Greg Murray is the brand strategy manager at Exact Media
It was quite the sight to behold. In the back of Susur Lee’s restaurant in Toronto there is a darkened private dining room where one evening this May, there gathered the leaders of North America’s top retailers, startups and brands. Seated around one table, sharing family-style plates of braised beef and grilled shrimp were competitors, innovators, futurists, traditionalists, venture capitalists and lobbyists all with their interests staked on the future of retail.
It was a room of extremes: young entrepreneurs like Matt Corrin, the 33-year-old Founder and CEO of Freshii alongside retail veterans like 83-year-old Harry Rosen, founder and chairman of Harry Rosen Stores. The contrasts continued between Deepak Chopra, CEO of Canada Post, a 250-year-old organization with 71,000 employees, alongside Ben Zifkin, CEO of Hubba, an organization only a couple of years old with 20 employees. The extremes were palpable, and built fertile grounds for rich discussion.
As the plates got passed, there inlay an irony. Family-style, amongst an unsuspecting group of individuals who day-to-day would never consider each other as such. But tonight, amidst the cutthroat, challenging and cunning world of retail, they congregated not as competitors or investors or lobbyists, but rather as a group who share the same undying love of retail, brands and the almighty consumers a family, of sort. And there was one focus on the agenda: how is the consumer changing, and how do retailers keep up?
Perhaps there is no greater time than this to bring together the executives of the largest retailers and their affiliates in Canada. We stand in the shadow of straggling retail sales, mass industry consolidation, growing omni-channel confusion, and not to mention the collapse of some of the most anticipated retail launch plans in recent history.
The conversation was wide ranging, bearing many relevant and interesting perspectives that we will explore in this article.
On Technology Innovation
The conversation started with the king of retail, Harry Rosen. He told the story of his early-days solution from the 1950s that tracked his customer’s previous purchases, preferences, and experiences on cue cards. He instructed his sales team to review the cards before each customer visit to ensure they had an uncanny ability to personalize the consumer experience. Without knowing it, Harry had just built one of the first customer relationship management (CRM) platforms in retail. And had latched onto a human truth that is just as relevant today as it was back then: consumers love personalization.
This was one small step for man and one unseemingly large step for the retail industry. This innovation in customer relationship management went unnoticed by the rest of the retail industry, during which time Eatons and Simpson’s amongst other large retailers faltered and fell. As Gord Meyer, business director at P&G Canada noted, “Harry systemized the CRM, others didn’t and that is why they fell.”
Harry’s focus on innovation in the CRM space is what propelled his organization, and is a testament to the focus that organizations need to have on innovation to remain relevant. Whether a brand manager or a store manager, the focus on intimate consumer interactions cannot be underestimated and the bar is getting increasingly higher.
Everyone around the table was united: the closer that brands and retailers can get to consumers through innovation, the more meaningful experiences will be, and the stronger the bond will be formed. In this pursuit, the leaders expressed a distinct need for innovation in the space.
Enter, Ben Zifkin, CEO of Hubba, a startup that facilitates closer brand and retailer connections to consumers. Through Hubba’s infrastructure, brands can build great stories about their products and share them with retailers and e-commerce sites to help them enhance the consumer experience online and in store. As Ben put it, “consumers are looking for a partner retailers and brands need to partner with consumers to make their lives better.”
This level of commitment to innovation in the space truly being market makers is what is driving forward modern day personalization.
On Globalization
The dark clouds of Target’s exit from Canada were still lingering as the 20 executives met. Target had singlehandedly come to embody the difficulty of going global, and was a top of mind as the room began discussing the topic. And the room was resounding in their focus on what makes it so difficult: the consumers.
When asked why retailers struggle with global expansion, Anushka Ramchandani, VP of e-commerce for Hudson’s Bay Company and Lord and Taylor, commenced the discussion by stating, “they can’t adopt the same approaches to different businesses in different places.” While seemingly similar, Americans and Canadians are remarkably different. The nuances are subtle, requiring a fine eye and careful planning to accommodate.
Deepak Chopra, CEO of Canada Post, summed up these differences by saying, “Canadian shoppers love their brands but are more price-sensitive and regularly comparison shop. Being close to the U.S. market, they are well informed and expect Canadian retailers to respect that fact.” Hiring local talent and truly listening to their input can substantially increase the odds for a foreign entrant in Canada.
Around the table were leaders who had both successfully expanded globally, and some who had not. When asked how he did it successfully, Matt Corin, CEO of Freshii, told the story of moving his young family to Chicago to truly lean in to the experience and get to know the market better than anyone else. In his estimation, nothing substitutes living local to understand their decision-making best.
This said, retailers have been able to expand successfully. It was noted by Diane J. Brisebois, president and CEO of Retail Council of Canada, that 41% of the top 100 retailers in Canada are from other countries. This supports the premise that foreign retailers are generally successful in Canada. According to these companies, however, they are not immune to the challenges of continually adapting their business models to the needs of the local consumer.
The global consumer is getting more difficult to understand as the pace of technological adoption grows. Internationalized brands, retailers, prices, and the evolving shopping experience online make it difficult to keep track of meaningful dimensions of the consumer experience. As the importance of globalization increases, so to does the role of figuring out the exact parameters of purchase decision-making in the target companies.
On Omni-channel
Of all topics discussed as important as they are the table came most alive when the omni-channel topic was raised. Driven by evolving consumer preferences and habits, omni-channel is the merging of online (e-commerce) channels with offline (bricks and mortar) channels. All retailers are trying to crack the code on the role of each, and how they can work together to build a unique proposition for consumers.
Nathalie Belanger, VP of e-commerce for Reitman’s put it best: “omni-channel is the single most important issue for retailers right now it’s no longer online vs. offline, it’s a merging.”
While online sales are still small in Canada, amounting to only about 5% in 2014 (or $25.3B), the US is more than double that rate (11%) and the UK is a stratospheric 30% of total retail sales. Canada is poised for tremendous growth in this realm, and the leaders discussed that this will be a source of growth for them moving forward as traditional retail sales continue to be flat, if not on the decline.
But the question emerges: for a retailer like Lord and Taylor or Harry Rosen with a vast network of bricks and mortar stores, what strategic role do they serve in the future channel mix?
There was no clear answer to that, but what was clear is that omni-channel presents a strategic differentiator for retailers, and an opportunity for brands to partner to build consumer experiences. According to Anushka Ramchandani from HBC, “retailers need a unique selling point superior to their competitors, and relevant to consumers to win. This is where omni-channel comes in.” Increasingly meaningful channel strategies that evolve with consumers and fit their lives are driving retailer loyalty and winning customer praise.
The consumer of today, and increasingly so of the future, will be desiring complementary experiences between offline and online. The role of flagship stores and treatment of bricksandmortar as “media” to showcase products will become increasingly important, but need to be made even more strategic. The industry can already see this trend gain momentum as retailers including Ikea and Best Buy adopt new omni-channel models that treat stores as pickup destinations.
It’s important to note that omni-channel isn’t important just to drive the top line, it is also presenting tremendous advantages to organizations’ cost centres. According to Egil Moller Nielsen, SVP of SmartCentres and head of Penguin Pickup, an innovative service that aggregates shipments from eCommerce sites into a central pick up location (yes, at a SmartCentre of course). Egil a former senior leader at Lego and Bodum says, “as much as 65-85% of total delivery costs are associated with the last mile.” By reducing these costs, significant pressure is alleviated from the online model.
“The last mile” is a supply chain term referring to the final stage the delivery network, typically from regional warehouse to the consumer’s home. Omni-channel allows for distinct cost savings allowing consumers to order online and pick up in store. As retailers continue to experience downward pressure on P&L statements, they will increasingly turn to this type of model to save costs and maximize the efficiency of their store network.
The Future of Retail is evolving faster than ever. For those in retail, tech, marketing, and all of the affiliates need to adapt and welcome the changes. Tech, globalization and omni-channel are the defining issues of contemporary commerce, and the companies that adapt quickest to this pace of change will be the ones to win.
Exact Media is a disruptor in the product sampling space. Leveraging the parcel distribution networks of the world’s top eCommerce retailers, Exact Media builds contextual campaigns that targets consumers and builds brand experiences. Exact Media works with some of the largest brands in the world with P&G, J&J, Unilever and L’Oreal.
