budget, and with demonstrable return on investment. Retail IT seesmany new opportunities to create markets and serve customers – but isconstrained by staffing limits and by the demands of multiple concurrentprojects. This does not mean that IT spending is down – 65% of retailerspolled say that IT spending has already increased or never slowed down.

" Managing costs is key. Publicly held companies don’t want to disap-point Wall Street. The main focus now is to manage costs, wringing everynickel out of every project, and minimizing costs-after-purchase. IT shopswant to be using fewer products, fewer vendors, and want to offer betterhelpdesk support on a smaller list of software products.

" Customers will get more attention. CRM, customer databases, andclienteling systems that can maximize multi-channel return continueto be a major focus area. As more stores are wired for Web connections,more transaction data will be available to allow better sales forecastingand customer service.

" Visibility creates measurable results. Business intelligence continuesto be a major focus. Analytics products show dramatic returns for mark-down optimization, merchandising, pricing, and assortment planning.

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PhilWilkerson,HomeDepot

Ken Harris, GAP, Inc.

Moderator Rick Gallagher of NRF poses questions to roundtableparticipants (from left) Gary Davenport, Hudson’s Bay Co., Bill Finefield,Navy Exchange Service Command (NEXCOM), Guillermo Siman,Almacenes Siman, and Dave Hogan, Duty Free Americas.

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The most promising applications enhance demand forecasting and analyzewhich items sell best with other items. Decision support tools are beingused more often; retailers are revisiting business rules to get the mostout of them.

" The Web finds its niche. Retailers continuethe process of “Webifying” everything —bringing persistent connections into thestore. They’re looking for bigger bandwidth.

" Smart POS will be everywhere. Manyretailers report that they will conduct majorimplementations of new point of saledevices; hundreds of thousands willbe deployed in the next year.

" Supply chain, supply chain, supply chain. Supply chain managementcontinues to be an important area for business process improvementand for technology deployment. Many retailers report that enhancedmerchandise and inventory management tools are the top ITimplementation goals for this coming year.

" Be prepared. Companies are looking at ways to increase their disasterpreparedness and business continuity posture.

The mood was upbeat at the meeting, and attendees are optimistic aboutthe future. They’re busy, they’re focused, and they are looking forward tonext year’s projects. Members will compare notes at the 2003 NRFtech: ITLeadership Summit, August 9-12, 2003 in San Diego.

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VictoriaCantrell, Gucci ▼

Paul Butka, TJX

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Panel including (left to right): Mike Ragunas, Staples.com; Mike Jones, HollywoodVideo; Joe Giordano, ExxonMobil; and incoming chair of the CIO Council EvelynFollit of Radio Shack address IT challenges for retailers.

▼Ann McCool of Radio Shack speaks whileDennis Harris, Genesco, looks on.

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Cathy Curless, Payless Shoe Source

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Specialty (Auto, Drug,

Office, Pet, Toys)41%

CEO Forum

Mid-Year Board Meeting and CEO Forum Draws

The Nation’s Top Retail Executives

In May 2002, CEOs from the nation’s top retail companies gathered at the BacaraResort and Spa in Santa Barbara, California, where they discussed a number ofpressing industry issues and considered possible solutions. Removed from distrac-tions, the arena proved perfect for networking and information sharing, and alsoincluded presentations by some of the leading minds in business and politics.Russell Reynolds, an expert on corporate governance issues shared his thoughtsabout corporate boards of directors in a post-Enron environment. Lanny Davis,a partner with the law firm of Patton-Boggs LLP, provided insights into crisiscommunications strategy, and Richard Butler, former U.N. Chief of Arms Inspectionin Iraq, joined the executives for a dialogue about the geo-political climate.Finally, Howard Fineman, Newsweek magazine’s Chief Political Correspondent,Senior Editor and Deputy Washington Bureau Chief, offered his “inside thebeltway” insights with the group.

The two-and-a-half day event included a meeting of the NRF Board of Directorsand also featured other speakers, agenda setting meetings and networking events.

A casual conversation at NRF’smid-year Board Meeting. Fromleft are: Bob Corliss, TheAthlete’s Foot Group; ShelleyNandkeolyar, Martha StewartLiving; Jim and AlisonZimmerman, FederatedDepartment Stores; Lisa Harper,The Gymboree Corporation; andKathy DeCarlo, Principal,DeCarlo Consulting.

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Gordon Segal, left, CEO of Crate &Barrel, chats with fellow NRF BoardOfficer Arnold Zetcher, Chairman,President and CEO, Talbots and hiswife Ellen.

Brian Devine, President and CEO,PETCO, speaks with former U.N. ArmsInspector Richard Butler.

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▼Jim Zimmerman, center, Chairman and CEO, FederatedDepartment Stores, and his wifeAlison, talk with Mark Larsonof KPMG, which sponsored the meeting.

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Member4

NRF brings retailersand suppliers togetherat industry conferencesand other venues,making it easier forretailers to locateproducts and servicesthat meet theirbusiness needs.

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2002Domestic

RetailMembership

Membershipby Type

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Strategic Partnerships Reap Rewardsfor Retail Industry as Key Studiesand Initiatives Roll Out in 2002RETAIL HORIZONS AND NRF UNIVERSITY wired LAUNCHED

Through the support of NRF’s core partnerships with such firms as SunMicrosystems and BearingPoint, NRF has been able to better serve theneeds of its diverse member base.

New strategic partnerships formed in 2002 for value-added, retail-specificservices include:

NRF’s Membership Appeals toAll SegmentsNRF MEMBERSHIP A VIBRANT MIX OF CATEGORIES

Over the years, NRF has moved from its roots of predominantly depart-ment stores to a vibrant, fiscally healthy mix of categories and industrysegments. Over the past two years, this mix has held steadily.

Through the diverse but unified voice of our retail membership, NRFhas positioned itself as the definitive advocate for retail, both on CapitolHill and in the boardroom.

Discount Dept. Stores3%

Sports, Entertainment2%

Food, Beverage1%

Furniture5%

Hardware, House Ctrs., Housewares

2%

Department Stores13%

Computers, Electronics1%

Arts, Collectibles, Gifts7%Apparel, Accessories, Shoes

23%

Jewelry2%

" NRF Membership NeedsAssessment

" CRMretail Study

" Retail Horizons

" NRF University wired

" IT-Related Studies and SupplyChain Expertise

" Executive Opinion Trends Study

Services

“The value we have derived from just a year and a half of member-ship has been exceptional. The NRF is the definitive artery to theretail executive community, and our investment and focus of time,resources, and intellectual capital into NRF programs has yieldedtremendous awareness and recognition—for both our organizations.Unlike other more orthodox associations, the NRF is open andreceptive to all ideas or activities that will benefit its constituency.This rapport of innovation and exploration—of partnership, really—iswhat sets NRF apart and is certain to attract a growing membership—both from retailers and associate members alike in the years ahead.”

JERRY BLAESING, Senior Vice President, Retail/Wholesale, BearingPoint

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NRF FINDS NEW WAYS TO SERVE DIVERSE MEMBERSHIP MIX

From NRF’s new “Networking Nights” to teleconference calls managedby NRF committee liaisons, NRF is finding alternate ways to minglewith members and meet their diverse needs. NRF members arereached through every communication channel:

" Monthly E-Newsletter, NRF Update

" NRF Networking Nights, intimate dinners located in citiestraditionally not visited by NRF

" Monthly membership mailingsdirected to divisional anddepartment heads at membercompanies

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Member Services

Uncertain times not a deterrentto NRF supportIn 2002, support from all businesspartners increased nearly 30% overlast year — with nearly half of allcompanies listed on last year’sHonor Roll increasing theirsupport for 2002.

Over 30 companies attended the2002 Business Partners Meeting inconjunction with NRF’s AnnualConvention & EXPO.

NRF

thanks

these

Honor Roll

Strategic

Partners {

" Quarterly teleconference briefings for members interested in hearing moreabout NRF’s government affairs activities – as well as specific topics designedto equip our members for the ever-changing environment of retail:

" Vendor Allowances

" MD&A Disclosure Rules

" Risk Management and the Cost of Insurance

" Supply Chain Strategies

" Expanded committees for retail companies looking to get more involved

" New conferences and committees designed to meet emerging needs:

" CRM Retail Idea Network

" CRMretail: Customer Relationship Management Conference

" NRFtech: IT Leadership Summit

" Merchandising: New Basics and Winning Strategies Workshop

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NRF welcomes these newHonor Roll Strategic PartnersNew firms added to the NRF Honor Roll of StrategicPartners who contributed over $50,000 in participa-tion or value-added services this year:

" AMR Research

" Bank of Tokyo-Mitsubishi Ltd.

" BearingPoint

" CareerBuilder

" Gartner DataQuest

" Oracle

" QRS

" SAS Institute

" Thompson Associates

" Wincor-Nixdorf

NRF Expands Its World-Wide PresenceAs Retailing Becomes An IncreasinglyGlobal Business

Thai Retailers Association — The Thai Retailers Association first cameinto existence about 20 years ago. Their goal is to strengthen unity, coopera-tion, and coordination among members to improve the retail industry. TheThai Retailers Association has 126 members (70 retailers and 56 associatemembers).

Intercontinental Group of Department Stores (IGDS) — TheIntercontinental Group of Department Stores (IGDS) was founded in 1946in Switzerland. The IGDS organizes more than 20 conferences per year andprovides significant opportunities for networking and information exchange.

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For most retailers, doing business is an international affair. Merchandise onthe store shelves comes from the four corners of the globe. Many retailershave expanded their selling-reach across geographic boundaries and operatestores in multiple countries. NRF helps retailers navigate the complicatedissues that are inherent in doing business around the world.

The International Retail Forum (IRF) promotes information sharingamong retail trade associations around the world, and identifies opportuni-ties for cooperation in research and education. The IRF has members inAsia, Europe, South America and North America; membership is open to allnational retail associations outside of the United States. NRF welcomes thenewest IRF members — China, Thailand and Switzerland.

China General Chamber of Commerce — China General Chamber ofCommerce (CGCC) is a national social organization under direct administra-tion of the State Economic & Trade Commission P.R.C. The CGCC managesabout 500 members.

Clockwise from left: NRF’sDenise Brassé meets withMr. Nelson Barrizzelli ofConfederação Nacional deDirigentes Lojistas (CNDL),and Mr. Sebastião MauroFigueiredo Silva, Presidentof CNDL, NRF’s TatianaTolentino and Daryl Everett.

NRF President TracyMullin chats withHiroshiTsuruzono andHiroko Isaka of the JapanRetailers Association.

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Jose Maria Castellano Rios,Deputy Chairman and CEOof Inditex (right), receivesthe International Retailer oftheYear Award from then NRFBoard of Directors ChairmanRichard L. Sharp.

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Mr. Wang Shupei, Director Generalfor the China General Chamber ofCommerce (CGCC) (center) andMr. Shen Shi, Section Director forCGCC, meet with NRF staff, fromleft, Tatiana Tolentino, Tracy Mullin,and Karen Knobloch.

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NRF spokespeople represent the U.S. retail industry ininternational forums. NRF President and CEO Tracy Mullin(above) at a German retail industry event.

NRF’s Board is geographically diverse, including, forexample, Cem Boyner, Boyner Holdings, Turkey (center).

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INTERNATIONAL RETAILERS VISIT U.S.

International attendance at NRF’s Annual Conventionand EXPO continues to grow with large groups of retail-ers coming from Brazil, Canada, Mexico, Spain and Israelin January 2002. The NRFtech IT Leadership Summitheld in August 2002 attracted registrants from four continents,and countries including Australia and South Africa. IT leaderscompared best practices for varying economies and stages ofimplementation during the Summit. US attendees valued theopportunity to compare notes with international companiesregarding their varying experiences with technology issues.

NRF VISITS ABROAD

In order to strengthen NRF’s ties with its international trade associationcounterparts (the IRF) and other organizations outside of the UnitedStates, NRF staffers frequently travel abroad as representatives of theU.S retail industry. In March, NRF’s Manager of International OperationsTatiana Tolentino traveled to Guadalajara, Mexico to attend the 24thAnnual Convention and EXPO of Mexican partner ANTAD (AsociaciónNacional de Tiendas de Autoservicio y Departamentales). Tolentino partic-ipated in various events there including the Opening Super Session head-lined by Mexican President, Vicente Fox. In September, Tolentino andRick Gallagher, Publisher of STORES Magazine attended ANTAD’sGeneral Merchandise Conference and EXPO in Mexico City whereGallagher participated as a speaker on “Six Mega Trends In Retail.”

In October, Tracy Mullin accepted an invitation to speak in Berlinat the 2002 German Retail Conference hosted by Hauptverband desDeutschen Einzelhandels. This conference drew an audience of about800 prominent retailers from Germany and elsewhere in Europe, andtackled issues including globalization and competition from abroad.

The Association for Retail Technology Standards (ARTS)played a significant role in the NRF international program in 2002.Executive Director Richard Mader spoke at the annual CIOmeeting of the International Association of Department Stores(IADS) in Paris and made a presentation to the Marcus Evansconference in London. In addition, ARTS hosted meetingsin Madrid, Spain. To increase awareness of the benefitstechnology standards provide for the retail industry,ARTS developed a special education program forEuropean retailers, conducting sessions in London,Paris, The Hague and Dusseldorf.

NRF Members Receive Valuable Benefitsand DiscountsIn 2002, the Member Discount Program (MDP) continued to offer businessproducts and services at specially negotiated rates to NRF members.

NRF welcomed CIC Enterprises as a partner this year. Through CIC,NRF members receive Work Opportunity Tax Credit (WOTC) and Welfareto Work (WtW) administration, State Incentive consulting and other moneysaving programs—helping them recover hundreds of millions of dollarsin Federal, State and Local monies for retail companies nationwide.

Independent retailers receive a quarterly newsletter with updates andinformation on new and existing NRF discount programs, highlightingproducts and services to fit their special business needs.

Member Discount product and service offerings include:

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Additionally, NRF members receive legislative updates, groundbreakingresearch, special discounts on publications and other services. NRF is alwayslooking for new ways to help members cut their costs and improve theiroperations. Many exciting new benefits will be unveiled throughout 2003.

Independent Stores BoardThe Independent Stores Board of Directors is comprised of chief executivesof independent member businesses. This board advises the ExecutiveCommittee on matters related to small store retailing. They work closelywith the NRF staff to ensure that services, programs and government repre-sentation accurately address the current and future issues confronting inde-pendent retailers such as Bankruptcy Reform, Minimum Wage and HealthCare initiatives. This year the board initiated three sub-committees to furthertheir efforts in three major arenas: Policy, Membership, Education andResearch. The Independent Stores community actively participates in theNRF Annual Convention and Expo. Members of this board are often calledupon to speak on behalf of retailers at meetings on Capitol Hill and supportother lobbying efforts as needed. They meet regularly throughout the yearto network and share best practices for small store retailing.

" Recruitment solutions

" Tax credit recovery

" In-store fixtures

" Retailing supplies

" Credit card processingand more

Advisory Committees5

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ADVISORYBOARDS,COUNCILS, AND COMMITTEESNRF relies on an interactive committeestructure, open to NRF retail membersin good standing, for the formulationand execution of policies, guidelines,standards and strategies consistent withretail industry objectives. The NRFcommittees are, without exception,designed to be representative of theindustry and reflect its breadth anddiversity. They are comprised of industryspecialists in their individual fieldswho give generously of their time andknowledge to set policy and help developpositions on important retail operationsor public policy issues which willbenefit the industry at large.

Existing for the purpose of advancingthe retail industry, NRF councils andcommittees may engage in a numberof activities, including:

" Information exchange

" Setting of public policy positions

" Research

" Benchmarking

" Product development

" Shared opportunities forpurchase of services

" Presentation of testimony

" Standards setting

" Publishing

Board of DirectorsThe NRF Board of Directors is the govern-ing body that oversees the activities of theFederation. It is comprised of leading retailchief executive officers representing thebreadth and diversity of the industry.Regular meetings of the Board of Directorsare held in January in New York City inconjunction with the Annual Conventionand Exposition and again in the spring orearly summer.

NRF staff contact: Tracy Mullin

Executive CommitteeNRF’s Executive Committee has mostof the authority of the Board of Directorsand serves as the ad hoc committee todetermine strategic planning and directionfor the Federation. Each member of theExecutive Committee is elected by theBoard of Directors. The Chairman of theBoard of Directors presides over the NRFExecutive Committee.


Finance CommitteeThis committee is elected by the Boardof Directors and oversees the financesof the Federation including reviewingand recommending the Federation’sbudget to the Executive Committee andthe Board of Directors. The committeealso advises the Board on general mattersrelating to financial and accounting issues.

NRF staff contact: Carleen C. Kohut

Awards and NominationsCommitteeNRF’s Awards and NominationsCommittee reviews nominations forDirectors and members, and preparesslates of nominees for considerationby the Board and for election by theNRF membership. The Awards andNominations Committee also makesrecommendations for recipients ofNRF awards and honors, including theNRF Gold Medal, International Retailerof the Year, Retail Innovator of the Year,Distinguished Service, American Spirit,Leadership in Public Service and theSilver Plaque Awards.


Independent Stores BoardComprised exclusively of chief executivesof independent member firms, membersof the Independent Stores Board provideinvaluable advice to NRF in the develop-ment of programs and services, especiallyin the areas of conferences and memberdiscounts, to meet the needs of the smallerstores community. The Independent StoresBoard advises the Executive Committee onmatters related to small store retailing andworks closely with NRF staff to ensure thatservices, programs and government repre-sentation accurately address the currentand future issues confronting independentretailers. The Chairman of the IndependentStores Board is appointed by the NRFExecutive Committee.

NRF staff contact: Steve Pfister

BOARD OF DIRECTORS &STANDING COMMITTEES

NRF Foundation Board of DirectorsThis Board of Directors, madeup of chief executives of majorretail and supplier-partnerfirms, directs and overseesthe programs, activities andfunctions of the NRF Foundation,the non-profit research andeducation arm of the NationalRetail Federation. Members areelected by the NRFF Board andapproved by the Federation’sBoard of Directors.

NRF staff contact: Katherine Mance

ADA Task ForceA group comprised of NRF retailmembers interested in theAmericans with Disabilities Actand any resulting or pendingfederal regulations or litigation.

NRF staff contact: Mallory B. Duncan

ARTS Consortium EuropeARTS Consortium Europe isthe formal organization of ARTSEuropean members to supportstandards development byorganizing committees toenhance the Data Model anddevelop XML documents andmessages. This work supple-ments the efforts of similarUS based committees.

ARTS staff contact: Richard E. Mader

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CFA Product RegistrationCommitteeThe committee was set up inresponse to a petition from theConsumer Federation of America(CFA) to the Consumer ProductSafety Commission (CPSC) thatretailers, manufacturers and dis-tributors be required to collectand house consumer contactinformation on products soldfor a period of 20 years via a pre-paid mail back postcard.The intent of the cards is toprovide accurate informationin the event of a recall. All NRFmembers are welcome to join.

NRF staff contact: Jennifer Kurrie

CIO CouncilAn invitation-only committeemade up of retailing’s mostprominent chief informationofficers. It meets in winter, springand summer to discuss issues ofcommon interest, promising tech-nologies, and to take a proactivestance on creating new technologyenvironments. It provides avaluable opportunity for peersto share ideas and experiences,and in doing so helps guide theNational Retail Federation technicalstaff to create new projects thatreflect the industry’s needs.

NRF staff contact: David Hogan

Committee onEmployment LawThis committee serves as NRF’stechnical committee on labor lawand employee relations matters,and is comprised of retail indus-

try corporate executives andindependent labor counsel, aswell as human resource andemployee relations executivesfrom NRF member companiesand associations. Each year, theCEL files amicus curiae briefs inhigh profile cases pending beforethe NLRB and federal courts.

NRF staff contact: Katherine Lugar

Conference of State RetailAssociations (CSRA)CSRA was founded in 1991 andis dedicated to increasing theprofessionalism of state retailassociation executives, strength-ening retailing’s grassroots effortsand serving as a forum for thediscussion of retail associationmanagement issues and oppor-tunities. Officers serve as anadvisory committee to the Fed-eration. Reserved for State RetailAssociation Executives only.

NRF staff contact: Maureen Riehl

Council on DiversityThe NRF Council on Diversityleverages the knowledge andexpertise of its members to influ-ence the direction of diversitypractices within the retail industry.Such practices not only serve animportant moral cause but also havea profound impact on the growthand prosperity of the business.The Council educates the industry,media, public interest groups andthe general public regarding themultiple benefits of a formaldiversity awareness program.

NRF staff contact: Dan Butler

Credit ExecutivesCommitteeThis committee provides NRFwith strategic and operationaladvice related to consumercredit issues, including federallegislative and regulatory policy,the standardized credit bureaureporting format, as well as fileintegrity among retail creditgrantors. This group of seniorcredit executives meetsat least twice a year.


Credit — BankruptcyWorking GroupA subcommittee of NRF’s CreditExecutives Committee, this groupfocuses on legislative, regulatoryand other solutions to combatrising consumer bankruptcies.

NRF staff contact: Mallory B. Duncan Katherine Lugar

CRM Retail Idea ExchangeThe group discusses issues andconcerns related to implementingCustomer Relationship Manage-ment (CRM) initiatives in theircompanies. Comprised of largeand small retailers, the groupfocuses on the integration oftechnology, marketing, opera-tions and strategy in the retailenvironment to drive sales andprofitability. The group also con-tributes educational content forNRF’s CRMretail conference.


Data Model Committee(ARTS)This committee shapes thefuture of the ARTS Data Model.Members propose enhancements,prioritize activities and approveall changes to the Model.


Digital Asset ManagementCommittee (ARTS)This committee reports to theCIO Council and focuses onimprovements in image metadatamanagement, including identifi-cation methodology and trans-port guidelines for merchandiseinformation (images and productdescriptions) used in multiple-channel retailing. This committeeis open to NRF retailer andmanufacturer member personnelthat are responsible for themanagement of merchandisedata in their catalog, Web orbrick-and-mortar stores.

NRF staff contact: Germaine Palangdao

E-Commerce PolicyWorking GroupThis committee is made up ofpolicy, legal, and IT experts fromretail companies with a presenceon the Internet. The groupaddresses e-commerce issuesfrom a policy perspective as theyaffect retailers in the fast-pacedworld of e-tailing.

NRF staff contact: Liz Treanor

Electronics RecyclingWorking GroupThis working group is for retailersinterested in developing andadvancing an industry positionon electronics recycling. Severalstate legislatures have begunto move toward requiring someform of electronics productrecycling typically paid for withan advanced fee collected atpoint of sale. A federal bill hasalso been introduced requiringfees and recycling for computers.All NRF members are welcometo join this committee.


Financial ExecutivesCouncilThis Council, comprised princi-pally of Chief Financial Officersof member firms, represents allsegments of the retail industry.Members focus on businessstrategies and monitor retailindustry financial services activi-ties, with special attention devotedto tax and accounting issues.This group also provides impor-tant input into development ofprogram content for key NRFconferences and other educa-tional programs.



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General Counsels ForumThis invitation-only council islimited to the most senior legalofficers among NRF’s retail mem-bership. Two to three times eachyear they meet to share strategyand ideas for addressing cuttingedge legal and managementissues of concern to retail lawdepartments, such as alternativedispute resolution, antitrusttrends, advertising, benchmark-ing of legal programs and securi-ties law issues, as well as othermatters.


Government AffairsPolicy CouncilThe NRF Government AffairsPolicy Council is the Federation’sprincipal policy making body onfederal legislative and regulatoryissues. Receiving input fromother NRF technical committees,the Policy Council reviews pend-ing and proposed legislation andregulation and sets official policypositions as well as implement-ing strategies and tactics. Thisinvitation-only council is com-prised of corporate representa-tives as well as state and nationalassociation executives.


Health & Employee BenefitsCommitteeThis committee consists ofsenior- level retail benefitsexecutives who provide technicalinput on a wide range of healthand other benefit issues. Thecommittee meets on an ad hocbasis as needed.


Human Resources SpecialtyStore RoundtableThis committee is concernedwith organizational issues in fieldoperations and compensationand benefit considerations forspecialty store chains. It con-ducts an annual Specialty StoreCompensation and BenefitSurvey for the retail industry.


Internal AuditAdvisory CouncilIn addition to planning the annualFinancial, Credit and InternalAudit Executives Conference,this council conducts an annualforum for the exchange of ideasand solutions to industry auditconcerns. The committee con-ducts its own annual internalbenchmarking survey, availableto participants. Representativesfrom each of the large publicaccounting firms provide inputand guidance to the council.


International TradeAdvisory Committee (ITAC)The ITAC members includesenior retail sourcing, compli-ance, and government relationsexecutives and general counsels,who are responsible for interna-tional trade, customs, and inter-national labor issues for theircompanies both on the legislativeand regulatory fronts. In 2001,

the ITAC played a key role inrepresenting the industry’sinterests on efforts to passtrade promotion authority (TPA),implementation of the AfricanGrowth and Opportunity Act(AGOA) and the Caribbean BasinTrade Partnership Act (CBTPA),providing new trade preferencesfor countries of the AndeanRegion, Congressional approvalof the trade agreement withVietnam, funding a new com-puter system for the CustomsService, as well as other initia-tives to eliminate U.S. andforeign trade barriers and tofacilitate trade. The ITACmeets three times a yearand has five subcommittees.

NRF staff contact: Erik Autor

ITAC — SoftgoodsSubcommitteeThis subcommittee of the ITACprovides guidance and technicalexpertise on trade issues thatspecifically affect textiles andapparel. The subcommitteeconfers on an ad hoc basis.


ITAC — HardgoodsSubcommitteeThis subcommittee of the ITACprovides guidance and technicalexpertise on trade issues thatspecifically affect consumerproducts other than textilesand apparel. The subcommitteeconfers on an ad hoc basis.


ITAC — CustomsSubcommitteeThis subcommittee of the ITACprovides guidance and technicalexpertise on customs and tradefacilitation issues affecting retail-ers as well as relations betweenthe U.S. Customs Service and the

importing community. Thesubcommittee confers on an ad hoc basis.


ITAC — SupplierCompliance SubcommitteeThis subcommittee of the ITACformulates the industry’sresponse to concerns raisedabout “sweat shop” working con-ditions in U.S. and internationalmanufacturing operations. Thesubcommittee has played a keyadvisory role in assisting the NRFin its position as a member of theU.S. Treasury Department’s ChildLabor Advisory Committee.Within the subcommittee, aSweatshop Education Taskforcedeveloped a website (www.sweatshops-retail.com)aimed at educating the publicabout industry efforts to ensurethat products sold at retail in theUnited States are manufacturedin an ethical manner and in com-pliance with all applicable lawsand regulations. The subcommit-tee confers on an ad hoc basis.


ITAC — Trade and E-Commerce SubcommitteeThis subcommittee of the ITACprovides guidance and technicalexpertise on international issuesaffecting the ability of retailersto sell their products in foreignmarkets through the Internet.Some of the issues addressed bythe subcommittee include theimposition of customs dutieson electronically transmittedproducts, market access, andnegotiations on e-commerce atthe World Trade Organization.The subcommittee also is aworking group of the NRF Taxand Privacy Committees. In thiscapacity it also helps formulateindustry positions on the interna-

tional aspects of Internettaxation and Internet privacy.The subcommittee confers onan ad hoc basis.


IXRetail TechnicalCommittee (ARTS)The IXRetail TechnicalCommittee develops XMLdocuments and messages for usewithin the retail enterprise. It iscomposed of XML experts fromboth vendors and retailers.


Loss PreventionAdvisory CouncilThis council meets frequentlyto discuss common problemsconfronting the security industryand to share new ideas on productand program results. The councilis also active in the planning ofthe Loss Prevention Conferenceand Exhibition. The council wasinstrumental in the developmentof a new series of informationalbrochures on a variety of lossprevention topics to benefitsmaller retail companies.


Postal Working GroupThis working group providesguidance to the NRF in repre-senting retailers on mattersbefore Capitol Hill, the PostalRate Commission and theUnited States Postal Service.The committee’s primary focusis first-class mail. The committeealso provides testimony onproposed federal legislationwhich affects mailers generally.The committee meets on anad hoc basis.


ADVISORY BOARDS,COUNCILS, AND COMMITTEEScontinued

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Product Safety CommitteeThis committee effectively com-municates existing and potentialproduct safety problems withinthe retail industry and addressesemerging product safety issuesby providing substantive andstrategic input into the develop-ment of industry public policy.In addition, the committeeprovides comments on proposedregulations before the ConsumerProduct Safety Commission andcommunicates the industry’sposition on key issues.


Retail Privacy CommitteeThe Retail Privacy Committee iscomposed of senior retail repre-sentatives with responsibility foraspects of company operationsthat affect customer and employ-ee privacy. Due to the breadth ofthe subject, it is intended to be across-functional committee. Mostcompanies have more than onerepresentative on the Committeeto ensure their marketing,information systems, humanresource, operations and loss pre-vention interests are represented.Government and public interestgroup initiatives that couldrestrict retailers’ use and reuseof personal data, either directlyor through limitations on accessto credit bureaus, mailing lists,demographic files or othersources fall within the purviewof the committee. The committeemeets on a regular basis.

NRF staff contact: Mallory B. Duncan Liz Treanor

Retailer’s Work-Life ForumThe forum meets to examine thechallenges of the hourly employeethat prevent them from being ableto fulfill their work schedule.This creative and unique groupexamines such important issuesas child care, elder care andfinancial planning initiatives thatwill give the hourly employeeassistance in solving the prob-lems that prevent them fromworking their schedule. Thisgroup works to encourageresearch and supports alllegislative actions in the work-life arena.


Sales & Service VoluntaryPartnership, Inc.Managed and led by the NRFFoundation, hundreds of orga-nizations representing retail,wholesale, personal service andreal estate industries have cometogether in a groundbreaking vol-untary partnership to develop anational system of skill standardsfor industries. The Board ofDirectors is made up of nationallyknown cross-industry represen-tatives, educators, nationalemployee representatives andcommunity-based organizations.To remain competitive in a timeof rapidly changing technologyand business operations, industry-led skill standards for educationand workforce development area necessity. The work of thepartnership has the potentialto transform our education andworkforce preparation systemand improve both performancein and perception of sales andservice careers.

NRF staff contact: Kathy Mannes

Strategic Supply Chain CouncilThis new Council is comprisedof retailers, research firms, andsoftware application suppliers.The mission of the Council isto address emerging supply anddemand chain trends, to identifyretail requirements, and to educateall three distinct communities onbest practices, efficiencies andopportunities.


Taxation CommitteeThe Taxation Committee pro-vides senior retail tax executivesa forum to discuss industry-related tax issues and serves asan invaluable information andnetworking resource. TheCommittee meets three timesa year to discuss issues affectingthe industry and advises NRF onemerging tax legislation and reg-ulations likely to affect retailers,their businesses, and their cus-tomers. Briefings and discussionsfocus on Federal legislation, regu-lations, audit issues, and stateand local tax matters. TheCommittee develops legislation,submits testimony, and provideswitnesses to represent industryconcerns before Congress,Treasury, and the IRS. It also produces publications and memorandums on currentretail tax issues.

NRF staff contact: Steve PfisterChad Davis

Tax — Alternative TaxSystems Task ForceA task force of the TaxationCommittee and Policy Council,this group is comprised of seniorretail tax and governmentalaffairs executives and economistsfrom major retail companies whohave specific interest in con-sumption taxes. The Task Forceis responsible for initiating andproducing research related to taxreform and its impact on retail-ing and disseminating the resultsin appropriate forums.

NRF staff contact: Steve Pfister

Tax — LCM Working GroupThis subcommittee reportsto the Taxation Committee.Members utilize the Lowerof Cost or Market accountingmechanism and work to educatelawmakers about its importanceto retailers and consumers.Attempts have been made inrecent years to eliminate thisGAAP account practice forfederal revenue reasons.

NRF staff contact: Steve PfisterChad Davis

Tax — Tax ReformWorking GroupThis is a subcommittee of theTaxation Committee. Its primarypurpose is to evaluate andeducate retailers, lawmakersand consumers of consequencesassociated with major nationaltax reform proposals, includinga flat tax or national retail salestax (NRST). It has commissioneda multi-year study of leadingreform proposals and utilizesthese results to highlight theramifications of a NRST onthe economy and consumers.

NRF staff contact: Steve Pfister Chad Davis

Tax — Tenant ConstructionAllowanceThis subcommittee reports to theTaxation Committee. It focuseson legislative and regulatoryactivism in an effort to providea clarification of tax treatmentof both tenant and constructionallowances (inducements)provided to retailers byowners and developers.


Tax — WOTCWorking GroupThis ad hoc committee iscomprised of corporate WorkOpportunity Tax Credits (WOTC)administrators and meets byconference call to discuss specificprogram procedures and updateswhen necessary.


UnifiedPOS TechnicalCommittee (ARTS)The Committee enhancesand maintains the TechnicalSpecification, the foundationfor both JavaPOS and OPOS.


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NRF Provides Vital Support to OnlineRetailing Through Shop.orgAccording to Shop.org’s premier annual industry study, State of RetailingOnline 5.0, online spending in 2002 is expected to reach $72 billion, anincrease of 41-percent compared to 2001. As the industry grew in 2002, so toodid Shop.org, NRF’s online retailing division. Shop.org saw significant growthin its membership, event attendance and its stature as the authority in retail-ing online. As NRF’s online group, more than 220 leading companies are partof the Shop.org community where they enjoy a non-commercial forum forthe exchange of information, lessons-learned and expertise on issues relatedto the Internet and its integration with other channels.

HIGHLIGHTS FROM 2002 INCLUDE:

" As of November 2002, Shop.org is on pace to add more than 90 newmembers representing a 40 percent increase in membership for the year.

" New members include large multi-channel retailers, catalogers, Internet-based retailers and manufacturers selling direct as well as leading solutionproviders. A sample of new members includes companies such as Bose,Crate & Barrel, Yahoo!, CompUSA, eBay, Google, Kohl’s, Overstock.com,Polo.com, and Tiffany and Co.

" Shop.org released the 5th version of its annual State of Retailing Onlineresearch study conducted by The Boston Consulting Group in partnershipwith Forrester Research. Media coverage included The Wall Street Journal,The New York Times, USA Today, The Washington Post, and others.

" The Shop.org Annual Summit attracted more than 350 interactive retailexecutives who gathered to network, share information and hear keynotespeakers such as The Sharper Image Founder, Chairman and CEO RichardThalheimer.

" Shop.org held monthly teleconferences on timely topics such as:" Alternative Online Retail Channels for Optimizing Inventory" Online Merchandising" Organizing for Retail eBusiness" Using the Online Division to Move the Needle in Retail

" Shop.org held two retailer-only 1.5 day workshops:" Best Practices in Online Marketing, New York" Best Practices in Online Merchandising Workshop, Sonoma, CA

NRF Divisions6

“... the Shop.org report [The State of Retailing Online 5.0 June 2002],conducted for the association by Boston Consulting Group andForrester Research, is thought to be one of the most completegauges of online retailing. It incorporates financial figures fromclosely held companies and bricks-and-mortar merchants that oftendon’t independently report online sales and profits.

—The Wall Street Journal

“Office Depot participates in Shop.org because it provides terrificnetworking opportunities with ‘Best in Class eRetailers,’ up to dateeCommerce marketplace metrics and informational seminars. It’s animportant resource for anyone in eBusiness.”

—MONICA LUECHTEFELD, Executive Vice President, E-Commerce, Office Depot

“I find Shop.org to be a great source of unbiased, reliableand in-depth research as well as an excellent forum to learnfrom my fellow members, who are leaders in multi-channeland online retailing.”

— DENNIS HONAN, Vice President and General Manager, CustomerDirect, Sears, Roebuck and Co.

SHOP.ORG’s MISSION is to help our members significantly

improve their multi-channel retail capabilities by addressing

the evolving opportunities and issues related to the Internet

and integration with other channels.

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NCCR Continues to Lead the Industryon Public Policy Issues

Stepping up to lead the industry on the issue of animal welfare, NCCR, inpartnership with the Food Marketing Institute, has been working with theproducer community over the past year on establishment of animal welfareguidelines. NCCR nearly completed the process of endorsing animalhandling guidelines for all species that will be recommended to NCCRmembers when choosing their suppliers of eggs, beef, pork, chicken, etc.NCCR has also recently embarked on the development of an audit programto assure that the guidelines adopted are being followed. This initiative hasreceived national media attention and is being hailed as an extremely effec-tive proactive strategy that has helped member companies manage this verydifficult issue.

NCCR MANAGES A BROAD RANGE OF LEGISLATIVE ANDREGULATORY ISSUES ON BEHALF OF ITS CHAINRESTAURANT MEMBERSHIP

NCCR had a very busy and productive year on the government affairs front.The list of issues NCCR managed for the industry over the past year isextensive, and included labor and employment, health care, tax, immigration,food safety, pensions, and trade issues. As part of NCCR’s government affairsstrategy, they lobbied Members of Congress and their staffs through personalcontacts. As part of that effort, NCCR hosted its annual member “LobbyDays” this year in conjunction with the National Retail Federation’sWashington Leadership Conference. In addition, they employed letter-writingcampaigns, and joined forces with other employer trade groups in coalitionefforts to fight bad legislation.

NCCR successfully fought off an increase in the federal minimum wagefor yet another year. Working with others, they avoided enactment of a so-called “patients’ bill of rights.” NCCR also succeeded in extending the WorkOpportunity Tax Credit (WOTC) and the Welfare-to-Work Tax Credit (WWTC)

for another year. In that vein, NCCR formed a new coalition to lead thecharge for permanent extension of WOTC and WWTC.

Finally, NCCR launched its new “Week at a Glance” newsletter to keep itsmembers informed of the upcoming legislative schedule during the weeksCongress is in session. This newsletter contains information on legislationand events relevant to the industry. As always, NCCR still publishes itsmonthly newsletter, “NCCR Highlights,” which provides information on legislative and regulatory activity affecting the industry, as well as generalinformation on NCCR events and updates.

NCCR HAS RECORD GROWTH YEAR

The National Council of Chain Restaurants enjoyed a year of growth,unprecedented in the last decade, in terms of program development,membership expansion and media coverage. In addition to its regular membermeetings held throughout the year, the partnership with the National RetailFederation gave NCCR the opportunity to offer members attendance at theCommittee on Employment Law meetings and the Washington LeadershipConference. NCCR has also developed its own employment law committee forthose with operations in California. NCCR continues to look for opportunitiesto develop programs that serve the needs of the chain restaurant industry.

NCCR’s membership growth in this past year is impressive. They addedEl Pollo Loco, Bob’s Big Boy, Domino’s, RARE Hospitality, Dave & Buster’sand Cocos and Carrow’s to their list of members.

In a real “tip of the hat” to the organization, a major trade publication, Nation’sRestaurant News, recognized the President of NCCR, Terrie Dort, by selectingher as one of the 30 most influential women in the restaurant industry.

Members of NCCR's Executive Committee meet with Congressman Darrell Issa (R-CA) at their annual meeting.

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Brian Riendeau, VP ofGovernment Affairs, Yum!Brands, talks with SenatorByron Dorgan (D-ND) at theWashington LeadershipConference.

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Promoting Technology Standards ThatBenefit the Retail IndustryARTS, the technology standards division of NRF, enjoyed a very successfulyear as the adoption of standards increases worldwide. Standardization isa key strategy to lowering technology costs and providing stability in therapidly changing IT industry. Companies are realizing that standards:

"Reduce Risk: Standards capture the essence of proven techniquesand technology.

" Increase Choice: Open standards allow the selection of operatingsystems like Windows, Linux or Solaris, and enable functionalitywith almost all network or database management systems (DBMS).

" Speed Development: ARTS standards like the Data Model and IXRetailXML messages provide ready-to-use file designs.

"Cut Costs: Each of the points noted above substantially reduces costand implementation time.

The benefit and increased interest in standards is clear as ARTS member-ship growth in 2002 included key new members, Best Buy, Kinko’s, TheChildren’s Place, QVC, Mueller GmbH, Pier One and Burlington Coat Factory.

ARTS 2002 ACCOMPLISHMENTS:

IXRetail, ARTS’ two year investment in developing XML schemas andmessages to integrate applications within the retail enterprise was rewardedin 2002 as Longs Drug Stores implemented the Price schema and the DataModel. Smart & Final Inc. implemented the Digital Receipt Standard toincrease customer communications and reduce fraud. Shell Oil Companyimplemented a pre-release version of Remote Equipment Monitoring andControl messages to reduce the cost of maintenance and increase equipmentuptime. Retailers and vendors cheered the recent release of the standardXML POS transaction log as a historic advance in easing integration of POSto over 30 systems that use sales data.

UnifiedPOS, the ARTS standard for interfacing 24 different devices suchas scanners, printers, magnetic stripe readers and PIN pads with sales floor ter-minals, was greatly enhanced. The check image scanner was added, allowingretailers to convert paper checks into debit card transactions, thus handing thecheck back to the customer at the point-of-sale. In a key move to explore theadvantages of UnifiedPOS, The Gap recently announced a pilot of this process.

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Plans for 2003:Following up on the success of 2002, ARTS has aggressive plans to enhance,expand and increase the adoption of retail industry standards.

t Data Model’s complete enterprise version will be released in the FirstQuarter of 2003.

t IXRetail will release three new schemas and message sets; Stored Valuewill integrate gift certificates, store credits, loyalty programs and pre-paidaccounts to POS; Digital Asset Management (DAM) will classify andcommunicate images between manufacturers and retailers; and the fullversion of Remote Equipment Monitoring and Control will enable centralmanagement of store equipment.

t UnifiedPOS next version 1.8 will include support for smartcard readersto reduce the time and costs of implementing this more secure paymentand loyalty card within retail.

Luncheon hosted by El CorteIngles at the ARTS meeting inSpain with Stuart McGregor, ARTS,Jaroslav Dvorak, Beta Control,Francisca Vicente-Tamarin, ElCorte Ingles, Jerry Rightmer, 360Commerce and Diane McGregor.

ARTS meeting in Spain withGermaine Palangdao, Director,NRF, Jesus Colao, ISDevelopment Director, El CorteIngles and Richard Mader,Executive Director, ARTS.

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NRF and RAMA Take Retail Marketing to New Heights

RAMA celebrated the 50th year of the RetailAdvertising Conference (RAC) with salutes to itsmany supporters who have helped build RACinto the premier marketing and advertisingconference in the retail industry. The themefor this year’s milestone conference was “TheArt of Storytelling” with the program focusingon the story of some successful brands.

In 2002, RAMA formed a partnershipwith BIGresearch of Columbus, OH that willprovide an important new benefit to RAMAmembers. The Consumer Intentions and Actionsstudy provides fresh economic and consumerinsights for RAMA members. This monthlynewsletter summarizes data collected from atleast 5,000 consumers and reports with keenforesight their intentions to purchase productsfrom retailers and how they are spending andsaving their money. As part of the agreementBIGresearch will also provide substantial dis-counts on its other services to RAMA members.

RAMA and NRF got new graphic looks in2002 with enhanced websites as well as updatedNRF print materials. The new sites are mucheasier to navigate and will help RAMA focus its resources on importantmember services and benefits. RAMA and NRF also developed neworganization logos with the help of industry partners.

RAMA would like to thank all its partners for both in-kind andmonetary contributions to the organization during the past year.

The UnifiedPOS specification grew to more than 1,100 pages includingchapters on implementing OPOS and JavaPOS. Today, UnifiedPOS fullysatisfies the goal first conceptualized in 1998, “…freedom of choice inselecting POS devices…” and extended this vision by allowing retailersto use off-the-shelf PC’s as fully equipped sales floor terminals.

The Data Model’s long awaited expansion from a single store to an enterprise-wide operation was partially completed with an advanced pre-release distributedto the ARTS membership. Major international retailers demanded this extensivemodification to enable use of this Model. The Model now supports separate pric-ing and merchandise allocation by an individual store or groups of stores acrossmultiple divisions within one corporation. The Data Model conformance pro-gram was completed in 2002 and is now being used by vendors to verify thattheir applications are built on the Model. Retailers can now protect their invest-ment by verifying responses to their RFP for Data Model compliance.

International Expansion readily continued into 2002. ARTS presented atthe International Association of Department Stores (IADS) CIO meeting inApril, while attending the Global Retail Forum in Paris. In October El CorteIngles co-hosted the annual European IXRetail meeting in Madrid. In Londonand Dusseldorf, well-attended education classes provided EMEA retailersand vendors the opportunity to learn more about ARTS standards and howto successfully implement them.

t Education on the retail industry’s best practices supported by ARTSstandards will be available in the Second Quarter of 2003. These classeswill present technology solutions to retail business process problems thathave been incorporated into the ARTS standards, and were based onthousands of hours of work contributed from a large number ofpremier global retailers and vendors.

RAMA President Tom Holliday speaks at RAC50

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ARTS IX Retail Meetingat Blue Martini headquar-ters with Jon Ransdell,McDonald’s Corporation,Kathleen Ford, BlueMartini, Vahe Katros,Blue Martini, Doug Jones,Target Corporation,Ron Kleinman,Sun Microsystems,John Fluke, IBM andJerry Rightmer,360 Commerce.

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NRF Foundation Offers Advanced Educationand Training Services to Retail IndustryEARNING THE PIN

NRF Foundation this year officially unveiled national certification inProfessional Customer Service as part of the national system developedunder the auspices of the National Skill Standards Board. In a pilot launchin May 2002, more than 800 individuals were provisionally certified, finalanalysis of the national assessment’s integrity was assured, and first-timeever industry-driven national certification was made widely available.Retailers, schools, and employment and training providers can now offer

the assessment to potential and existing retail employees.Successful candidates are given, as part of their portfolio, a

pin to demonstrate their level of mastery of skills necessaryto demonstrate high performance in customer service. NRFFoundation is grateful to the hundreds of retail companies and

individuals who have worked to ensure the validity and value ofthis new credential and are now helping to pioneer its use.

Meanwhile, NRF Foundation is developing and testing the nationalassessment in sales, which is expected to be available in 2003.

Other industries have taken note of the national standards andcertification developed by the retail industry. Customer service and sellingskills, learned in retail, translate and transferto career options in a variety of occupations.

NRF Foundation increasingly receivesrequests for assessment and certificationfrom airlines, call centers, banks, hotels,delivery companies, and the armedservices, among others.

TURNING TURNOVER AROUND

NRFF’s workforce development programs continued to broaden their scopeand reach to help retail companies manage their employees’ professionaldevelopment. Targeting post-secondary students, the newly enhanced NRFFoundation web site emphasizes career options and long-term advancementin retail. Trumpeting the message that retail is a career destination, thisoutreach is reinforced by the Foundation’s training and education programs.

The former five active and successful Retail Skills Centers were joined thisyear by programs in Rochester, New York; Prince George’s County, Maryland;and San Marcos, Texas. Each site offers programs with a different twist, butall are built on the common purpose of recruiting, assessing talents andneeds, providing personalized training, finding suitable job openings, follow-up and coaching for long-term success and productivity.

Requests for new Retail Skills Centers and cross-industry skill develop-ment centers are fielded by NRF Foundation staff as word of this program’s

NRF Foundation7

Sales associates from the Philadelphiaarea complete the National Assessmentin Customer Service at the Retail SkillsCenter at King of Prussia. More than 800individuals participated in the pilot launchof the assessment and certification.

NRF BIG Show attendees took an active interestin many of the items being offered in the inauguralBIG Silent Auction, organized by the NRFFoundation to raise funds for Foundationeducation and career development programs.More than $45,000 in net proceeds was realized,due to generous donations from NRF membersand Foundation supporters.

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The Customer Service and Sales Skill Standards,developed with participation of more than 1,000

companies in retail and the service sector,were officially approved by the National Skill

Standards Board, clearing the path fornational assessment and certification.

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success travels. Partnerships with shopping center developers have expandedthe potential for opening new centers where NRF Foundation is effectivelybrokering partnerships among employers, government, educators andcommunity organizations.

NRF UNIVERSITY

NRF Foundation’s partnership with Sun Microsystems to create and roll outan industry-wide, web-delivered program of education and professional trainingwas announced in January 2002. Labeled NRF University wired, the initia-tive will enable retailers, educators, trainers and others to access courses invirtually every retail discipline from a growing number of sites, providingopportunities for professional development in and around the workplace.

Throughout 2002, course offerings were solicited from educational contentproviders and peer reviewed to ensure that offerings for the university wereof the highest quality and retail specific. Seven initial content partners have

agreed to participate in the January 2003 launch at NRF’s AnnualConvention & EXPO. A number of retailers have also expressed interestin sharing content with other retail users through this venture. Additionally,an original series of courses leading to credentials is in the planning ordevelopment stages. Sponsors interested in participating are being sought,since their support will be critical to NRF’s ability to fully build out coursesin multiple areas of operations—for employees and executives at all levels.

SCANNING THE HORIZON

NRF Foundation worked closely with sponsor and partner BearingPoint(formerly KPMG Consulting) this year to make good on its promise to delivera definitive state of the industry report by January 2003. Retail Horizons:Benchmarks 2002, Forecasts 2003, gathered data on measures in key retailareas from supply chain to human resources, nine in all. The metrics weresupported with face-to-face interviews with C-level executives across theretail spectrum in order to ensure the benchmarks and forecasts were trulyrepresentative of the entire retail industry.

Findings and strategy recommendations will be released in a Super Sessionat NRF’s Annual Convention & EXPO in January 2003. Copies of the study willalso be available from the NRF Foundation for purchase through the NRF Bookstore.

INVESTING IN THE FUTURE

Retailers, suppliers and business partners, NRF staff members and friends ofNRF Foundation got in on the fun of the first Retail’s BIG Silent Auction, heldover a three-day period in conjunction with the NRF Annual Convention &EXPO. Sponsored by JDA Software and co-chaired by James M.Zimmerman, Chairman and CEO, Federated Department Stores, Inc.,and Robert J. Corliss, Chairman and CEO, The Athlete’s Foot Group,the auction offered unique and interesting items that sometimes sparkedlively bidding and resulted in net proceeds of more than $45,000 to supportFoundation initiatives. Building on this success, the second annual event isunderway to be held in conjunction with the 2003 NRF Annual Convention.It is on track to far exceed the success of the inaugural event and turn thisinto the NRF Foundation’s major fundraising event each year.

Richard L. Sharp, Chairman and CEO,Circuit City Stores, Inc. and formerChairman of the NRF Board ofDirectors, presents the NRF SilverPlaque for outstanding service to NRFand the retail industry to DeborahMasten, Director of Human Resources,Communications and Development,J.C. Penney Company, Inc.

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The debut of Stocking the Shelves and Keeping UpAppearances marked completion of the full developmentof the Retailing Smarts series, a 12-volume series of user-friendly workbooks based on the industry skillstandards in customer service and sales.


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During 2002, STORES main-tained its No. 1 position asthe best-read and best-ratedmagazine for senior retailexecutives in all industrysegments. An industry-wide survey of retailexecutives found that:

" 56 percent of executives, if limitedto receiving one publication, wouldchoose to receive STORES

" 45 percent say STORES provides thebest information on supply chain,logistics and warehousing

" 46 percent rate STORES as providingthe best information on computersoftware, hardware and pointof sale

" 53 percent believe STORES providesthe best information on credit,collections and payment systems

" 62 percent have recommendedthe purchase of equipment,products or servicesadvertised in STORES

" 81 percent of executives havediscussed with a colleague aproduct or service advertisedin STORES.

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STORES Magazine Keeps NRFMembers InformedOne of several results of 2002’s soft economy was that retailers worldwidebegan placing an even higher level of scrutiny on their operations expendi-tures. As a result, increasing numbers of merchants are turning to STORES.

The STORES editorial staff also helped meet the need for integral ITinformation with the launch of two new publications, the STORES SoftwareSourcebook and the STORES Retail Deals e-newsletter.

Launched in May 2002, the Software Sourcebook tees off the fact thatretailers increasingly rely on a variety of software applications to helpachieve optimum operational efficiency. This annual publication is designedto help retailers of all sizes and in all industry segments find the softwareapplications needed to run a successful enterprise.

The Retail Deals e-newsletter is a bi-weekly publication designed to keepretailers and product and service providers abreast of the latest IT developments,including new hardware and software applications, retail implementationsworldwide, personnel changes, and other important retail IT information.

Both the Software Sourcebook and the Retail Deals e-newsletter joinSTORES growing stable of publications, including STORES Magazine,STORES Online, the STORES Retail Industry Buying Guide, the annualRetail Industry Calendar, the Top 100 Retailers and Top 100 SpecialtyStores lists, and the Top 200 Global Retailers list.

STORES Magazine8

Financials9YourDues $Hard at Work:

NRF members receive over $3 in products andservices for every $1 of duespaid. NRF member benefitsinclude advocacy, knowledgeexchange, education and community building. STORES magazine, Retail's Big Show and other NRFconferences provide significantresources to underwrite NRF member benefits.

Convention &Conferences43%

MemberDues19%

ProgramRevenue7%

STORES Magazine20%

Miscellaneous 11%

Advocacy,MemberPrograms andAdministration63%

Convention &Conferences20%

STORES Magazine17%

NRFSOURCE OF FUNDS

USE OF FUNDS

325 7th Street, NWSuite 1100Washington, DC 20004

(202) 783-7971

Fax: (202) 737-2849

www.nrf.com

THE NATIONAL RETAIL FEDERATION is the

retail industry’s largest advocacy organization, advancing the

industry through professional seminars, trade conferences,

publications and educational activities and influencing the

development and content of legislation and public policy affecting

retailing and the consumer.

By bringing under the Federation umbrella 36 national associations

that have members in most lines of retailing, associations in all 50

states and the District of Columbia, and 36 international

associations representing retailers abroad, NRF represents an

industry which encompasses more than 1.4 million U.S. retail

establishments, employs more than 20 million Americans —

about 1 in 5 U.S. workers — and registered sales of nearly

$3.5 trillion in 2001. NRF also has a sizable

international membership of more than 1,000

stores in 50 nations abroad.