- The Washington Times - Monday, September 18, 2000

15 minutes with Robert J. Verdisco

Robert J. Verdisco is confident mass retailers will have a good holiday season this year. And if the first two quarters are any indication of their success, he could be right.Mr. Verdisco is the president of the International Mass Retail Association, which represents those retailers that have high volume and low margins like Target, K-Mart, Home Depot, Lowe's, Circuit City and Best Buy.

He says his member companies have a draw low prices at a one-stop shop that keep customers shopping there, whether they are on the Internet or in physical stores. It's a trend they've been experiencing for a while now.

Question: According to IMRA's most recent economic trends analysis, consumers have been watching their spending but when they do reach for their wallets they tend to favor mass retailers? Why?

Answer: There are several reasons why that's happened. It's been a long-standing trend. Consumers are going to shop more on the mass retail side than anywhere else. It's because of value an outstanding price. And people are time-starved so if you go to the mass retailing industry you can get a lot done in a given store. It's one-stop shopping for a lot of people. But I think it boils down to the great value consumers get.

Q: Many people consider the Internet to be one-stop shopping. How does that fit in?

A: When this whole Internet thing started, nobody knew where it was going to go or where it was headed. There was talk about what was going to happen to bricks-and-mortar retailers. There was talk about manufacturers going directly to consumers. There was talk about stores becoming a waste land because no one was going to go to them anymore. There is a little bit of truth in all of that.

In my opinion, as younger generations become the consumers of tomorrow they've been raised on the computer and the Internet. However the best position to be in right now is the combination of the bricks-and-mortar stores with the on-line ability to order from those stores. That's proving to be a terrific advantage for the traditional mass retailer.

Q: What do mass retailers need to do on the Internet that's different from what they do in their physical stores to make it work?

A: I think the goal is the same. They have to devise a strategy, like they do in their stores, for customer loyalty. They have to focus on the customers. Customers are becoming more and more sophisticated every day. It's that demanding customer that they have to deal with so they have a lot of experience from their stores that they can apply to making that customer loyal on the Internet.

Q: Mass retailers have traditionally been located in suburban areas. But it seems now they are moving more into cities. Why and is it a smart move for these big-box retailers?

A: Sure it is. In order to be a successful business person, let alone a successful retailer, you have to adapt to change.

There's been a cycle in inner-city opportunities. For a long time it was not competitively advantageous or economically efficient to serve inner cities if you were a mass retailer.

I think there's been several things that have happened to transform that. I think inner-city government has recognized that to better serve the inner-city consumer they have to do things to entice mass retailing back into the city. I think they've done a lot of things to help that along.

Secondly, mass retailers have gotten smarter and they realize you don't have to have the same physical plant you have in the suburbs. They've adapted their store size to inner city needs.

The third element is that retailers have recognized for years now how important ethnic markets are to the success of their business. They're realizing now and strategizing about how to take that as an opportunity to better serve ethnic groups.

There's another reason too. I think our companies that have always been focused on giving back to the communities also recognize they should give something back to the urban communities.

Q: Are plans for suburban "smart growth" restrictions on what is developed in an area another reason for the move to inner cities?

A: Smart growth obviously is an extremely high priority and an important issue for these folks. It really impacts them being able to do business. There could be a little bit of that involved. But smart growth is so big that I don't think that's forcing them into the inner city. However, it's probably been given some thought as they go through this process.

Q: What is the IMRA and mass retailers doing to combat smart-growth restrictions?

A: Communities have to decide what they want. I know there are a lot of complaints that [big-box retailers] put mom-and-pop retailers out of business and all of those kinds of things. But if you look at what big-box retailers have done across the board if you look at the value mass retailers bring to consumers. If you look at what it does for jobs in given area. When you're talking about the restriction of size of the store you can build in a particular area, to just arbitrarily say that when you can demonstrate all these benefits, that doesn't make any sense. And we'll fight that until the end. We're very active.

Some individuals, some planners, don't like the concept and they don't take into consideration the value to the ultimate consumers. It's very sexy political issue so we have a tough fight but its something that has to be determined by what the people in the communities want and by economics.

Q: What are mass retailers doing to retain their employees?

A: It's difficult to keep employees anywhere right now. The unemployment rate has been low for a very long time and competition for competent employees is very difficult.

It is probably as important an issue in our industry as there is. You read some of the wild things that companies are offering to their employees just to keep them. It's a tremendous battle.

You've got to create a good culture. If you have a good corporate culture, you're going to be able to persuade employees that it's a nice place to work. A lot of companies are finding ways to share the wealth. You see stock options for more and more levels of company employees. You see profit sharing for everybody. You see sensitivity to family needs getting better. But that's all driven by the marketplace. Those are good changes.

Q: What is the new IMRA Foundation and why is it being created?

A: We feel that it is very, very important to get as much good information to our members and to potential employees as possible. I think it is the association's responsibility to help educate our members and do research for them. The other part of it, which I think can hopefully be achieved through the foundation efforts, is to educate potential employees and students that retailing is a very good opportunity.

There's an old mind-set out there that has been very difficult to break and we're making some progress. Lots of kids when they're in high school get jobs in retailing and it's immediately imbedded in their minds that retailing is just standing at a register scanning stuff. We want to try to break that mind-set, especially on the college level. We want to create scholarships, to educate the educators about the great value that retailing brings to this country not only in terms of value to the customer but terrific opportunities for lawyers, information technology experts, trade specialists, and accountants. There are equal opportunities in our industry that people are just not aware of because they go back to that mind-set.

That's the concept behind the foundation.

Q: How do you think this holiday season will turn out for mass retailers both bricks-and-mortar and their Internet business?

A: I think for mass retailers it will be a very good holiday season. I emphasize mass retailers because when you have things that are happening like high gas tax that take discretionary dollars out of people's pockets that they would ordinarily spend on commodities some would say that will bode ill for purchasing of products.

If you look at the trend over the last several years and you look especially at times when people have less money to spend where do they go or where will they go? They'll go to the best value. Where is the best value's going to be? The best value is going to be at the stores we represent mass retailing.

I think we'll have a very good season and I think consumers will look to us as the value for the Christmas season. While there might be a slight downturn in other parts of retailing, like department stores, it will not be in mass retailing because of what we offer. We'll end up being the shopping venue of choice.

SELF-PORTRAIT

Name: Robert J. Verdisco, president of the International Mass Retail Association headquartered in Arlington.

Age: 57

Education: Penn State, B.A.; George Washington University, J.D.

Resume: Became president of IMRA in 1990, joined the association as vice president of government relations in 1984; was the executive assistant to the chairman of the Consumer Product Safety Commission; worked in the antitrust office at the Nuclear Regulatory Commission; was an antitrust lawyer for the Federal Trade Commission.

Just finished reading: "The Street Lawyer" by John Grisham

Family: wife Pat, two children Elizabeth and Matthew.



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