North West Co. nurtures roots

It's a long way from downtown Toronto - in more ways than one....

It’s a long way from downtown Toronto – in more ways than one.

While little known in warmer climes, The North West Company is something of an institution in the remote communities of Northern Canada and Alaska that it serves.

More than 200 years old, the company is today the largest retailer in the north – and as such, faces marketing challenges that its more southerly counterparts couldn’t even begin to imagine.

"Most stores are one of dozens or hundreds in a city, and they come and go," says Edward Kennedy, president and CEO of The North West Company. "We have a long-standing relationship with the community. There’s a mutual respect and a dependency that’s grown up over the years. In many cases, both lifestyle and quality of life would change if we weren’t there. That gives us a strong sense of pride and purpose, but it also has high obligations attached."

Founded in 1783, the company started out running trading posts in competition with those of the Hudson’s Bay Company. In the early 1800s, it was acquired by its rival, and for decades afterward operated as the Northern Stores division of Hudson’s Bay. Then, in 1987 it was purchased by a group of investors and senior executives, who changed the name back to The North West Company.

In all, the company operates more than 170 stores, under a number of different banners: Northern, NorthMart and Quickstop (in Northern Canada), as well as AC Value Center and AC Express Center (in Alaska). The stores, most of which offer food and other everyday basics, along with general merchandise and apparel, are located across the north – many in towns with as few as 300 people.

The North West Company also sells through direct channels, including in-store kiosks, a catalogue (Selections) and the Web. Sales last year totaled $650 million.

Kennedy, who was himself a Northern store customer while growing up in The Pas, Man., says the company’s customer base consists of three major segments: necessity or impulse shoppers; low-income customers seeking strong selection; and high-income customers, who tend to be short-term residents working in the North on a contract basis. More than half of its customers are under the age of 20, which means a considerable potential for future growth.

While the company employs conventional forms of retail advertising, such as weekly and monthly circulars, it isn’t always easy to ensure that the advertised product is actually in stock. Transportation to many northern communities is difficult at best, forcing the company to operate on longer lead times than most mainstream retailers would find acceptable.

"It can take six weeks to get product to some stores – and that’s working efficiently," Kennedy says. "In smaller communities, some stores get their freight by road, then by rail, then by ship or plane. Some people describe us as a logistics company as much as a retailer."

At the core of The North West Company’s marketing philosophy is a sense of responsibility to the community. Grassroots activities such as funding hockey schools, donating much-needed items to community organizations, distributing Christmas gift bags to households and sponsoring elders’ feasts or other special events are crucial to building and maintaining the retailer’s image.

"We have this long-term relationship with customers," Kennedy says. "To keep it alive, we give our store managers a lot of flexibility [when it comes to developing] community relationships and sponsorships."

The company does have rivals at the local level – usually co-op stores, or franchise operations like Home Hardware or IGA. But Kennedy says the real competition lies outside the community: It comes from those retailers that allow people to shop via telephone or Internet – and from those that northern residents may happen to visit on excursions southward.

"There is a large increase in people’s awareness of shopping options," he says.

Plans for the near future include beefing up The North West Company’s direct channels. Kennedy says the company is also hoping to broaden its current offerings, primarily through partnerships with other retailers.

The company’s Quickstop stores already have alliances with KFC and Pizza Hut. There are also some retailers from the south who sell through the Selections catalogue, and the company is hoping to develop more such partnerships, notably in the areas of clothing and consumer electronics.

"We have the locations, the in-depth customer database and the logistics to bring an assortment of merchandise from the south to customers in the north," Kennedy says. "We’ve got a real offer that allows us to go beyond food and everyday basics. It’s about giving people the ultimate choice."

Also in this report:

- Harry gets hip with casual campaign: Upscale retailer makes a play for younger, "new economy" business executives p.24

- POP progress slow but sure: With the promise of credible data, point-of-purchase is poised to prove its worth as a medium p.25

- Interactive merchandising on the rise: Just one of several trends apparent at GlobalShop 2000 show in Chicago p.25

- Traditional retailers can thrive in online world p.27

From Karen Howe’s dining table: Creativity, COVID and Cannes

ICYMI, The Township's founder gathers the best of the best campaigns and trends so far.

Cannes Base Camp

By Karen Howe

I’m attending Cannes from the glory of my dining room table. There’s not a palm tree in sight, yet inspiration and intel are present in abundance.

Cannes Lions is a global cultural pulse check. The social course correction in the wake of the murder of George Floyd and BLM has delivered far greater diversity in the judging panels as well as the work. And we are all better for it.

I’m proud to say that creativity defeated COVID, which speaks to its power. Great work and big ideas flourished, despite unimaginable odds.

The work from the past two years spans a vast emotional range. From the profundity of Dove’s “Courage is Beautiful” to the hyper exuberance of Burberry’s “Festive,” they are opposite ends of the spectrum, but each answered a need in us.

Take note, the ascendency of gaming cannot be understated. Smart brands have embraced the channel. It makes sense, because gamers participate to meet others around the world, not just to play. And they represent a huge and powerful community. That’s why QSR Wendy’s gamified their iconic gal in RPG’s Feast of Legends.

Burger King sponsored the unknown Stevenage Football Club, transforming the team into online heroes and vaulting BK into the fray at the same time. Once again, the brand embedded itself in culture.

The birth of gaming tourism arrived when Xbox snuggled up to travel guides and created a brilliant baby: a travel guide for gaming worlds. It, too, embedded itself in culture.

From the standpoint of social good, Reporter Without Borders showed how it worked with Mindcraft for its “Uncensored Library” to bypass press censorship, with Minecraft providing a loophole to a space where young people could be educated. It provided youth with a powerful tool to fight oppression: truth.

COVID changed us in unexpected ways. We learned how to pay attention again and there was a notable lack of 30-second commercials. Instead, longer format content thrived. Apple’s WFH was seven minutes long. Entertainment reigned king, so we find ourselves returning to our advertising roots.

Seeing competitive brands form partnerships was one of this year’s other great surprises. The brilliantly simple “Beer Cap Project” by Aguila to reduce binge-drinking saw the brand reach out to competitive beers to join in. Aguila put incentivizing (keyword: free) reminders to drink water, eat food and get home safely on its bottle caps from all sorts of fast food chains, ride-share co’s and H2O brands.

On a personal level, I’m so proud of Canada again this year. Given that it was two years of work from all over the world being judged, even making the Cannes shortlist was an accomplishment. Canada is herding in the Lions in tremendous numbers – and it’s not even over. Fingers are crossed.

KAREN-HOWE-PIC-higher-rez-300x263Karen Howe is a Canadian Cannes Advisory Board Member and founder of The Township Group