Holiday wars

Amid a cold economy that has consumers keeping a Scrooge-like hold on their purse strings, strategy asks Canada's retailers how they're wrangling shoppers this season

Will Santa bring us all the goodies he brought us last year? Not really – he’ll still arrive, just not with an overzealous bag of gifts. But Canadian retailers don’t seem to be in a mood to wait for generosity to strike, and, with an aggressiveness not seen in past years, this holiday season they’re flexing their marketing muscles to convince Canadian consumers to dig under the mattress and get shopping.

As a wave of uncertainty washes over the Canadian psyche, consumers seem less inclined to spend. The consumer confidence index dipped to its lowest level in 26 years, said the Conference Board of Canada in a survey of 2,000 adults conducted in October. The last time it was this low was the third quarter of 1982, when the Canadian economy was in the midst of a recession.

‘There is no doubt that with the economic conditions across the country, sales across Canada this holiday season will be softer than last year. We are still expecting to see growth, but likely in the 2 to 3% range,’ says Derek Nighbor, SVP national affairs at the Retail Council of Canada, which represents over 40,000 retailers across the country. (Last year retail sales during the holiday season grew 5.5% over 2006′s numbers.)

Experts such as Nighbor say Canadians aren’t going to shop the same way this season, and retailers will have to understand what makes them tick in order to come up with creative solutions and marketing approaches. ‘As the economy softens, Canadians tend to be more sales-conscious,’ says Nighbor. ‘Also, fewer trips to the stores mean that once they are in the store, you want to maximize your time with them.’

The price consumers are willing to pay for gifts this year will play a huge factor, as people are worried about their investments and jobs and will tend to adopt a wait-and-watch attitude that could result in the postponement of discretionary or overindulgent purchases.

‘Consumers will ask themselves, ‘Do I want that fancy plasma TV, or can I do without it this year?” says Prasad Rao, business director and partner at Toronto-based Rao, Barrett and Welsh. Rao says that while his agency has not been affected, he has seen some clients’ winter budget allocations decrease by 15 to 20%. As well, clients are asking for more return on investment. Reginald McLay, Canadian Tire SVP marketing and business development, says the retailer hopes to stretch its dollar so it feels like it’s spent $1.50.

Interestingly, while some marketers were candid about pricing playing a big role in their strategies, others preferred to ‘offer value.’ And some manufacturers, such as Toshiba, were even more candid when asked about their price strategy. ‘Toshiba will not be decreasing the price of its products, as we are as competitive as we can be,’ maintains Sherry Lyons, director, marketing communications at Markham, Ont.-based Toshiba Canada. ‘The exchange rate has a big impact on our cost structure, and if anything we may need to see a price increase. This will be a challenge, as it is not something retailers or consumers are used to.’

Experts say big retailers will emphasize promotional pricing and even adopt the loss-leader strategy. Flyers are also playing a bigger role. And though online sales in Canada are only roughly 2% of overall retail sales, retailers such as Future Shop and Best Buy are leveraging third-party online advertising to drive traffic to their own websites and stores.

‘As the same number of retailers chase a few dollars in a recession, competition becomes fiercer,’ says Robert Daniel, president and managing director of Maritz Research, which conducts an annual holiday shopping survey of 2,000 Canadians (this year’s was not complete at press time). Daniel, who advises clients in the U.S. and Canada, says, ‘Retention is the name of the game, as it is always more expensive to acquire a new customer than to retain an existing one during a recession.’

That puts more pressure at store level, as many consumers aren’t satisfied with their in-store experiences – especially in the U.S., where the recession has started, says Daniel. A survey done by Maritz in Canada shows that Canadians weren’t willing to wait in long check-out lines, and Daniel says that’s where a retailer can really make a difference with well-trained staff and payment-processing technology that helps alleviate frustration.

Good rewards programs also go a long way to persuade when the going gets tough. Best Buy launched a loyalty program last year which has swollen to a million consumers, and one of the best things that it provides, says senior communications manager Scott Morris, is preference to its members for the biggest event of the year – Boxing Day.

It’s also a good time to play to historical strengths. The Body Shop, which has over 120 shops in Canada and 2,400 boutique outlets in 60 countries, hasn’t shaped its strategy for the downturn, but it does have a new tagline this season – ‘Feel festive, give fair’ – reinforcing its commitment to fair trade programs.

‘The goal is to communicate to the customer who we really are,’ says Shelley Simmons, public relations director, Americas, for The Body Shop. ‘Our loyal customers know what we stand for, but we would like new customers to also understand.’

Simmons says people are looking for products that give more than just an immediate benefit. ‘To buy something where somebody benefits, or you know that the packaging is not going in the trash can, creates a feel-good factor.’

Here’s what some of Canada’s major retailers have planned for the holidays.

Future Shop delivers tech expertise with a digital push

Anita Sehgal, director, customer experience, at Burnaby, B.C.-based Future Shop Canada, says this holiday season the retailer will focus on delivering the message that it has the best prices and the best selection of tech gifts, and that its product experts can help consumers sort through it all.

The company’s brand ads this holiday build on the creative concept of earlier ‘Tech Club’ campaigns, wherein a group of tech-loving guys create tech heavens in their basements. In the new seasonal version, ‘The One,’ one goes to the store to find the perfect gift for his girlfriend, and receives guidance from a product expert on an iPod Touch. The guys are impressed, and good-natured ribbing ensues about how serious the relationship must be, based on the size of the iPod purchased. This spot is being rotated with product- and price-focused spots, with one of the characters integrated at the front end of each spot and a donut in the middle to feature weekly offers.

November until Boxing Week is the busiest time of year for Future Shop, with 25 million Canadians coming into its 136 stores in that time.

And spokesperson Susan Kirk reveals that online is also garnering high traffic: ‘On Boxing Day, futureshop.ca has three million customers shopping, and we estimate that the site receives an average of 300,000 visits daily over the holiday season,’ she says. As well, the company has over one million subscribers to its weekly e-newsletters.

This year there has been a greater drive to send that message more effectively through online media, says Sehgal, who adds that the company will be ‘leveraging flash banner advertising on portals and gift guides in order to drive traffic to its website and stores.’

Future Shop is also using the website to drive further business. An updated tool on futureshop.ca is an online gift finder called the Gift-o-meter, which, says Kirk, ‘helps customers navigate the right gift idea for all types of people: tech-shy, tech-flirt, tech-savvy and tech-wild.’ Customers can move a slider to the appropriate place based on the receiver’s level of tech knowledge, and a list of gift suggestions is provided. If the consumer clicks on a specific gift, it will show the product details as well as customer ratings.

To generate more buzz this year, the retailer is introducing a user-generated video contest called ‘Wish your way to 10K,’ in which consumers can upload a video of their holiday wish list for a chance to win a $10,000 Future Shop gift card, says Kirk.

And Sehgal says it is also using more social media. The official Facebook fan page provides information on events, promotions, contests and specials, and hosts how-to videos submitted by customers to help others with their technology challenges.

Best Buy owns ‘best’ and plays the loyalty card

Burnaby, B.C.-based Best Buy Canada (which also owns Future Shop) will focus on the basics this season. ‘Our customers are looking for a stress-free environment because of our blue shirts [non-commissioned associates],’ says Loveena Chera, director of marketing, Best Buy Canada. ‘We really focus on this whole no-pressure environment, and our customers respond.’

Chera says the company will focus on the shopping experience while delivering the hottest deals, and will communicate that to consumers every week through integrated campaigns – including online, TV and radio pushes. As well, its lowest price guarantee will be emphasized. ‘We are not in panic mode or being super-reactionary, and will focus on those core ideas.’

Since November, weekly flyers have showcased gifts such as Blu-ray DVDs, digital photo frames and GPS systems. The company is also venturing into advertising on its own website as well as third-party sites like sympatico.msn.ca and yahoo.ca and online networks like Olive Network to get the word out about promotions.

This year the tagline is ‘The best gifts get the best reaction’ – a concept conceived back in 2006 which revolves around shopping for great reactions from those on your gift list.

‘The idea is playing on the notion of the ‘best gift,’ and seeing that our name is Best Buy, we can own that,’ says Chera, hoping that the emphasis on ‘best’ will help Best Buy break through the clutter and increase brand recall for consumers, even as they are bombarded with similar messages in the marketplace.

An online campaign also focuses on the gift reaction, similar to the TV and print ad creative, and weekly promotional offers around electronics or entertainment gifts will be flashed on the website.

Best Buy will also emphasize great deals for its loyalty program members (about one million) at its Reward Zone. Scott Morris says the perks include dibs on the best deals and preference for some Boxing Day items.

In 2009, Best Buy will take advantage of an opportunity in the cellular space with the launch of smaller 1,800-sq.-ft. Best Buy Mobile stores in shopping malls in the Toronto area – Vaughan Mills, Square One and Fairview Mall. They will sell mobile plans, accessories, digital picture frames and GPS navigational tools.

Morris says the company also hopes to gain a bigger share of the $2.5-billion gaming business in Canada. ‘We have about 33% of the overall consumer electronics market between our two brands, Future Shop and Best Buy,’ he points out.

And it’s continuing to expand. With 53 stores in Canada as of October, Best Buy added virtually one store every week in November in places such as Nanaimo, B.C., Hamilton and Belleville, Ont., Rosemère, Que., and Southeast Edmonton and Grand Prairie, Alta.

Sears ups the ante with a price drop push

Sears Canada does not mince words in this economic climate. ‘We will not wait for the economy to take its course, but will enable Canadians to stretch their budgets during these uncertain times,’ says spokesperson Vincent Power. This holiday, the company is pushing an aggressive budget relief price drop to get more consumers through its doors.

Every week, Sears will drop prices on products and categories, and the offers can be combined with other savings programs, such as Scratch & Save events or Super Saturdays. ‘We will be more aggressive than we might have been in past years,’ says Power, who adds that the company began the effort as it saw consumer confidence dipping in the fall.

The promotional program is being splashed across the four million flyers the company delivers weekly, and will also apply to online consumers, who get additional deals. Sears’ online business has experienced double-digit growth in the past two years, says Power, who adds that research suggests customers ‘who shop the most with Sears are also the ones who use its multi-channels to make their shopping decisions.’ The aggressive message is also being conveyed to thousands of shoppers via newsletters – and Sears’ newsletter base has grown 400% in the past two years.

To increase sales through its Christmas Wish Book (almost four million were printed this year), and to promote catalogue sales, Sears added a contest at sears.ca. Consumers guess the exact number of times Sears’ Christmas mascot – the Snowball – appears in the Wish Book to vie for a $10,000 prize.

Sears is sticking to last year’s holiday ads, ‘Hugs and Wishes,’ a feel-good campaign about getting big hugs in return for gifts.

Power says the budget relief price drop program could continue for 2009 if consumer confidence is still down substantially. ‘We are not going to wait for the good times to come back, but will engage with the consumer in slower times,’ he adds.

Canadian Tire combats Scrooge impulses with Santa nostalgia

Toronto-based retailer Canadian Tire’s marketing team is gearing up for the largest, most extensive and aggressive Christmas program in its 86-year history.

‘We’ve looked at our product mix and our ad campaigns, and we’re going to have great pricing and value – and it will be our strongest program ever,’ says Reginald McLay, who has been with the company for over 17 years.

The value proposition is going to be driven harder this year, partly due to the economic climate, he says, and pricing is one of those elements. The retailer is featuring promotional deals, offering products at a range of price points and coming up with innovative high-end products in its four core areas – living, driving, fixing and playing.

McLay says the brand has connected with the consumer at both an emotional and a rational level, in large part due to its new marketing strategy, which increased the nostalgic quotient. The new ad campaign by Taxi, ‘For Days like Today,’ for instance, showcases six vignettes depicting Canadian life (such as boys playing street hockey from morning to night), subtly conveying the retailer’s product range. And as McLay explains, ‘It can work when the stock market plunges 800 points, or we can adapt it to Christmas, when it’s days of gifting or staying with family.’

Over the holidays, 17 separate creative treatments – a mix of brand ads, product ads and testimonials from consumers – are hitting primetime TV and drive-time radio. Transit shelters and cinema preview trailers are also being explored.

The retailer is also using e-flyers, which have an increased readership of 65% YTD, as well as traditional flyers (about 11.5 million weekly) to drive traffic into stores. The flyers were revamped to match the TV campaign, with the tagline conveying the appropriate mood, such as ‘For days of gifting’ for its new line of gifts for the holidays.

Looking ahead, the company is exploring new places it has not traditionally ventured, with smaller stores (14,000 to 18,000 sq. ft.) in tiny towns such as Deer Lake, Nfld., Hearst, Ont. and Athabasca, Alta. As well, it’s opening Smart Stores in Nepean and Welland, Ont., this year.

McLay says these next-generation stores sport a new exterior look and a more attractive layout, and showcase their strengths in the automotive and tool business, while a big sports and recreational section will reflect category authority. The retailer is also adding, for the first time, a small ready-to-serve food section to drive traffic to the stores.

And what does he see for 2009? ‘If you can let me know what the Canadian dollar’s going to be, I might be able to tell you,’ he jokes. Then he adds, more seriously: ‘We, like most retailers, have to be positioned for flexibility and are cautiously optimistic in the future.’

Toshiba interrupts the holiday hubbub with unconventional antics

Toshiba Canada, which usually adopts a serious brand image befitting a maker of laptops and TVs, is set to ‘make people smile’ and break through the clutter of holiday ads with a campaign designed to go against the conventional ‘surprising your loved ones with a gift’ messaging.

The 30-second TV spots called ‘Spoil the Surprise’ explore the notion of telling loved ones in advance exactly what they are getting. ‘We all have the experience of getting gifts that are not exactly suited for us, but when times are more challenging – and it’s going to be a tougher year for all consumers – it’s even more important to make sure our dollars are spent in the most beneficial way,’ says Sherry Lyons.

Starting in mid-November, two commercials created by Zig hit primetime TV. One of the ads, explains Zig’s creative director Kevin Lynch, opens with a voiceover: ‘This laptop is for Geoff Berg of Mississauga.’ Immediately, arrows and spotlights point to several wrapped presents, one of which keeps beeping, ‘It’s a Toshiba laptop, it’s a Toshiba laptop.’ Product features then unfold, and the tagline points consumers to spoilthesurprise.ca to learn more.

Also, by driving to the website, Toshiba wants to educate consumers on the wide range of options within the TV and laptop product lines, says Lyons.

To attract gaming enthusiasts, the company is also on Facebook, and this holiday season Toshiba is increasing its presence in malls.

Lynch says the unconventional approach is needed, especially for high-end gifts. ‘Every marketer is gunning for the same dollars, and you have many sales messages which are similar – ‘We have the perfect gift for everyone on your list.”