The belated development of online shopping venues by Canadian Web portals and retailers has left the virtual shopping niche wide open for dot-coms like Richmond Hill, Ont.-based NorstarMall.ca.
And while some pundits believe the Web-based ‘mall’ model is not sustainable – as online consumers become more adept at surfing the Web, there will be no need for ‘virtual malls’ to act as aggregators – the nine-month-old online shopping mall is making inroads.
NorstarMall.ca, a division of SKG Interactive, wants to become Canada’s premiere Internet shopping destination. According to chairman and chief executive officer Paul Romanchuk, it is the ‘only true shopping mall out there today.’
‘The rest are nothing other than portals,’ he says dismissively, ‘and there are no relationships between those people and the tenants.’
NorstarMall.ca offers consumers access to over 175 Canadian retail partners – including Roots, HMV, Chapters, Holt Renfrew, Indigo Online and Future Shop, as well as more than 250 American e-tailers. The site, which is distinguished by its 3-D cybermall that allows visitors to ‘walk’ through a visual rendition of the mall, will soon be complemented by wireless shopping access.
Unlike most pureplay Internet companies today, Romanchuk says NorstarMall has forecast a ‘significant’ profit for its current fiscal year.
Michael Szego, a consultant with the J.C. Williams Group of Toronto, says if that’s true, it’s because there isn’t much competition in the online shopping mall segment. For although online portals like Canoe, Altavista, Yahoo!, Canada.com and AOL each have their own shopping sections, they generally consist of directories of e-commerce-enabled retailers.
‘Canadian portals have been slow to develop their shopping sites or at least build them up with enough retailers to make it worthwhile for (consumers) to go to those sites as a launch point,’ Szego says. ‘NorstarMall seems to have quickly built up a pretty impressive breadth of participants.’
Although NorstarMall may not have the traffic that its portal competitors do, the fact remains that Canadians are neophyte online shoppers (only 27% of Canadian Web users have ever made an online purchase), says Szego, so a mall becomes a great place for them to start. And he says NorstarMall has done a good job of breaking through the clutter and building awareness for its site.
Late last month, for instance, it advertised heavily on Global TV’s broadcast of the NFL Super Bowl, which drew an estimated four million viewers across Canada. Thanks to the broadcaster’s live insertion technology, ‘virtual’ billboards carrying the NorstarMall.ca URL were frequently displayed during the game. The day after the broadcast, traffic to the online shopping venue doubled, Romanchuk says.
Besides targeting Internet users who want to make their first online purchase but aren’t sure where to start, Romanchuk says NorstarMall will also try to reach women and teens, two rapidly growing Web audience segments. To that end, the online mall has added features such as a loyalty reward program, chat capabilities, virtual cash wallets for people who don’t have credit cards, an arcade/gaming section, and a heavy focus on fashion retailing.
In a few weeks, NorstarMall.ca will also launch interactive 3-D stores for Indigo Online and Holt Renfrew. The interactive sites, which will be promoted through a co-branded advertising effort, will showcase products and specials that shoppers will be able to ‘browse’ online.
‘If you’re at a mall – even if you go for something in particular – and you see something in the window of another store, that’s the shopping experience that 99% of the population does today in person. Now it will transfer online,’ explains Romanchuk.
‘It hasn’t been tried and nobody’s done it before,’ he continues, ‘because the people leading the charge on e-commerce up until very recently have been the technicians, not traditional marketers. There hasn’t been the opportunity for impulse buying online, and they haven’t been focusing on the largest demographic.’
Romanchuk says NorstarMall.ca will spend $6 million to $10 million on marketing and advertising over the next 12 months to build the brand and draw traffic to the site, which already counts 700,000 unique visitors per month (25% coming from the U.S.).
Toronto-based Holmes & Lee, NorstarMall.ca’s advertising agency, is currently developing a radio and television campaign to be rolled out in April – coinciding with the launch of several interactive stores on the site. Print ads in major Canadian dailies will launch just prior to the radio and television ads.
Sidebar: Malls debut ‘bricks and clicks’ venues
While virtual malls like NorstarMall.ca are starting to build awareness among consumers, Canadian bricks-and-mortar malls are fighting back with their own e-commerce offerings.
Recently, two of Canada’s largest mall landlords announced plans to convert their physical shopping malls into ‘bricks and clicks’ venues, where consumers will, among other things, be able to pick up orders that they’ve made online.
Cadillac Fairview, of Richmond Hill, Ont., says it will spend more than $30 million over the next four years to upgrade the Internet capabilities within its 46 Canadian malls. In partnership with Toronto-based BCE Nexxia, Cadillac Fairview plans to install public access multimedia kiosks and provide retail tenants with private wide area networks and high-speed Internet connections in an effort to promote Internet shopping services throughout its mall facilities.
The developer will pursue two separate online business models, says Ron Peddicord, senior vice-president at Cadillac Fairview. First, the company will facilitate the development of individual Web sites for stores that want to develop their own e-commerce strategies. Second, the company will develop mall-centric Web properties such as auction or clearance sites, where retailers will be able to list their merchandise.
In either case, the consumer will have the option of picking up their pre-ordered merchandise at the mall, or having it delivered to their home or office.
Toronto-based RioCan Real Estate Investment Trust, meanwhile, has announced a partnership with Toronto-based Brightspark to extend its 130 shopping centres into online malls, where retailers could erect their own storefronts or simply make a list of goods available. The joint venture’s first initiative is expected to launch in time for the back-to-school retail season. RioCan’s major tenants include Loblaws, Zellers, Shoppers Drug Mart and Danier Leather.
‘The people that are taking advantage of the fact that they have real, live, physical stores, and coupling that with an aggressive e-commerce strategy, are catching the leading edge,’ says Peddicord. ‘We believe that is the winning strategy. But the whole key to enabling that is for the retailers to know what they have in stock. That’s why we needed the infrastructure.’
The Cadillac Fairview initiative will begin with five malls: The Toronto Eaton Centre, Fairview Mall (Toronto), Fairview Pointe Claire (Montreal), Market Mall (Calgary), and Pacific Centre (Vancouver). The rest of its 46 malls will be fully ‘wired’ within the next 12 to 18 months, Peddicord promises.
