Retailers take stock of the issues

Lack of consumer confidence, retailer complacency and insufficient differentiation between competitors are just some of the challenges facing the retail industry in Canada, according to a cross-section of delegates to the Retail Council of Canada's spring convention and trade show.The three-day...

Lack of consumer confidence, retailer complacency and insufficient differentiation between competitors are just some of the challenges facing the retail industry in Canada, according to a cross-section of delegates to the Retail Council of Canada’s spring convention and trade show.

The three-day event, called ‘Fighting Back,’ is to be held June 6-8 at the Westin Harbour Castle hotel in Toronto.

With the conference featuring seminars on merchandising, staff training and motivation and database marketing, among other topics, plus speeches from experts such as business writer Nuala Beck and u.s. retailer Marvin Traub, convention organizers are offering delegates a money-back guarantee if they do not come away with at least one useful idea for improving their business.

For Doreen Menaker, national manager, corporate and marketing research at Sears Canada, the biggest challenge Canadian retailers face is convincing recession-weary Canadians to spend their money.

‘I think most people today feel the recession is still on,’ Menaker says.

‘Many have friends, relatives, neighbors who are unemployed or underemployed,’ she says.

‘Virtually all Canadian housesholds have less disposable income today than they did 10, 15 years ago. And with that does not come a psychology of spending, not even judiciously.’

Menaker says the solution is to reassure consumers that it is not irresponsible to spend money, provided they are getting good value.

For Ralph Trott, president and chief executive officer of The North West Company, a Winnipeg-based firm that operates 173 retail outlets throughout northern Canada and Alaska, complacency is the single biggest challenge facing the retail industry.

‘I think that Canadian retailers in general don’t appreciate just how tough the retail marketplace is going to be in the next decade,’ Trott says.

‘We have been well-insulated from [competition] for many years,’ he says. And I don’t just mean the senior management in the company.

‘I mean from the clerk stocking the shelves, to the cashier, to the store manager, to the operating manager, to the president.’

‘The competitive dynamic of the Canadian marketplace is changing rapidly and we are seeing a much stronger influence of u.s.-style retailing, which I think the Canadian consumer likes.’

Trott says for corporations to succeed in the ’90s ‘they must first achieve absolute clarity of focus about what business they are going to be in, and be able to convince everybody in their company that a) the direction is right and b) to achieve it is going to mean major cultural upheaval and change.

‘We, as retailers need to find ways of delivering the value proposition that we have chosen, in the most effective and low-cost manner we can achieve, or we are going to get blown out of the water,’ he says.

‘We can’t afford not to use that last paper clip. We can’t afford not to listen to the best ideas. There has to be that kind of dynamics in an organization, both to change on a dime and to make sure that your expenses are absolutely under control and declining as a rate to sales.’

Rod Smith, senior vice-president of operations at Black Photo, a photography retailer with 207 outlets throughout Ontario, the Maritimes and Western Canada, says the biggest challenge for Canadian retailers is to try to bring some excitement back into the shopping experience.

‘Consumers are very bored with what is going on in shopping malls right now,’ Smith says. ‘The whole sense of excitement or theatre they used to have is gone.’

He says Canadian retailers have been so battered by the recession, they are not spending money to build their business.

‘Our focus has very much been on cutting costs, saving every penny we can,’ Smith says.

He says he would like to see retailers put more effort into creating interest and excitement through imaginative merchandising.

He cites home furnishings retailer Ikea as one of the more successful examples in that respect.

‘I went to Ikea last week and it still is fun,’ Smith says. ‘It’s a rarity. What makes it fun is a lot of color, the use of space. It’s not just laid out in a linear fashion. You go around a lot of corners. There are lots of surprises.’

As far as Black’s is concerned, Smith says it is the best in its category, rating seven out of 10, ‘but we’re not wonderful yet.’

George Rivers, vice-president of marketing at Rogers Cantel Service Centres, a 48-location chain which markets cellular phones and other mobile communications products, says one of the key challenges for retailers is how to communicate to niche markets within the broader consumer population.

Rivers says the marketing tools that were used in the ’70s and ’80s to bring customers into the store are, by necessity, changing.

‘There are still the traditional mass media tools, but we’re looking at database marketing to a greater degree,’ he says. ‘Telemarketing, naturally, is a big tool. Word of mouth is, and will continue to be, very important.’

Philip J. Rosenberg, general manager and director of A&P Drug Mart, a combination food and drug store under the A&P and Ultra-Mart banners, with 24 outlets in Ontario, agrees niche marketing is key to survival.

‘I think target marketing, niche marketing, is becoming much more important – limiting the number of products in your store, knowing your customer base better, endeavoring to take greater sales from the customer base that you do have,’ says Rosenberg, who is also chairperson of the Retail Council’s 1993 convention committee.

‘Advertising today has to be a lot more specific than in the past,’ he says.

‘I think you’ve got to advertise to the customer base that you see as your potential customers, and make secondary and tertiary customers into primary customers.’

Mavis Rose, vice-president and senior director of stores and human resources for fashion retailer Club Monaco, says Canadian retailers have to work harder to differentiate themselves from their competitors.

‘In my own view, the challenge is being able to differentiate ourselves in the marketplace through our product, through our customer satisfaction, and the quality of the overall experience that we provide to the customer,’ Rose says.

‘Every retailer is working very creatively to come to grips with how to differentiate themselves, or at least they should be,’ she says.

Bruce McLaren, vice-president of finance at Aikenhead’s Home Improvement Warehouse, says the single biggest challenge for Canadian retailers is meeting the needs of the customers.

‘It’s deeper than customer service,’ McLaren says. ‘It’s listening to what the customer wants, whether it’s type of merchandise, level of service required, price or selection.’

The answer, he says, is three-pronged.

‘It’s empowering people at the store level to act on what the customer is saying to them, training them, and giving them the systems to work with that knowledge,’ says McLaren.