The Center for Retailing Studies at Mays Business School at Texas A&M University will host its annual Retailing Summit in Dallas, Texas, October 1-2. The event will be held at the newly remodeled Westin Galleria Hotel and is expected to draw 250 retailing executives from the nation’s largest chains, such as Ashley Furniture, Kroger, Walgreens, Harley-Davidson, Sewell Automotive and Zale Corporation.
Summit speakers will include top-level executives such as Frank Blake, CEO of The Home Depot; Sam Duncan, OfficeMax CEO; Jim McIngvale, Gallery Furniture CEO; Stan Richards, CEO and founder of The Richard’s Group; Gayle Tremblay, Vice President of Neiman Marcus Last Call Stores; as well as James Gilmore, author of The Experience Economy.
Attendees will hear presentations on a variety of retail-related topics such as navigating a difficult economy, gaining share, connecting with customers, and crisis management. Of special interest will be reflections from legendary turnaround artist, Allen Questrom, whose long and diverse career make him one of retailing’s most notable veterans. Questrom previously held positions as CEO of JCPenney, Federated Department Stores and The Neiman Marcus Group, and he currently sits on Wal-Mart’s board of directors.
This is the first time that the Retailing Summit conference will be held in a retail venue, the Galleria Dallas. To recognize this change, Nordstrom at Galleria Dallas will host a special pre-conference reception in the store on September 30. This reception will provide added value to all attendees, as it will showcase retailing at one of Dallas’s most fashionable department stores.
“The Retailing Summit is a great opportunity for attendees to learn best practices from retailers who are innovating to survive, evolve and come out on top when the recession is over,” said Cheryl Holland Bridges, director of the center. “People come for the high value content and unmatched networking opportunities that the summit provides.” The summit attracts senior executives from all areas of the retailing industry.
Sponsor partners for the 2009 Retailing Summit include BDO Seidman LLP, Maritz Research, DAVACO and Nordstrom. Proceeds from the event fund scholarships and programs for students pursuing retailing studies at Texas A&M University.
Founded in 1983, the Center for Retailing Studies bridges the academic and business communities by educating the next generation of retail leadership, and serving the industry through research and executive education.
Normally, I use this forum to provide you with uplifting news about our faculty, staff, students, and programs. However, today I cannot do so. Earlier this week, Professor Jeff Conant, a member of our faculty since 1985, died unexpectedly. Jeff was a tremendous educator, colleague, and friend, and his passing will be felt deeply by many.
I first met Jeff in 2001 when I assumed the role of dean at Mays Business School. Like all who knew him, I was impressed with Jeff’s dynamic personality, his genuine concern for others, and his passion for teaching and for students. While Jeff’s career and life highlights are many, I was pleased to see his outstanding work recognized by his being named a Texas A&M University Presidential Professor for Teaching Excellence and to watch his leadership within Mays grow as he became department head. He was well suited for the job, a natural leader. Under his guidance, the marketing department has flourished.
Jeff was loved by his students as well as his colleagues. He was an important part of our Mays family and he will be sorely missed by all of those fortunate enough to know and work with him. Please join with me in keeping his family in your thoughts and prayers.
Tom didn’t set out to be financially delinquent—in fact, when he signed up for his first credit card as a freshman in college, he thought he was being quite responsible by building up a credit history.
By senior year, Tom had racked up several thousand dollars in credit card debt as he charged school-related expenses and other incidentals. Tom wasn’t worried about his mounting bills, as he would soon be entering the workforce full-time.
According to an April 2009 report from SallieMae, 84 percent of college undergrads have at least one credit card. Half of the students polled had four or more cards.
Tom did eventually find a job after a few months of searching, during which he used credit to float by. He intended to pay down his debt, but by that time he’d become accustomed to living slightly beyond his means, filling the gap with credit and making the minimum payment each month. His debt escalated, especially as his credit card rates steadily and stealthily increased from 8 percent to 15 percent for no discernable reason.
When the economy worsened and Tom lost his job, he knew he was in trouble. The credit card company raised rates on his large existing balance to 24 percent after a missed payment. Now broke and unemployed, Tom wonders how he got to the point where bankruptcy is an attractive option.
Tom’s is a common tale in the credit-saturated U.S. society, where “enjoy it now, pay for it later,” is the favorite message of marketers. As more and more Americans slide toward financial ruin, consumer advocacy groups that for years have spoken out against abuses by the credit card companies have finally been heard. On May 22, President Obama signed the Credit Accountability, Responsibility, and Disclosure (CARD) Act of 2009 into law, which will limit or change the way credit card companies do business starting in February 2010.
Will the bill make a difference to consumers or the economy? Kelly Haws says the effect of the legislation will be significant. Haws, assistant professor of marketing at Texas A&M University’s Mays Business School, has conducted several studies on consumer use of credit. “Consumers might actually change their spending behaviors as a direct consequence of this legislation,” said Haws. “Even if it has only a minor effect, it could be huge when it comes to how people are managing their personal finances.”
More disclosure = more responsible spending?
As the U.S. economy continues to languish, people are spending less, and so like many other industries, credit card companies have been making less. This situation led some creditors to come up with creative ways to boost revenues, such as “any time, any reason” rate hikes or hidden fees (Americans pay about $15 billion each year in credit card penalty fees). The CARD Act bans certain rate increases and unfair fee traps, as well as mandating more transparency between lender and borrower. When the bill takes effect in a few months, credit card companies will be required to notify consumers of rate changes 45 days in advance of the change. Also, companies will be required to display the consequences of credit decisions to consumers in periodic statements, such as how long it will take to pay off an existing balance with interest if the consumer pays only the minimum balance.
Haws says that this kind of stipulation is potentially positive, but that many consumers don’t take the time to understand financial statements. Benefits of that component of the act may be limited if consumers disregard notices from their creditors that seem too complex.
According to a study Haws conducted, people will modify their spending behavior when given greater information about the real costs involved with using credit. However, her study involved subjects in a controlled setting, a very different environment from the one experienced by most credit card holders on a daily basis. “In the real world, there are a lot of distractions that can influence those actions,” said Haws.
Even without full comprehension of the statements they’ll receive, consumers will benefit from their new protection under the law, which will ban credit card companies from increasing rates retroactively without cause. Companies will also be severely restricted from retroactively increase rates due to late payment.
Slow down, Junior
One area of the new law both Haws and colleague Don Fraser agree will be impactful is the age restriction. “This is one of the most important dimensions of the legislation,” said Fraser, Hugh Roy Cullen Chair in Business and associate head of the department of finance at Mays.
The CARD Act will prevent credit card companies from targeting potential customers under 21. Those under 21 that want a credit card must have a co-signer on the account, or show proof of independent means.
Currently anyone over 18 can get a credit card—and many do. According to an April 2009 report from SallieMae called “How Undergraduate Students Use Credit Cards,” (download a copy here) 84 percent of college undergrads have at least one credit card. Half of the students polled had four or more cards. The study also noted that undergraduates are carrying record-high credit card balances, with the average (mean) balance of $3,173. More than 20 percent of undergrads reported credit card balances between $3,000 and $7,000.
In the past, credit card companies were allowed to market aggressively on college campuses, incentivizing their offers with promotional gifts from tee shirts to iPods. “Removing the ease of accessibility to that market could really be transformational,” says Haws. College years are formative, making it an opportune time for credit card companies to lock in a customer for life on the debt merry-go-round, as young people often lack the knowledge or analytical skills to use credit wisely. Haws notes that some college campuses already ban credit card sales reps on their premises as a protection to students. Getting parents on board as potential cosigners is beneficial, too, as past research suggests that this could help prevent debt from accumulating during college years. “Studies show that the more parents are involved, the more responsible the student’s use of the credit card is,” she said. (( Palmer, T.S., Pinto, M.B., and Parente, D.H., College Students’ Credit Card Debt and the Role of Parental Involvement: Implications for Public Policy. Journal of Public Policy and Marketing, 20(1): 105-113 (2001). ))
Drawing the legislative line
Though the CARD Act passed through the Senate with a vote of 90-5, showing overwhelming support for regulation of credit card practices, some economists wonder if it was the right thing to do. After all, if a product is bad, shouldn’t consumers stop buying it? According to a 2009 Nilson report, 78 percent of American households have at least one credit card. Clearly, consumers are still purchasing these services. The free market philosophy that the U.S. economy is built upon argues that the consumer demand will regulate the market eventually on its own, without interference from the government.
Bans unfair rate increases, including retroactive rate increases
Prevents unfair fee traps
Plain sight /plain language disclosures
Accountability
“My opinion is that the legislation was badly needed, as there were numerous examples of abuses by credit card lenders. It would have been better if these changes had been made some years earlier,” said Fraser, commenting that though some consumers (likely those with the best credit practices, who pay off their balance each month) will may see an increase in rates and fees, overall consumers will be better off as a result of the legislation.
Haws agrees that the credit card reform is positive, as the consumers that are often most affected by predatory practices by credit companies are the ones who can least afford to pay, such as those with excessive debt from medical or other unforeseen expenses. “This will provide protection for consumers that are already hurting,” said Haws.
Other detractors of the bill hypothesize that this increase in regulation will lead to a tightening of the credit market, which will hamper economic recovery. “From a macro economic perspective, I would expect that the legislations will reduce the amount of consumer spending and thus increase the amount of consumer saving,” said Fraser. “In the short run, this will tend to dampen any economic recovery, but probably not to a large degree. In the long run, however, it will encourage saving, something that will be a net benefit for the economy.”
Will the legislation force an overhaul of credit card practices as companies struggle to stay profitable? What will the future of the credit industry look like? “Obviously, to the extent that the new legislation is successful in limiting or reducing the abusive practices, the credit card issuers will have to seek alternative revenue sources from their credit card customers,” said Fraser. “This is especially relevant today as the bank issuers of these credit cards are often in serious financial difficulty and in some cases on the verge of failure. They cannot tolerate significant reductions in their revenue streams.” Fraser suggested that credit card lenders may increase their average interest rates, screen out certain less profitable borrowers who may not use their cards often or who pay in full at the end of the payment period, or deny cards to those with low FICO scores, in an attempt to stay profitable.
Will rewards programs and no annual fee cards disappear under the new model as some have predicted? “I’ll believe it when I see it,” says Haws. “It’s such a competitive market that it’s unlikely they will do away with all of these programs.”
From I have a dream, to pinching yourself, realizing that you are awake. Actually, there was no need to pinch myself: the bitter cold D.C. air was enough to remind me that I was alive, and watching history happen right before my very eyes.
Hardin (right) and two friends from Australia in front of the Lincoln Memorial directly after the MLK Day celebration.
There were a predicted four million people present, and billions around the world watching the National Mall in Washington, D.C., as Barack Obama, the 44th President of the United States, recited the oath of office. I was standing next to the Washington Monument, more closely resembling a popsicle than a human being, however, I was better off than some of the other people I had met who had been camping out since 3 a.m. Although I watched the proceedings on the giant screens set up all along the National Mall, I could partially see the Capitol Building from where I stood. Being present at such an event, sharing in the minor suffering of the elements with my fellow Americans, was an incredible moment that I will cherish for the rest of my life.
The day immediately before the inauguration was Martin Luther King Day, which was appropriately celebrated at the Lincoln Memorial. Celebrities from Denzel Washington to Steve Carrel were present, with performances by Shakira, Bruce “The Boss’ Springsteen and my most anticipated… Beyonce. Often finding myself surrounded by an international crowd, I made sure all of the Australians, Canadians, Israelis, Norwegians and Puerto Ricans knew that Beyonce and I shared the privilege of calling Houston home. We sang and performed the “circle chicken dance’ from the music video “Single Ladies” all day, eagerly awaiting her live performance. Using some flawed logic, she chose to sing the much less patriotic tune of “America the Beautiful.” We’ll forgive her, only because she is Beyonce.
Searching for a place to grab a bite to eat (which was quite a feat given the number of people present in the city) we ran in to some cadets from the Naval Academy who were in the Glee Club, and had gotten to sing onstage at the MLK Day performance. Their pictures of Barack and Michelle were literally taken from only a few yards away, and they captured pictures of Bono and friends from within inches. Although two very different perspectives of the same event, we were all able to enjoy and recall the moment together.
Don’t get between Americans and their coffee on chilly D.C. mornings! Every trashcan in the city was overflowing with used coffee cups.
With the exception of my immediate international circle, everywhere I went was amidst a sea of Americans, many of them black. Growing up in Houston, I went to a high school that was largely black and Hispanic, with a dwindling number of white kids. Looking around at the crowd, I noticed generations of black Americans that had traveled far and wide to witness and be a part of this piece of history. It brought a tear to my eye when I saw an elderly black woman, her eyes wet as she gazed across the Reflecting Pool to the Lincoln Memorial, as she listened to President-Elect Obama Obama speak. She was ethereal, somehow outside of her body and in the present. I never asked her, but I didn’t have to in order understand that she had been in that exact spot before, almost half a century younger, listening to Dr. Martin Luther King share with the world his dream, the dream of millions. Standing there with her grandson, asleep in his stroller, it was as if you could take a bite out of her sense of pride, accomplishment, and assurance.
Washington, D.C., is notorious for being a dangerous city, however, my entire time there, I never once felt unsafe. Something in the air felt brisk and refreshing, like a sip of Diet Coke. The streets were packed, it was disturbingly glacial (I literally traversed block by block, stopping in a pub/restaurant on each corner, thawing my nose and re-circulating the blood in my toes) but none of these elements of discomfort or potential sources of frustration seemed to dampen the mood. The news networks all wonder when the honeymoon period will end, but based on my assessment on Connecticut and 18th, real change is in the air.
As employers downsize in these tough economic conditions, some employees are being let go via “reduction in force” (RIF). What can you do if you believe your company made RIF decisions based on discriminatory factors such as age or race? Statistical evidence can be helpful in building your court case, says a recent article from Ramona Paetzold and a colleague, which appeared in the June 2009 Harvard Law Review forums section.
Paetzold is a professor of management and a research fellow at Mays Business School at Texas A&M University. Her article, “Statistics is a plural word,” appeared in the Law Review as a rebuttal to an argument made in a previous issue about the limitations of regression modeling for proving causation in civil rights cases like the one mentioned above.
Paetzold
“Some kinds of cases require statistical evidence as proof. Without it you could not establish discrimination,” said Paetzold. “Other kinds of cases will only use it for supporting evidence of discrimination—the primary evidence has to be more specific to the employee who is suing, such as comparing the employee’s treatment with how other employees were treated.”
The article focuses on how much and what kind of statistical evidence should be used by employees in proving employment discrimination against their employers—or conversely, by employers to defend themselves in employment discrimination suits.
“Employers need to understand the ways in which statistical evidence can be used in these lawsuits,” said Paetzold. “They also benefit from knowing some of the types of statistical methods that can be used to provide statistical evidence.”
Paetzold coauthored the article for Harvard Law Review with Steven L. Willborn, dean and professor of law at the University of Nebraska College of Law. She and Willborn also collaborated on the book The Statistics of Discrimination.
Paetzold specializes in human resource management, with research interests at the intersection of human resource management and employment law. Her work encompasses psycho-legal aspects of sexual harassment, disabilities and accommodations, and workplace violence. Her research has appeared in outlets such as the Academy of Management Review, American Business Law Journal, North Carolina Law Review, Employee Rights and Employment Policy Journal, and Journal of Applied Social Psychology.
She has served as senior articles editor for the American Business Law Journal and editor-in-chief of the Journal of Legal Studies Education. Her primary teaching responsibilities at Mays include courses in employment law, employment discrimination law, and research methods.
BKD, LLP, the 10th largest accounting and advisory firm in the U.S., is continuing a long-established relationship with Mays Business School at Texas A&M University with a recent gift of $25,000. These funds will establish the BKD, LLP Accounting Education Endowment, which will impact several areas of accounting education at Mays.
The purpose of the endowment is to promote awareness of, and enhance the quality of preparation for, public accounting as a profession. Specifically, earnings from the endowment will be used for scholarships, as well as supplementing opportunities for students in the Department of Accounting or the Professional Program in Accounting.
Part of the motivation for this gift is name recognition, says John Steffes ’87, partner in charge of recruiting at BKD’s Houston branch. “The market for recruiting these Professional Program students is very challenging,” he said. “The A&M program puts out high quality students. It’s a very competitive market place.” Steffes said BKD’s gifts are intended to display the firm’s commitment to the accounting department at Mays and to the talented students who are their potential future employees.
“The new endowment commitment is a continuation of the significant support from the partners of BKD over an extended period,” said Professor and Accounting Department Head James Benjamin. “This support has clearly helped accomplish their goal of enhancing accounting education at Texas A&M. I hope that BKD benefits as well as a result of their successful recruiting of our graduates.”
Steffes was unabashed in his praise of the A&M program, saying that the Aggies BKD hire are an important component of the business. “You really only have two assets, your people and your clients,” he said. “Good people bring in good clients.”
“The Professional Program was designed to have exactly what we’re looking for,” said Steffes, who typically recruits students during their junior year. At that time, students can enter an internship program prior to their senior year, then potentially begin working at the firm full-time after graduation. Steffes says that about one-third of his recruits are Aggies, so it makes sense for the firm to invest in the A&M program.
About BKD
BKD is the top-tier U.S. CPA and advisory firm that delivers its experience and service with a deep understanding of your business, your needs and what it takes to improve your business performance. BKD’s approximately 2,000 personnel, including approximately 250 partners, are based in 32 offices serving clients in 50 states. To learn more, visit www.bkd.com.
