Retailers review marketing campaigns in shaken economy

An-already strained economy was crippled further by the Sept. 11 aftershock, as consumer confidence plunged, forcing Canadian retailers to review their marketing strategies, with many focusing on sales and promotions to lure shoppers.

An-already strained economy was crippled further by the Sept. 11 aftershock, as consumer confidence plunged, forcing Canadian retailers to review their marketing strategies, with many focusing on sales and promotions to lure shoppers.

Canadian banks have warned of recession recently, while several corporations have issued pink slips, leaving almost 20,000 people out of work in the airline and auto industries alone. This gloomy climate negatively influences the retail sector, according to Len Kubas, president of Toronto-based retail consultancy Kubas Consultants. ‘Nobody knows what GDP [gross domestic product] is, but when a neighbour is out of work, or a company is in financial peril, they will go into savings mode.’

However, Kubas notes that certain categories will suffer considerably more than others, and some may actually benefit from the current financial situation. ‘ [The bottom line] for supermarkets and drugstores will stay the same and may increase as consumers stop spending at restaurants.’

Mark Hindman, director of marketing for Montreal-based home improvement chain Rona, also expects consumers to dish out more cash for their own do-it-yourself projects. ‘People don’t want to travel now, because they don’t feel secure,’ he says. ‘They’re going to spend more money at home, because they want to have that comfortable environment.’

Indeed, having recently acquired the Revy, Lansing and Revelstoke banners, Rona will aggressively push its presence in the marketplace, says Hindman. While other companies cut costs amidst economic uncertainty last month, Rona launched a new radio, print and flyer campaign boasting that it’s the largest home-improvement chain in the country. The print effort, for instance, features a clamp, with the names of the various banners wedged in, as well as the message: ‘Together we’re stronger.’

Similarly, David Strickland, senior VP marketing at Zellers, sees a silver lining, as he believes consumers will become more price-sensitive, a trend that bodes well for the discount chain. ‘Based on the fact that we offer more value than others, I don’t think that our message would change that much,’ he says.

However, he admits that Zellers may ‘tweak’ its strategy, concentrating more heavily on price-point items in flyers and reviewing the immediate worth of each initiative.

‘We won’t be reducing marketing, but looking for ways to be more efficient,’ he says. ‘If there was something extra that wouldn’t make a huge impact in the short-term, then those sorts of things may be put off or changed in some way.’

Montreal-based fashion retailer Le Chateau will also reassess its marketing plans, after debuting its first transit shelter campaign in Toronto, Montreal and Vancouver for the recent back-to-school period. The company, which ran a poster of a stylishly dressed young woman, wanted to convey an image shift, as it is now zeroing in on females in their mid- to late 20s and not teens, according to Cara Vogl, marketing manager. ‘We are trying to show we’re not about Saturday night club-wear anymore.’

But in the current volatile marketplace, Le Chateau has to reconsider whether it will forge ahead with more ad buys. ‘Do you continue as if nothing happened? We’re all in the same boat with that and it’s definitely under review,’ she says, but quickly adds that it might actually be the perfect time to boost promotional activity. ‘There will be a lot of people pulling out of advertising, [but] that’s a great opportunity for others to surge ahead.’

For his part, Kubas warns it would be risky to scale back on communications, because stores must remain top-of-mind with consumers. ‘[Even for] a retailer of essential goods, it’s important to continue marketing,’ he says.

Certainly, those in the high-ticket furniture and appliances categories have already started highlighting promotions to lure consumers. Back in August, Edmonton-based The Brick extended the term on its finance offers from 12 to 15 months. ‘The furniture industry has been struggling since early spring,’ concedes Richard Byers, VP of marketing. ‘I think quite honestly we’ve gone back to the basics in that our marketing plans have focused on stronger offers to the customer.’

Similarly, Future Shop promoted a 72-hour sale early this month and will extend a sales period by an extra week in November, which it will advertise in ads on TV and in newspapers, as well as through its flyers.

‘What we’re trying to do is make it easy to buy product,’ says Jeff Schulz, VP, marketing and business development. ‘I don’t know that there’s a lot more we can do, other than making sure we’re keeping our expenses in line and that we’re running efficiently.’