In today’s e-commerce world, retailers live and die by their conversion rate. Because small changes to a conversion rate can result in massive changes to their bottom line, e-commerce managers are always searching for technologies that increase the number of sales per 100 visitors. After all, for a multi-million dollar retailer, an increase in conversion rate from 2% to just 2.2% is a very big deal.

While there are always e-commerce micro-trends that have seemingly all retailers jumping on board, there is one macro-trend that will always rule them all: Pricing.

Pricing is the single most important variable in the consumer decision-making process – be it online or off. In these economic times, comparison shopping is on the rise. With consumers becoming more savvy to the countless retailer options available when shopping online, retailers are having to raise the bar of quality, while pricing as competitively as possible. Consumers are looking for as many ways to save as possible, without sacrificing quality, which means they are taking advantage of coupon codes, daily deals, comparison shopping engines and other ways to save money.

Taking that into consideration, many companies offering new technology to support e-commerce retailers have emerged. The most successful have found effective ways to capitalize on the psychology of online comparison shopping, ultimately converting shoppers and increasing revenue.

One such company, PriceWaiter, has proven to increase conversions for e-commerce retailers by offering a personalized pricing platform that places a “Name Your Price” or “Make An Offer” button on sites. This button, usually located near the price, allows retailers to collect offers from comparison shoppers before they leave a retailer’s site. The retailer then uses PriceWaiter’s platform to efficiently manage the offers, whether they receive thousands or just a few.

PriceWaiter ‘s product is evolving quickly and focused on providing retailer partners with top-notch service. Bijan Dhanani, a marketing and product manager for PriceWaiter, shared insight into what sets his company apart. “After a successful round of funding, the PriceWaiter team has launched several major features,” said Dhanani. “One of the features adds support for international retailers and the other is an innovative new service called Exit Offers, which is a conversion tool that uses mouse-tracking technology to determine when users are about to leave the site, and then entices comparison shoppers to make an offer before they leave.”

The following infographic by SMS Store Traffic (www.storetraffic.com) includes a list of North America’s top malls by sales per square foot (we’ll be updating our own article on this topic shortly) as well as a list and description of of the world’s largest malls. Interestingly, the world’s largest mall (in China) is still largely vacant more than nine years after it was built. The infographic concludes with some interesting facts on world shopping centre development. 

By George Anderson, RetailWire

Canadians have had a lot of problems with Target since it first opened for business in their country in 2013. Aside from out-of-stocks, Canadians have been particularly peeved that Target’s prices in Canada have been higher than in the U.S. Now, however, Target has an independent source to assure consumers up north that its prices are not only in line with what Americans pay, but are lower than what Walmart charges.

According to a market basket study of 33 identical national brand products conducted by Kantar Retail, Target Canada’s prices were 3.9 percent lower than Walmart. Customers who paid for these goods with their REDcard would have paid 8.7 percent less than Walmart.

In the company’s second quarter earnings call, Kathee Tesija, Target’s chief merchandising and supply chain officer, said, “While both our own studies and external surveys show that we are already priced very competitively, the team has made decisive changes to ensure we respond even more quickly to pricing dynamics in the Canadian marketplace, including comparison shopping our prices versus competitors on more items more frequently, implementing enhanced tracking of competitor promotions to ensure we react quickly, and implementing a price match policy, which includes online and local competition with a more flexible process for guests.”

Kantar’s findings may not be enough, at least not yet, to convince Canadians of the deals to be had at Target, where Robin Sherk, director of retail insights at Kantar, told the Financial Post, the chain faces an uphill battle.

Target does appear to be making progress in Canada. The chain reported sales had picked up substantially from the first to the second quarter.

DISCUSSION QUESTION: What will it take for Target to convince Canadians who are no longer shopping it its stores that it has fixed its problems? Are you more or less optimistic now than earlier this year that Target can get it right in Canada?

Dick Seesel, Principal, Retailing In Focus LLC: Short-term, it’s an important tactic for Target to advertise its price advantage vs. Walmart, especially when using the REDCard. But this works only as long as Walmart chooses not to respond. History suggests that Walmart will not sit still for very long being beaten on price by somebody else.

Long-term, Target has a branding story to tell that helps differentiate itself from Walmart. It has the same challenge in the U.S. right now, and the new CEO recognizes that less focus on food and consumables will shift the spotlight toward Target’s core strengths. But before any of these steps can be put in place—short-term or long-term—the execution of in-stock rates must continue to improve.

Bill Davis, Director, MB&G Consulting: Much more than a basket of only 33 national brands being priced lower than Walmart. Target could offer a price match, and I am sure they considered that, but they probably decided this wouldn’t be feasible from a business standpoint. I don’t think Target has the chops to get into a price war with Walmart, but we’ll see how this plays out.

Steve Montgomery, President, b2b Solutions, LLC: Old retail strategy—make friends and then make money. Making friends is not possible if you can get them into the store and the universal way of doing that is via pricing. This is especially true if you are perceived as a “value” retailer like Target.

The other part of making friends is not disappointing them. Target did that by having higher prices than customer expected and, perhaps more importantly, having products out of stock. Someone might forgive you if your price is a little higher than anticipated, but when they made a trip to buy items and find that they are not there, that takes a greater degree of forgiveness.

Walmart will likely move to counter Target’s pricing claims but it won’t matter if Target doesn’t fix its out of stock issues. They will have exceeded most of their customers’ forgiveness quotient by making a dual promise they couldn’t fulfill.

Brian Numainville, Principal, The Retail Feedback Group: Competing with Walmart on price isn’t a winning strategy. Focus needs to be more on how Target can differentiate their offering based on their core strengths. Otherwise, Walmart will simply adjust on pricing and Target will once again be at a disadvantage.

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Through a special arrangement, presented above is the discussion from an article originally published on RetailWire. Read the entire RetailWire discussion here: http://www.retailwire.com/discussion/17798/target-low-balls-walmart-in-canada

By Eric Blais

Like many U.S. retailers entering the Canadian market, Target expected that its reputation would precede it. It created hype and high expectations promising Canadians that they would not be offered a Target Lite version of what they’d experienced south of the border.

Creating expectations.

Much of Target’s strategy leading up to its first store opening was therefore predicated on a majority of Canadians being already favourably predisposed to the retailer and eager to finally experience “Tarjay” closer to home.

“No one was more excited about Target entering Canada than the Canadians themselves” according to retail advisor Anthony Karabus quoted in a Fortune article last March. 

Canadians were giddy but what about French Canadians living in Québec?

Findings from a survey of 1,000 Canadian women by Headspace Marketing indicate that Quebeckers were significantly less familiar with Target than Canadians in the rest of Canada when it launched last year. Today, only a quarter (23.7%) of Quebec women have ever shopped at a Target store in the U.S. compared to more than half (54.4%) in the rest of Canada (and as high as 77% in Manitoba and 62% in B.C.).

This might be good news for Target in Québec as the bar was likely not set as high. While Canadians in the ROC were expecting the bright clean stores, wide aisles, trend-right merchandise, great guest service, short checkout lines and unbeatable prices they experienced in the U.S., three in four Quebeckers had never experienced this while shopping in the U.S.. Instead of a Target Lite, Quebeckers may have simply discovered a better Zellers where the lowest price is not always the law on some items.

Adapting Target’s store opening strategy for Québec.

While the Target brand did not have the same level of awareness and familiarity in Québec as it did in the ROC, the retailer opened  its stores in the province by adopting essentially the same formula (translated in French of course) for its launch. It took some steps to speak more directly to Quebeckers through events featuring local celebrity Mitsou posing next to Bullseye – Target’s bull terrier mascot. It leveraged associations with local designers and taste makers like Sakia Thuot. And the retailer ensured it complied with Quebec’s French language laws across its operations.

Failure to exceed expectations.

First impressions are everything. And when you’ve so publicly raised the bar, you better not just meet expectations. You need to delight the folks you’re calling your “guests”. It’s worth noting that Target has had to call its guests “clients” in Québec where the French equivalent – invités – would have been a bit too personal. Our survey reveals that nine in ten Canadian women were guests at a Target store at least once in the past year. This is consistent across the country. 

We asked these women shoppers to rate their overall experience. Despite all the negative publicity about Target’s failed launch in Canada and the public apologies, six in ten Canadian women (61.7%) rate their experience as either good or very good and only 7.3% rate it as bad or very bad. Still, Target appears to have only managed to delight one in five shoppers with 21% rating the experience as very good.

Quebeckers are unsure about Target.

They are less likely than Canadian women in the ROC to rate their experience at Target favourably. 52.1% of Quebec women rate it as good or very good compared to 64.7% in the ROC. Almost one in ten Quebec women rate their experienced as bad or very bad. What is most revealing however is how many Target female shoppers in Québec rate their experience as neither good nor bad. 38.4% in Quebec compared to 28.7% in the ROC. 

With fewer Quebeckers already familiar with the Target experience in the U.S. and a launch strategy that in many ways relied on its reputation preceding it, many Quebeckers may not know what to make of Target at this point. This is both an issue and an opportunity for Target. It’s an issue because if you don’t define your brand, someone else will do it for you. Target needs to be crystal clear about what it stands for and how it’s different from other shopping destinations in Québec. The experience is either neutral or bad for one in two Quebeckers who have shopped at Target. It’s also an opportunity. Quebeckers are more likely to be neutral about a brand they knew less about before it opened its doors, promised much and wasn’t able to deliver fully on its promise. The data suggest that Quebeckers are giving Target the benefit of the doubt despite rating their experience so far not as favourably as Canadians in the ROC.

Giving Target another chance.

We asked Canadian women if they were planning to shop at Target this fall given the retailer’s public pledge to fix its inventory problems and offer more competitive prices. Canadians must be forgiving. 73.7% said they would likely or very likely do so. 67.2% of Quebec women said they would, slightly below the ROC at 75.8%. But the retailer has its work cut out in Quebec where one-third (32.8%) say they are unlikely or very unlikely to shop at Target this fall compared to 24.2% in the ROC.

Creatures of habits

When Target announced its plans for Canada, it boldly declared its objective to change the way Canadians shop. Tony Fisher explained how he was surprised by the “lack of one-stop shopping” in Canada. Target’s strategy was therefore predicated on changing habits and consumers’ mentality. Despite all the talk about adapting to Canadians’ needs, this signalled an intent to “teach” Canadians how to shop at Target for all their needs. Easier said than done. And it’s an even greater challenge in Québec where consumers are generally more brand loyal and set in their ways. Borrowing from President’s Choice slogan, it takes a lot in Québec for a retailer to offer something “worth switching supermarkets for”.

A narrower focus

The one-stop shopping strategy now appears to have been set aside as Target attempts to get back on track. Its new CEO is intent on re-energizing what he calls signature categories such as “design and style”; the fashion, furniture and other products that once gave Target its edge. What’s been described as a focus on the areas guests most commonly associate with the Target experience should help bring greater clarity to the brand and give it cachet.

Our survey asked Canadian women in which department they would likely shop at Target. Clothing and accessories lead with 61.8% saying they would shop in that department. Home decor and everyday items follow with 48.6% and 49.9% respectively. Grocery and beauty get 44.0% and 31.5% respectively. Only 20.4% say they would shop for electronics at Target but that number would likely be higher if men had been surveyed as well. Quebec stands out from the rest of Canada on this front as well. Quebeckers are less likely to consider Target as a destination for clothing and accessories, home decor, groceries and everyday items. The new CEO’s strategy focused on signature categories also makes sense in Québec but converting Quebeckers into loyal Target guests won’t happen overnight. Jean Coutu already caters to their health and beauty care needs. Metro and IGA have stepped up their game to appeal to their inner foodie. And Walmart has built a strong position in a market in which it initially struggled.

Canadians in the ROC were told to “expected more and pay less”. Quebeckers were told something slightly different. They were promised “better” since Target’s slogan in Québec translates into “Find Better. Pay Less.” (Trouvez Mieux. Payez Moins.) Target still has a chance to offer Quebeckers something better but it needs to do much more than what it has done so far to become TarJay to Quebeckers.

Eric Blais is President of Headspace Marketing – a Toronto-based marketing-communications consultancy helping clients build their brands in Québec.

*****The survey was conducted online among 1,000 Canadian women adults residing in the FSA’s of Target stores across Canada between September 8th and 12th, 2014 using ResearchNow’s online panel. Regional quotas were set according to the regional distribution of Canada’s population.*****