By Suthamie Poologasingham

It’s old news that the digital channel plays a critical role in the path to purchase―from online research to social media reviews to consumer product ratings, shoppers are researching before they ever set foot in store. Physical locations are no longer the “first” nor even the “last mile” in the path to purchase thanks to online and omni-channel shopping.

Save the retail behemoths, like Walmart and Amazon, most retailers who carry multiple brands and products are unable to keep up with the information needs of consumers. In many cases, manufacturers and brands are becoming the critical source of information, helping to drive sales and educate consumers.

Despite the need for brands and retailers to play well together, there still remains the fear of retail cannibalization.

Retail cannibalization: Similar to channel cannibalization, many brands and manufacturers shied away from creating a digital presence for fear of diverting their partners’ revenue stream.

Example: Levi Strauss and Maytag in the early 2000s had their own direct-to-consumer site but complaints from dealer networks and stores forced them to close it down. Similarly in the food industry, producers and growers were dependant on the retailer to promote their product in-store and influence the buying decision.

However as more retailers produce private labels, from Costco’s “Kirkland” to Macy’s multitude of private brands (e.g., Charter Club, Ideology, etc.), other brands must determine how to stand out and bring value to their retailers, customers, and their own bottom line.

Showrooming is driven by high smartphone penetration rates of 73% in Canada and upgrades to the “net” to be mobile accessible. Therefore having an informational digital presence is essential for manufacturers and brands for consumers who are looking up information on their product while in a store.

The decision to have an e-commerce presence is also beneficial to all parties if structured in a way so as not to undermine distributor/retailer sales of the same brand/product. In some cases, a credit to the distributor for a percentage of the sales (based on where the sale is delivered) is appropriate and helps boost overall sales. For brands and manufacturers the online channel has provided an integral opportunity to connect with consumers and support retailers’ increasing sales and satisfaction overall.

Recall that the buying decision is not always made at the “last mile,” in today’s information era. What are you doing to ensure your product or brand is top-of-mind when consumer’s do their research?

Written by: Suthamie Poologasingham, Sr. Advisor of Digital & Omni-Channel, and Director of Research at J.C. Williams Group. You can also read their informative blog, Retaileye, here: retaileye.wordpress.com. 

Polarization continues in the Canadian retail market, as an increasing number of consumers continue to gravitate towards either the very high-end or low-end. As a result, retailers like Harry Rosen, Holt Renfrew, Dollarama and Forever 21 continue to experience growth, while many middle-market retailers struggle. Antony Karabus, CEO of retail consultancy firm HRC Advisory, recently wrote about this topic in the Journal of Corporate Renewal.  
 
In the article, Mr. Karabus noted that a variety of factors are challenging mid-priced retailers, including increasing costs of doing business, as well as the declining brand loyalty among younger consumers and millenials. Furthermore, online retail from both pure-players and brick-and-mortar e-commerce channels are increasingly gaining market share. Mr. Karabus noted that middle-market retailers in premium malls may see some protection from these trends due to increased traffic and spending in those malls, but those in less-than-prime malls are facing consumer traffic declines. Malls such as Yorkdale Shopping Centre, Chinook Centre, Toronto Eaton Centre, Oakridge Centre, Pacific Centre, Southgate Centre, West Edmonton Mall and a number of others continue to increase sales performance for their tenants.
 
This polarization has been a contributor to the closure of literally hundreds of mid-priced stores, including Mexx, Smart Set, Jacob, Petcetera, Esprit and Target Canada. Some of those mid-market retailers still in operation continue to close locations, as they fine-tune their real estate strategy to align more closely to their target customer. Mr. Karabus said that Canada may have too much retail space per capita housing mid-market brands, which puts additional pressure on mid-priced retailers. Teen/youth brands are increasingly seeing pressure, though a few of the brands are starting to post improved results.

Mr. Karabus said that in order to survive, middle-market retailers need to enhance their value proposition in order to differentiate them from value-priced retailers, creating an experience which keeps customers coming back. Keeping overhead costs low will be key, while investing strategically towards product, stores, digital, and other growth initiatives. Customer service also allows mid-market players to potentially compete with the exceptional service often offered at higher-end retailers. 
 
Another recent characteristic in the mid-market retail sector, according to Mr. Karabus, has been CEO turnover. Leadership change often spearheads new retail strategy or in the case of Target Canada, led to store closures. 
 
In order for mid-priced retailers to survive and thrive in this environment, Mr. Karabus identified the following five key mechanisms for success:
 
1.    Develop a compelling, differentiated customer value proposition and business model that is distinct from price and engages the customer most effectively.
2.    Create a merchandising, assortment, and inventory deployment strategy that aligns with the differentiated customer value proposition.
3.    Deploy their capital to the most important initiatives that will position them for the necessary transformation in the new retail environment.
4.    Manage their cost infrastructure and deploy capital cost-effectively while enabling the strategic agenda and meeting customer needs.
5.    Design an analytics capability that produces key insights into the key drivers of profitability and customer engagement.
 
Mr. Karabus noted that some retailers may need to re-evaluate their real estate strategy to increase customer loyalty. This includes evaluating how customers shop both bricks and mortar and e-commerce channels.
 
Finally, Mr. Karabus noted that retail is increasingly looking like ‘survival of the fittest’. Publicized store closures have resulted in great opportunities for stronger retailers to capitalize on the closures to optimize their store fleets at lower occupancy costs. Mr. Karabus expects this shift from weaker to stronger retailers to continue and  even escalate. 

Antony Karabus is CEO of HRC Advisory, a leading retail advisory firm. He has advised retailers on strategic and financial performance issues for over 25 years and has assisted numerous North American retailers to create significant shareholder value during this time. Karabus has advised numerous national retail chains in key sectors, including department store, specialty apparel and hard lines, big box, and grocery. He can be reached at akarabus@hilcoglobal.com.

By Russ Fradin

Nearly all retailers announce promotions on Facebook and post stunning photos on Instagram to lure customers into their stores. But few savvy retailers are tapping into one powerful social force that can drive real sales and exposure: employees.

Rallying employees around your store can inspire them to spread the word via social media. And when they display genuine excitement about your store and products, they become natural magnets within their networks.

For example, employees could announce your store’s new product line and promote it with a video series demoing the items to generate exposure, stir questions, and entice their friends and connections to visit the store for more details. Employees can also post personal product reviews or engage in online conversations, showcasing their expertise and positioning themselves as helpful in-store resources.

Emitting strong social signals will also boost your SEO. And when prospects can more easily find your website, they’ll have another reason to visit your store.

But employees can’t become authentic brand advocates without truly loving your store and products. Less than half of Canadian employees are satisfied with internal communication, so retailers need to take serious measures to generate excitement among employees and empower internal social media advocates.

Ignite Your Social Media Activists

 Although the advantages of employee pride are clear, retailers simply aren’t taking steps to instill pride in their employees and encourage them to share on social media. In fact, 88 percent of employees have at least one social media account, but only 33 percent post about their jobs.

 Work consumes so much of employees’ days, so why aren’t more posting about it?

In the retail setting, employees are often afraid of saying the wrong thing. Even when their comments are positive, they fear going against corporate language and getting in trouble for it. In other cases, they may not know what to say. It’s hard to craft a “shareworthy” social media post, and amid the retail frenzy, it can easily fall by the wayside.

Boosting employee engagement and social media usage may be the strategy you need to remain relevant in the omnichannel retail world. Here are four ways get employees excited to post about your retail store: 

1.     Make their jobs enjoyable. Instilling pride in employees is the key to a happier workforce and social media advocates, and it starts with culture. Steer your culture in a way that makes employees want to work harder and smarter. Offer appealing perks, and treat employees like the intelligent, capable adults they are. You’ll be amazed at the initiative they start to take.

O2, the third largest telecommunications provider in Europe and one of our clients, has taken this route by launching an employee-powered marketing program. O2 rewards and recognizes active employees with concert tickets and other perks to encourage participation. The company has seen great success — more than 1,000 employees got involved in just the first six months.

Another example is Montreal-based GSoft, which conducts weekly staff surveys to gauge happiness levels, uncover employee frustrations, and maintain open communication as it grows.  

2.     Refine your company’s messaging approach. Honest and genuine messaging will resonate most with employees, especially if you’re attempting to engage them as advocates. They won’t be interested in sharing stale, canned content they don’t really believe in. Instead, create content that’s personal, targeted, and focused on their level of expertise and department to ensure maximum participation.

3.     Showcase great work internally and externally. Recognizing a job well done will boost morale and help lagging employees know what to shoot for.

Encourage employees to write reviews of products they love or interact with customers instead of just pushing sales. When they do this, spread the word via the company’s social media accounts, feature their original content, or simply give them a shout-out in internal emails. Recognize them for going above and beyond, and you’ll lift everyone up.

4.     Gamify the process. Try introducing contests and prizes to stir up competition among co-workers. Keep it light, and encourage creativity and authenticity first and foremost.

Employee engagement and company pride will ultimately influence your staff’s social media participation. Create an in-store environment that promotes creativity, and don’t be afraid to let your employees have a little fun. Forward-thinking, culture-focused companies are the ones that will breed advocacy and win the most sales in the end.

Russ Fradin is a digital media industry veteran and an angel investor with more than 15 years of experience in online marketing. He is the founder and CEO of Dynamic Signal, the leading platform for empowering employees to be effective brand advocates. Learn more here.