Weathering the impending store bomb

With Target and other big U.S. retailers set to hit Canada, strategy asked our retail marketing gurus to spend a day sharing their thoughts via email as to what will transpire.

With Target and other big U.S. retailers set to hit Canada, strategy asked our retail marketing gurus to spend a day sharing their thoughts via email as to what will transpire.

Ken: Target comes to Canada! It’s going to make some consumers pretty happy, and not just because they can now shop at Target. My take is that the retail sector is about to change in ways beyond cheaper designer-like clothes.

Tony: Target is a category killer based on a simple insight – woman love a treasure hunt. At Target they discover affordable fashion, accessories and goods attached to highly recognizable names like Stella McCartney, Michael Graves and Jean Paul Gauthier.

Ken: Target also has a small-footprint fresh grocery format, a “super” discount format and even a distinct design for rural versus urban centres that they are testing. Not only can women treasure hunt, they can do it in the format that best suits them. 
And there’s even more: The Bay’s willingness to sell Zellers suggests it’s moving even more upscale.
Downtown malls anchored by Target also just became more fashionable. Winners just got new competition, Walmart’s
pursuit of more brand-conscious upscale shoppers gets tougher, even Shoppers Drug Mart’s cosmetics section will feel some impact: that’s a lot of disruption caused by a single entrant.

Tony: Add to that a robust economy and currency, relative to the G7, and Canada becomes a gateway for other retailers running out of runway in the U.S. marketplace. 
Markets like Southern Ontario are already oversaturated, and we haven’t even factored in the growing impact of “clicks” and online auctions or group buying.
It could be a bloodbath for retailers, and the manufacturers who depend on their shelves for volume. 
The short-term winner will be the consumer, with pricing wars a hedge against inflation.
But in the not-too-distant future? A lot of boarded-up storefronts.

Ken: Yes, every boom gives way to a rationalization or culling of the herd. But, until then, what a great time to be in marketing!
While I doubt any of the U.S. retailers will change their stripes as they move northward, there’s going to be a lot of tactical dollars, media buys and promotional activity generated.  Do you think agencies will bulk up and then let people go, or will we see a lot of freelance work suddenly become available?

Tony: This will be no skip through the park or the friendly sparring we see today.
This will be a retail war and it will be long and bloody.
The prize isn’t a share of wallet spike delivered through a door crasher or an advertising campaign, or for an agency,
a retainer. This is about winning sustainable market share.
The winner(s) will be the few that use intelligence gathering on Canadians by segment, geography, ethnicity and behaviour as their DNA; insights and strategy as their lifeblood; and creativity that captures the attention of a jaded consumer. 
They’ll need to be so operationally focused they can consistently sell and deliver on their promise – their reason why – across store operations, staff and merchandise, social, digital, retail and mass media.
Agencies that can enable this ecosystem will soar, the others will be casualties.
Any retailer or agency, regardless of size, can have or be had in this marketplace.

Ken: Not the kind of stuff you “buy” on a contract basis, is it?
That tends to tilt the scales in the direction of those with the courage to make some big bets on developing competencies or those with the intelligence to find new ways of making the agency business more productive and efficient – which is not the same as laying people off.

Tony: This is the kind of marketplace where destiny is a matter of choice, not chance. What a wonderful time to be in the game.

Tony Chapman is the CEO of Toronto-based agency Capital C; Ken Wong is a prof at Queen’s University and VP, knowledge development, at Level 5.