Alan Berdowski

Senior Director, Marketing and Strategic PlanningGrand & Toy DivisionCara OperationsAlan Berdowski joined Cara Operations in 1986, spending his first couple of years in its Swiss Chalet restaurant division, then moving on to direct the marketing group of its Harvey's fast food...

Senior Director,

Marketing and Strategic Planning

Grand & Toy Division

Cara Operations

Alan Berdowski joined Cara Operations in 1986, spending his first couple of years in its Swiss Chalet restaurant division, then moving on to direct the marketing group of its Harvey’s fast food chain.

When Cara acquired Grand & Toy in 1990, Berdowski, 34, went to the office products company to restructure and manage its marketing and merchandising groups, and to lead its long-term strategic planning.

Grand & Toy has 106 retail outlets from Ottawa to Victoria, and its commercial business operates from coast to coast.

Q. Has the arrival of superstores and warehouse operations invigorated your business?

A. Absolutely. Grand & Toy has always been focussed on its customer, but when there’s a new player in town it causes the whole company to tighten up. We’ve had to assess our strengths and weaknesses, as well as theirs, and refocus our operation specifically on the retail side.

Q. How have you done that?

A. Grand & Toy does over 60% of its business on the commercial direct delivery side so the retail has two purposes: one is to service a lot of fill-in of our commercial accounts, and the other is to go after the small home office and small business user.

With that particular customer we’ve had to tighten up some programs and re-educate [him/her.] For example, the price perception of a big box superstore is greater than in a smaller Grand & Toy store.

What the public didn’t realize was that we are actually buying far more and have much more buying power and pricing power than our small size store would indicate.

In addition to that, we do have a membership discount card that we’re pushing to all of our customers to a much greater extent.

The combined discount program that we offer in our stores, plus the most aggressive monthly flyer program in the industry, plus the fact that occasionally when the customer wants delivery to their place of business we offer it free versus the competition charging [for it] actually makes the value pricing at Grand & Toy extremely competitive with the warehouse for its small business customers.

Another factor is that the small business customer must buy full case loads at the superstore where we will honor the same pricing on individual units.

Q. More and more people have computers and fax machines at home, and Grand & Toy has moved into this area. Will they be something that you’ll only see in your larger stores?

A. Computer hardware-software accessories are becoming the new staple of the industry. We are going into a test in hardware in the near future in what will be our first supercentre, and we’ll evaluate the hardware side based on the results.

Q. Do you do a lot of branding of your own products whether on the commercial side of the business or for retail.

A. The Grand & Toy brand name is extremely important to us. Our objective is to have Grand & Toy product in all the commodity office supplies that [customers] use on a day-in and day-out basis.

We’ve packaged it under the HELP – High Efficiency Low Price – banner. We’ve seen excellent results with it being well over one-quarter of our overall business.

In addition to that, we have launched a program that is in a roll-out phase and will be coming to southern Ontario in the fall. It’s called the Guaranteed Delivery or Free program.

If the customer buys any of our Grand & Toy brand products – either comes to the store or asks for it to be delivered next day – if the product is not in stock and does not arrive we offer it free to our customer. [That's] on top of the Guarantee In Stock program.

Q. Moving on to something more general, everyone complains about the economy. What has Grand & Toy done, if anything, to cope with people buying fewer items from your stores?

A. Because we service business, we’ve been tied to the business cycle, and there’s no getting around that, so we’ve really been into a share war.

But what we have done over the past two years, we’ve incurred about a 20% deflation that we’ve passed on to our customers, but we’ve stuck behind the service commitment.

In fact, we’ve improved on our back order rates, we’ve stuck behind our guarantee of satisfaction. There’s absolutely no hassle if a customer wants to return an item.

Q. The new 12,000-square-foot store in north Toronto. Is this a one-off proposition because of the competition or is this an indication of the future for Grand & Toy?

A. We’re by no means going to walk away from the over 100 traditional-size locations which are about 3,000 to 4,000 sq. feet on average.

In addition to testing a 12,000-sq.-ft. supercentre, we’ll also be testing a 7,000-sq.-ft. store. We are currently in construction on a renovated 4,000-sq.-ft. store. We feel that there will be a requirement for a mix of stores in downtown, urban centres.

The convenience of smaller stores is critical, and once you get out into some of the suburbs, larger stores, strip mall types of centres will be important to the mix because some customers do like the big box approach.

Q. So you’re not convinced warehouse-style operations are entirely the right way to go?

A. There are some disadvantages with the supercentre concept.

Customers have told us that some of the stores are too large, they’re harder to shop. We feel you have to pick your markets carefully and there will be opportunities for larger size stores.

Our research has indicated that 12,000 [square feet] will do the job properly, but there is definitely a need for smaller stores as well.

In fact, the trend with supercentres in the u.s. now, they are in development of what they call express stores, which just so happen to be 4,000 square feet.