Jon Huntress works for Tenagra Corp in partnership with Peter de
Jager, and his address is jon@year2000.com .
====================== quote

Year2000.com Announcement List, Special Mailing
September 20, 1999

This is part five of our special coverage of the BrainStorm
Year 2000 National Symposium Series that took place in
San Francisco, CA June 28-30, 1999.  The next BrainStorm
Group Year 2000 Conference will be held in Chicago
September 22-24, 1999. See:
http://www.brainstorm-group.com/Y2K_Chi99.html

Covered by Jon Huntress, jon@year2000.com, for the Year
2000 Information Center: http://www.year2000.com/

===========  Kathy Hotka and the National Retail Association

Kathy Hotka is the Vice President of Information Technology
for the National Retail Federation and she gave a session on
year 2000 issues for retailers.  The NRF is the largest
retail trade association in the world and includes the
leading department stores, discount stores, mass merchandise
specialty and independent stores and it is one of the few trade
associations that has a technology staff.  NRF represents
1.4 million retail concerns that employ more than 20 million
people.  NRF also has an international membership

The NRF represents anyone who sells "stuff."  The NRF
Survival 2000 Project was launched in 1997 and 150 members
are participating in an attempt to create a shared industry
approach to Y2k.  Getting disparate retailers to get together
has been difficult because most of the retailers think they
are unique, and don't need to partner with others.  But Y2K
is different because it literally will affect everybody.
Kathy said flat out that we will see companies that will tank
because they will not be able to fix their business processes.
Early on the NFR realized that it did no good to get retail
involved unless manufacturing was along too.  They began
calling manufacturers and quickly began focusing on EDI
(Electronic Data Interchange) which allows automated ordering of
merchandise.  There is no substitute for this.  If Wards
wants to order jeans from Levi Strauss, they can't do it by
phone because there is nobody at Levi to take the call
anymore.  Kathy said the NFR created a test to see if a 00
will pass through a translator.  Over ten thousand companies
have taken the test so far and some of the companies flunked,
which told the NFR and the retailers that there were issues
to deal with here.

Kathy said that outside the US, all bets are off.  One of
the members of NFR is a big retailer in Spain.  He spent the
last two years going around Spain and the European Union
trying to interest people in the problem and made no
progress at all.  In addition to the manufacturers, there
are shippers, port authorities, customs and the switch to
the Euro to worry about.  In addition to this there is the
EU Privacy Directive, which basically says if you do business
with Europeans and keep any data on them, such as if they are
a credit card customer, then you must give them the option
of "opting in" in order to keep that information.  This
creates a very large IT overhead that has to be maintained.

Other issues to deal with are small and obscure phone
companies who may or may not have problems.  Some retailers,
such as L.L. Bean, do most of their business on the phone. Kathy
said she got a surprise when she brought up the possibility
of a power outage.  Many stores have contingency plans to
move their stuff out into the parking lot in case there is
an outage.  They are even prepared to sell prescriptions
drugs off the back of a truck.  Home Depot is prepared to
turn their largest trash containers into impromptu cash
registers if necessary.  There is a precedent for this.
When Hurricane Andrew hit Florida, Homestead was leveled
but the Home Depot there was open.

In the matter of product liability, the Consumer Electronic
Manufacturers Association is claiming that all consumer
electronics are compliant.  This would seem to be an issue
between the manufacturer and the consumer, but in reality
if something doesn't work people will take it back to the
store, so retailers need to take this into account. The
manufacturers of consumer items became part of their group
because they have nothing equivalent to the NFR.

There are a lot of unique issues that the retail establishment
must deal with.  What do you stock up on?  Kathy pointed
out that nobody has any kind of an idea of how many batteries
people will want to buy before January.  Also the NFR is just
beginning to find out if industries are going to go on the
offensive and recommend buying their product.  The bottled
water association has decided not to take advantage of Y2K
to sell more water, not because they don't want the sales,
but because of the fear that those big five gallon returnable
bottles won't be returned.  They are afraid of running out
of containers!  Retailers have the added problem of having
no space for extra product.

For instance, there is a difference between soft and hard
goods.  Canned food can be consumed later, but items
specifically purchased for a disaster that are not used may
be returned.  Kathy said that generators, water purification
units, and barbecue grills will be coming back to the stores
January 1 at noon!  Retailers sell 40% of their sales during
the holidays, so buying stuff for a potential disaster might
cut into this.  She said that especially on the East Coast,
nobody is thinking about Y2K or planning for it but they will
probably think about it later.  Later in this case is
usually the second day after Christmas.  This is the
December 28th Scenario, as she described it.  December 26 is
spent with your family eating left-over turkey.  On December
27 some friends come over for dinner.  The next day you
think you should go down to the store and get some stuff just
in case.  If everyone does this it is going to be a real
problem.  The stores will be empty overnight.

Retailers, like everyone else, are committed to due diligence,
but with Y2K it is sometimes very difficult to determine just
what due diligence is.  Nobody has been through Y2K before
and there is no precedent.  Consulting firm advice and
analysis usually focuses on the past and is not much help.
The NFR's position is that networking is the best solution
and this includes networking with manufactures, consumers and
the Y2K groups in the area.   Education and advocacy are
natural roles of a trade association, and this is the
role they have chosen to play.  The NFR thinks that
short-term interruptions are likely and this is the line
they are taking.  They are following and advocating the
Red Cross advice on Y2K preparedness.  The NFR is in a
difficult position here because they, and their retail
members, don't want to be seen as telling people to go out
and buy stuff.

We don't know what people are going to buy and the
manufacturers don't know how much they should make.  Battery
makers want to know if they should crank up some more assembly
lines.  Recommendations that are good for some are not good
for others.  Some gun dealers wanted a recommendation to buy
guns, but if people buy guns they might not buy jewelry, so
the NFR left that one alone.

She said the White House asked the NFR to run a "Y2K in
April" campaign for last April where they would push people
to plan and buy at that time.  The NFR passed on that one too
because they didn't feel the message was appropriate for
several reasons, one of them being the crossed message that
the everything is alright and all the stores will be open in
January but you still need to buy now.

Kathy said the word still needs to be gotten out, and one of
the options was to have a sponsor for the messages.  The
senate said this would be OK as long as it wasn't very
controversial.  Two sponsors they would not like to see are
Smith & Wesson and Depends.


The NFR is worried about how people are going to react.  East
of the Mississippi there doesn't seem to be any reaction at
all.  She said the topic of Y2K never comes up in cocktail
parties.  There is no buzz at all and the community
preparedness groups are saying they aren't worried about
panicking, they are still concerned with awareness.  Kathy
said at first she was concerned about sensational stories in
the tabloids but now her main concern is news from the
network news shows that focus on the sensational such as a
woman storing many pounds of M&Ms in her garage.  She also
said she has been planting corporate preparedness stories in
the press and she urged everyone there to do the same and to
establish a dialog with their local media and tell them what
they are doing.

The networking and joint action is paying off.  She told of
one major national retailer who was planning on doing no
testing at all until they found out through the NFR that
everyone else was doing it.  She told of another large maker
of consumer products who has come to the conclusion that a
number of their suppliers are just not going to get it and
so they are sending their own people to help them.  Everyone
is going to have to do this in order to avoid the December
28 Scenario.

Her take on the outcome is that things will get messed up
but it isn't going to be just awful. She gave the example
that all the mushrooms on Pizza Hut pizzas come from China,
so if there is a problem with the China supply chain, Pizza
Hut will have to find a new source.  She said the person
they want to target is your mom.  Is your mom going to act
in a rational manner or is she going to freak?  She said the
smartest thing she has seen so far is the letter the
American Bankers Association sent to Ann Landers.

Kathy's recommendations are to shop early and often and
don't encourage the nuts.

I called her to see if she had anything to add as the
conference was two months ago.  She told me she won't give
this presentation again, as they are starting now to focus on
"Roll-over Weekend."  The NFR is creating a command center
which will be the central source for the entire industry.
They plan on calling every single one of their members the
first few days of January to find out how everything is
going.  The White House thinks this is a great idea too.

She had just gotten back from San Antonio where she gave a
talk that was supposed to scare some of these people.  There
wasn't much interest as they listened to possible technology
problem until she mentioned that there was going to be a lot
of people walking around with fifty dollar bills in their
pockets.  (The extra money the Fed is printing is in
fifties.)  Do the math -- if you need a quick extra few billion,
you can print it a lot faster if you do big bills. It is kind
of like the old Soviet Union production quotas.  The quota
for glass was in pounds instead of area, US production is
figured in acres.  The Soviet glass factories easily made
their quotas by making all their window glass half an inch
thick.

Kathy asked them what they would do when a customer buys a
bottle of wine and gives them a fifty, and the next customer
also has a fifty, and the customer after them too.  They
began thinking very hard after that.

Maybe we need to begin stockpiling one dollar bills.  I've
always had trouble doing that.

Best Practices,
Jon Huntress
jon@year2000.com


Copyright 1999 The Year2000.com Partnership