Mark Ferris is director of retail experience and Matt Cammaert is president of Cheil Canada.
Clearly Contacts, the leading global manufacturer and retailer of high quality glasses and contact lenses, recently posted first quarter gross profit of $22.6 million, bucking the trend of flat or declining growth faced by many other retailers and manufacturers.
Mark Ferris, left, and Matt Cammaert of Cheil Canada
There is a pertinent figure beyond this headline – Clearly Contacts only opened their first retail location in Canada in 2013 and as of October had only nine retail stores in Canada and Sweden. That’s 13 years after opening for business, and it sells approximately 7,000 contact lenses and glasses a day.
This was a brand born online and its success shows the company understands that shopping has become a digital experience. In South Korea, where Cheil is headquartered, the change in shopping habits is staggering and offers a salutary view of where the U.K. high street, American Wall Street and Canada’s Bay Street could be heading. In 2011, according to a Korean Chamber of Commerce and Industry survey, only 11.9% of Koreans shopped using their smartphones. By 2013 the figure was 62.6%.
According to Statistics Canada, in 2012 83% of Canadians were online. Of those, only 56% made purchases, but the value of online orders by Canadians reached $18.9 billion – up 24% from 2010. This will only continue to rise.
Smart players like Clearly Contacts have realized that we don’t shop like we used to. They’re starting to understand that real people – you and I – are constrained by not one, but three budgets when we shop. Of course there’s the financial one, but there’s also the time budget and, increasingly, a frustration budget – if something’s not easy and straightforward, we move on.
All three of these elements add yet another layer of complexity to what is no longer a single or linear path to purchase. Today, shopping is an intertwining journey of searching, shopping and sharing – all fueled by mobile. But the complexity we face in retail is not an excuse. We must deliver simplicity in our retail experience. If we don’t, we will exceed our shoppers’ frustration budget.
Technology is simplifying shopping. Take show-rooming for example (using physical stores to investigate purchases eventually made online). It’s a serious dilemma for chains such as Best Buy, especially as Amazon expands its product offering in Canada and beyond. Although the purchase decision is something like a zigzagged line (arguably it always has been), the value, ease of acquisition and satisfaction have never been better.
This is not new. Even one generation ago, shopkeepers knew that people would be shopping around for the best value. The same can be said today, but technology has made it much easier to shop around at home or in-store.
But there is no linear path – shoppers go from online to offline interchangeably, and category behaviour never looks the same.
This shift has fundamentally skewed the price/quality value equation. Whereas once it was limited to price x quality, now it is (price x quality) ÷ convenience. And technology is constantly resetting our expectations of convenience. Every time we experience something new that makes our shopping experience more convenient or personal, it resets our expectations of what other retailers should be doing for us.
Does this fast-moving, ever-blurry landscape mean the end of Bay Street? In its current form, certainly, but not completely. Fulfillment expenses and delivery experiences are vastly changing (as Canada Post stated in its 2012 annual report, as it begins “redefining our role in the new economy;” it’s building a 700,000-sqaure foot processing plant in Vancouver to handle e-commerce shipments from the Pacific Rim).
Sure, the customer is king, and he/she is a more demanding ruler than ever before. But lessons from the demise of many well-known retailers in the past few years are being learned. We know that retailers holding on to formats that have outgrown their relevance are drinking in the Last Chance Saloon. Stores still have a big role, but only if they serve the customer and are relevant to how they want to live and shop. They have to put the person at the heart of the equation and activity has to inspire search, shop and share among consumers.
Layering search, shop and share with the new “budgets” – financial, time and frustration – together to deliver change is what could make part of an agile future-facing retail landscape.
Conversion and retention of this type of behaviour is the next customer service model and accepting these expectations of these customers is the understanding of this new generation of consumers. Despite its dazzling display in the past 12 months, Clearly Contacts realizes that it is still learning in the omni-channel age with the continued commitment to build out their retail strategy in Canada, Finland and Norway.
It is a lesson other retailers would do well to notice.
