Home Blog Page 639

Anatomy of a Leader: Ken Keelor, CEO of Calgary Co-op

By
Mario Toneguzzi
-
Anatomy of a Leader: Ken Keelor

Ken Keelor has always been interested in products, branding and consumer behaviour. 

Throughout his business career, particularly in the grocery sector, he was always a student of consumer behaviour. Why do people buy what they buy? How do they shop? What are their motivations?

As a student he did an MBA in marketing where he was fascinated by consumers. His first job was managing the Vicks VapoRub brand for Procter & Gamble. 

“Very early, during my MBA I had an interest in advertising and products,” said Keelor, who today is CEO of Calgary Co-op, one of the largest retail co-operatives in North America with more than 460,000 members, 3,900 employees and annual sales of over $1 billion.

“As a retailer, you see the end products coming to you and I found that very, very exciting and of course I loved understanding consumers – how they shopped in the stores.”

Rexall Re-Launch 2013 (Image: Ken Keelor)

Keelor was born in the UK because his father was a fighter pilot in the Indian air force. But he was only there until the age of two and then was raised in India. He lived in about a dozen places there as his father kept getting posted in different places in the country.

He did a Bachelor’s degree in Physics at St. Stephen’s College in Delhi then an MBA in Marketing at Jamnalal Bajaj Institute of Management Studies.

He realized with physics it would cost a lot of money to pursue further education in the field in the U.S.

“And we really didn’t have the cash. So instead I applied to a couple of MBA schools in India and luckily got into one where I happened to meet my wife (Antara) in the future,” said Keelor.

He worked for Procter and Gamble in India initially then moved to Bahrain in the Middle East for a couple of years, working for a food distributor. 

“I used to go around the world looking for products, put them in a 40-foot container and bring them to Bahrain and sell them in the local market. I had a field force that I hired and my job really was to go scout for products, bring them in and with the field force I hired we would go and sell them into the local market. Maintaining relationships with the local supermarkets was key and of course maintaining relationships with suppliers around the world was key,” said Keelor.

Image: Ken Keelor

After two years, he and his wife decided to move elsewhere. Canada and Australia at that time were open to immigration and they applied to both countries. 

“It just happened that the Australian papers came back. We didn’t have enough postage on them. The Canadian ones came back saying thumbs up. I had a cousin that lived in White Rock, BC and told me that was the place to come to Canada. It’s beautiful by the way so in 1995 my wife and I moved to White Rock, BC, and we both started with telemarketing. We didn’t have a job . . . My wife then began to do some work in retail and we both interviewed almost every day.

“I ended up joining Save-On Foods that had just moved their buying office from Calgary to Langley in BC. I worked for them for just over five years. The now President of Save-On Darrell Jones used to be my local White Rock Save-On Foods store manager.”

He joined the company in category management with a lot of buying, pricing, preparation of flyers, engaging suppliers. 

In 2001, Sobeys recruited him and the couple moved to Toronto.

“It was easy for us to move. I moved around a lot in life and we had no kids, no pets and barely any potted plants which was always our policy, even before we got married. We said do we really want to have kids, nobody wants to stay home, we were both quite aggressive with our careers,” he said.

He initially worked in the national merchandising team with Sobeys, did a lot of contracts with suppliers, about 200 every year, and also created a new framework for engagement with suppliers. After several roles at Sobeys for more than 10 years, Keelor left to become Chief Merchandising Officer for Rexall. After a couple of years, he returned to Sobeys for about a year when they bought Safeway. 

“I happened to find the ad for CEO for Calgary Co-op in a magazine called the Canadian Grocer. A hard copy of the magazine. Funny story. My wife and I were both sitting at our computers in our study in our pajamas and I had just moved back to Sobeys a year ago, everyone welcomed me back home as they called it and then I said I found this ad. She said well apply, we’re not going to move so who cares,” said Keelor.

Image: Ken Keelor

He came to Calgary and met the board. He had never been in a Calgary Co-op store before. He chatted with customers. Chatted with employees. Every time he would get a call from Co-op after that he would assume they were letting him know that he was not the person for the job. But each call they would say they wanted to go to the next step. 

Finally in November 2014, he took on the new role as CEO of Calgary Co-op. Initially when he came to Calgary the price of oil was elevated but then collapsed. His strategy had to be adapted.

As a successful business executive, Keelor said he believes integrity and honesty are keys.

“This is a small business and a lot of people know each other and if nothing else then for that reason you have to be very careful to always maintain integrity. In other words, you don’t promise somebody something but you would never promise it to the other person kind of a thing. Integrity is really important in how you do contracts, how you do deals, how you even don’t do deals . . . Your integrity, your reputation is very crucial in this business,” said Keelor.

“Another crucial thing to remember is you only get one life to live. So you have to enjoy the ride. For me, that is a two-part process. Number one is finding the person you love in your life which I’ve been very lucky with a wife of 32 years and then second find a job you enjoy so you’ll never work again. Those are two key pieces. But it’s got to be fun, it’s got to be challenging, and I used to always tell my team that winning is fun. Nothing is less fun than losing.

“When you say have fun, well you’ve got to be winning. You can’t be not winning or losing. So winning is crucial and finding people to surround yourself with I would say that are smart and keeping them focused on the strategic goals. Building a strategy is very important so everyone is very focused on it and then getting out of their way so that they can execute on that strategy with all the expertise they bring. No one has all the expertise. So you have to rely on the people around you. I would say that’s key.

“I’ve always tried to be humble in terms of nobody succeeds by their own efforts alone. I’m very passionate in what I say and do but I also try to maintain the humility of the fact that I have succeeded on the shoulders of many, many other people. Many other mentors, many people that lifted me up and believed in me, and what I try to do in this stage of my life is I try to care about other people and invest my time with them to help and support their careers and especially those that believe in me, those that care about me.”

Image: Ken Keelor

Keelor does several things to relax. One is spending a lot of time with his wife in various activities. Secondly, he goes to the gym as a stress buster knowing that when he is feeling good physically he’s feeling better mentally. That involves kickboxing, spinning, yoga – different exercises during the week.

“And then third my source of energy other than those two activities comes from visiting my stores. I really love visiting stores, chatting with customers, chatting with team members. I know to everyone that may not sound like fun but to me it always has been. 

“And I love traveling. Travel is a lot of fun for me as well.”

Image: Ken Keelor

People often ask him how he got to where he is today.

“I will say, I always put my hand up for the tough jobs. And in fact, I always put my hand up for any jobs, leave alone the toughest jobs. If you look back at my career at Sobeys and even at Calgary Co-op and Save-On, I always took on the toughest jobs that other people didn’t necessarily want to take on. If something would have been in a mess, they would say well put Keelor in, he’ll fix it, he’ll fix it fast. Because I got a lot of things done, a lot faster than others might have done it,” he said.

“There’s people that do a lot of talking and people who aim for perfection, I’ve been someone who has always aimed to get the job done so the company can move forward. And of course, raising my game each year was very crucial. So every year I would challenge myself to do even more, do even better. And I would challenge my team. Every year the bar goes up. A lot of hard work.”

Canadian Retail News From Around The Web For February 29th, 2024

By
Retail Insider
-
Canadian Retail News From Around The Web

News at a Glance

Retail Insider is streamlining its Canadian retail news from around the web to include a handful of top news stories that can be viewed quickly during the day. Here are the top stories from the past three days.

Corporate pressure led Shoppers Drug Mart staff to bill for unnecessary medication reviews, pharmacists say (CBC)

Parkland Corp. Putting 157 Convenience Stores in Canada Up For Sale (CSP Daily News)

George Weston reports smaller Q4 loss compared with a year ago (BNN)

Down by 25%: Is Canadian Tire Stock a Buy in February 2024? (Yahoo)

Quebec’s online shopping platform, Le Panier Bleu, shutting down (CBC)

Requiring French markings on appliances could lead to higher prices: lawyer (Montreal Gazette)

Toronto’s New Parking Levy: A Burden on Retailers and Consumers (RCC)

Grocery prices in Canada: Vancouver shopper shocked at ‘bizarrely high’ price of dried apricots (Yahoo)

North West Company asks city of Iqaluit to pay off its water debt (CBC)

Bomb squad called after grenade donated to a Canadian thrift store (Daily Hive)

Unprecedented Opportunity for Canadian Retailers to Sell to Consumers in China Online

By
Craig Patterson
-

Canadian retailers and brands have a remarkable opportunity to sell to consumers in China, which has a population of more than 1.4 billion people and a middle class that spends on international goods. China is the world’s largest online consumer market with nearly 50% of global transactions, creating a great opportunity for Canadian businesses. 

Next month is a free seminar for retailers and brands interested in selling to Chinese consumers online. The Canada China Business Council, along with Alibaba and Tmall Global, are hosting an exclusive information session in downtown Vancouver on Tuesday, March 19 at the Sheraton Wall Centre Hotel. The seminar will provide invaluable insights into Chinese market trends and will explain and break down how convenient it can be to do business in China through Tmall Global and its comprehensive vendor support for Canadian businesses. A lawyer will also be on hand to discuss protecting intellectual property.

The opportunity to sell to Chinese consumers is massive. By 2025, McKinsey predicts that the number of upper-middle and high-income households in China could reach 200 million and by 2030, that number could reach 260 million. Continued urbanization and rising income levels are expected to drive consumption growth sustainably in the medium to long term, McKinsey said.

China’s consumer market is growing, and the population is demanding quality modern products in categories such as health food and supplements for the entire family (including pets) as well as beauty, fashion, and modern baby goods, among other categories. China’s population is also becoming pickier as consumers recalibrate spending with a focus on shopping for value and high-quality international products.

About a billion Chinese residents shop online, with a penetration rate much higher than in North America. Chinese consumers see shopping as an enjoyable pastime rather than a chore while going online for convenience and selection.

China’s consumer economy has an overall positive outlook for the coming years. McKinsey is predicting retail growth in China this year of about 5%, with similar predictions for the coming years. By 2027, this growth would translate into $1.4 trillion USD in retail sales in China.

Given the ongoing growth in China, the opportunity for Canadian retailers to do business in China is great. Tmall Global, China’s largest B2C cross-border platform, helps brands from around the world enter China via its massive online marketplace. With over 900 million monthly active users in the ecosystem, Tmall Global has over 46,000 brands from 90 countries and regions, in over 5,000 categories.

Livestreaming with commerce is an extremely effective and popular marketing tool for businesses selling in China, and new vendors joining platforms such as Tmall Global can take advantage of it. In China, livestreaming is now responsible for more than USD$600 billion in sales with a high growth rate and more than a billion residents on social media. The popular Single’s Day shopping event in November of each year utilizes livestreaming to sell products every second. Alibaba invented Single’s Day, where brands launch new key products and consumers rush to buy.

Tmall Global provides comprehensive support and a range of services to help Canadian retailers enter the Chinese e-commerce market, including consumer analytics, translation services, and marketing tools. Payments to vendors are convenient as well – Chinese consumers shopping on Tmall Global use AliPay and other mobile wallets to pay in their local currency, which is seamlessly converted to Canadian dollars for the local vendor.  

Canadian retailers and brands interested in selling on Tmall Global to Chinese shoppers are encouraged to attend the free exclusive seminar in downtown Vancouver next month, hosted in conjunction with The Canada China Business Council and Tmall Global. It will be held on Tuesday, March 19 at the Sheraton Wall Centre Hotel at 1000 Burrard Street.

The seminar will provide invaluable insights into expanding one’s brand into the Chinese ecommerce market, leveraging the robust ecosystem provided by Tmall Global and its comprehensive support to help ensure retail success. All companies and manufacturers of retail and consumer brand goods are encouraged to attend, whether they intend to sell now or are curious about Chinese retail opportunities. The event will be especially beneficial for companies involved in health products, as experts from the Tmall Global Health Category Team, from Alibaba headquarters in Hangzhou, will be available to share their insights.

For more information and to register for the event, please visit the event website.

*Retail Insider partnered to create this event announcement.

Modern Golf Opening Innovative Golf Social Experience in Downtown Toronto’s First Canadian Place [Interview]

By
Mario Toneguzzi
-
Modern Golf at First Canadian Place (Image: Modern Golf)

Toronto-based retailer Modern Golf continues to evolve its operations with plans to expand on its existing pop-up and open its first new indoor golf social experience in the heart of downtown Toronto at First Canadian Place.

Paul Fisher

Paul Fisher, Managing Partner of Modern Golf, said the concept has been in the works for a while.

“When we went to First Canadian Place initially it was really a test concept to see what the urban landscape would look like for us. The reality is we’ve long thought that there was an outstanding opportunity for our brand to evolve into more than just retail and club fitting and some of the things we’re known for,” he said. 

“First Canadian Place initially was an opportunity to test the demand for corporate events and we’ve been studying the evolving social golf space in the US for over a year visiting different concepts and evaluating how the model translates to the Canadian urban core consumer. Part of the model is to certainly focus on core golfers coming in and enjoy the ability to play indoor golf and practice, but it’s the growth in the social side that really excites us. It truly attracts a completely different target audience and demographic. That’s something that we’ve long wanted to bring into the folds of our business. And we’ve seen it naturally evolve in that direction with the indoor golf and the lessons products we’ve added in our suburban locations.

“We’ve continued to cast wider nets of customers. It’s amazing. We call it our Modern Golf ecosystem. It continues to grow. The social side is really where the fastest growth in the sector is coming from and will come for the golf industry going forward.”

Image: Modern Golf

Fisher said the new concept will open by early November. The location is about 8,500 square feet. It will have more bays than any of Modern’s existing stores, multiple bars and lounge areas for members and events. Modern has contracted leading Toronto based design agency Denizens of Design to bring the space to market.  

“We are building a beautiful modern space reflective of our brand that can be enjoyed whether it’s through an event, meetings with co-workers or collogues, or individual use. Expect great food and drinks, amazing music, and a lot of energy and laughter” 

Fisher said the concept is partnering with Food Dudes for food and beverage.

“We’ll have a small exciting daily food menu and exceptional cocktails and mocktails curated by the Food Dudes team for our members and daily walk-in customers. Food Dudes is the perfect partner for corporate events, and we anticipate that corporate events are probably the largest part of this business model which ties into the location in the heart of Toronto’s finance district,” he said.

“We probably could have picked from multiple locations in the financial core. But it was important for us to align with Brookfield because they gave us the original opportunity to test the market and they’ve been such big supporters of ours. We feel that First Canadian Place initially is center ice in the financial core. The location is fantastic and given that this location is going to be highly predicated on corporate events and memberships this is the perfect partnership. Between the team at Brookfield, Modern Golf, Justin Curtis and Robert Weinberg from Oberfeld Snowcap representing the Landlord, this deal just felt right”. 

“We have plans to expand this concept to multiple locations in Toronto and start adding more social offerings to existing stores across the country this year. It’s a huge part of our growth plan as a company.” 

Modern Golf has contracted Toronto-based design agency Denizens of Design in collaboration with DS Studio to bring the space to market.  

Modern Golf at First Canadian Place (Image: Modern Golf)

Modern Golf currently has 11 locations.

“The expansion at First Canadian Place and adding additional social offerings at our existing stores is the priority in 2024. But we have our eyes on a second location in Toronto and expect it will also come on board in early 2025,” said Fisher. “Retail is a tough industry right now. We are so excited to continue to diversify our offerings and expanding our reach, not every retailer has that opportunity to pivot, so we are incredibly lucky”. 

Krispy Kreme Doughnuts Gears Up for Nationwide Expansion in Canada with Innovative Store Formats [Interview]

By
Mario Toneguzzi
-
Image: Krispy Kreme Canada

Popular doughnut brand Krispy Kreme is expanding its presence in Canada with new locations coming to Winnipeg, Calgary, Edmonton, Hamilton and Laval.

Levi Hetrick

Levi Hetrick, Chief Growth Officer & Operating Partner for Krispy Kreme Canada, said Krispy Kreme has two main formats in Canada: a Theatre Hub and a Doughnut Café.

“A Theatre Hub is where our doughnuts are made fresh from scratch every day. Guests can watch doughnuts rise as they go through the proofer, drop into the fryer, and travel down the conveyor line passing through a waterfall of glaze. Depending on the time of day, guests can also eat doughnuts fresh off the line while they are still hot – that is a main point of differentiation for Krispy Kreme vs any other doughnut shop and where the term “Theatre” comes from. You know we are making Original Glazed doughnuts when the “Hot Light” is on and glowing red. In addition to serving doughnuts, coffee and other beverages on-site, the Theatre Hub also serves as the doughnut factory for Doughnut Café shops, wholesale, mainly Costco, and our Fundraising program,” he said.

“A Doughnut Café is a location that doesn’t make doughnuts on-site, but receives two or more deliveries of fresh doughnuts every day. It offers a full product lineup including coffee and other beverages. We try to choose locations that are convenient for folks to stop in on the way to work, school, home, or just to hang out for a break. One secret tip – you can request for your doughnut to be heated in the microwave for eight seconds to try to replicate the “fresh off the line” experience. It isn’t exactly the same, but it does improve the experience in my opinion.”

Image: Krispy Kreme
Krispy Kreme Danforth (Image: Krispy Kreme Canada)

There are 14 stores in Canada. One of those is in British Columbia with a different franchise group.

Hetrick’s group has four locations in Montreal, one in Quebec City, and eight in the Greater Toronto Area.

He said one location is currently under construction in Winnipeg which will open in the next few months. 

Krispy Kreme first entered the Calgary market in 2004 near Sunridge Mall. The shop was popular, but ultimately closed during a broader re-organization in 2008, he said.

“Calgary has been a development priority for re-entry for a while and with help from Mike Kehoe and Monica Blachut at Fairfield Commercial we were able to find a great drive-thru site on Macleod Trail. The site is the former Ginger Beef location (9629 Macleod Trail) immediately adjacent to Schanks Sports Grill and just down the road from Ranchman’s Cookhouse,” he said.

“There’s no timeline for opening yet as we are just getting into the permit phase, but I will have updates as our construction schedules take shape. Targeting the first half of 2025 for opening.

“We knew when we wanted to come back that we wanted to be pretty central (in Calgary). A convenient location. A retail node that is accessible to as many people as possible. Macleod Trail being a main artery for Calgary was the prime spot to look. Chinook Centre to the north and Southcentre Mall to the south and Deerfoot Meadows over to the east, we kind of lucked out with a really great location. Drive-thru is a big part of our business so having the ability to have a drive-thru was pretty important to us.”

Image: Krispy Kreme
Krispy Kreme Danforth (Image: Krispy Kreme Canada)

The Calgary location will be about the same size as Winnipeg at 4,600 square feet.

“It will be almost an identical building as Winnipeg. We’ve created this prototype now that we plan to bring to Winnipeg, Edmonton, Calgary. I’ve got another site in Hamilton and Laval all in the next kind of 18 months we’ll be looking to open those,” explained Hetrick.

“It’s basically the same building. Brand new prototype for us. The first one is in Winnipeg and looking to bring that across a few different markets.”

Krispy Kreme Spadina (Image: Dustin Fuhs)

The Theatre Hub concept will be in Winnipeg and Calgary.

“The reason why we call it a Hub is because it will also be where when we deliver to Costco or other doughnut cafes or other wholesale outlets, that’s where all the doughnuts for that market will be made,” said Hetrick.

“The other important thing for Krispy Kreme is everything is made fresh every day. We’re constantly making doughnuts.”

Robson Street in Vancouver in Flux as New Retailers Prepare to Open Stores [Feature]

By
Craig Patterson
-
Robson Street in Downtown Vancouver. Photo: Lee Rivett.

Vancouver’s Robson Street is seeing new retailers opening as the popular shopping street continues to transition. Several new retailers have recently signed leases on Robson Street and will be opening in the coming weeks and months, while some closures and a cancelled project will impact the area.

The main commercial stretch of Robson Street spans from Bute Street to the west to Hornby Street and the Vancouver Art Gallery Square to the east. We’ll also discuss retail happenings on Robson Street near Granville Street, which recently saw Nordstrom vacate a large space. 

Some new retailers have already been announced on Robson Street, and others will be announced in this article. The shift begins at the corner of Robson Street and Burrard Street, with the recent announcement that German athletic brand adidas will be taking a massive two-level space recently vacated by Victoria’s Secret. It will be a first-to-Canada concept store with more details soon to be announced. 

Former Victoria’s Secret Location at Burrard and Robson in downtown Vancouver. Photo: Lee Rivett.

One interesting retail move not yet announced publicly is the exit of Roots from its iconic corner space at the northwest corner of Robson and Burrard Streets. Sources told Retail Insider that Vancouver-based Arc’teryx came in and scooped up the lease from Roots, which didn’t necessarily want to leave its prime corner space with a retail location considered to be a flagship store. Retail Insider interviewed Roots co-founder Michael Budman about the 4,500 square foot store in February of 2014, when Roots had renewed its lease and planned to renovate and expand the top-performing store. One source told Retail Insider that the new Art’teryx would span about 6,400 square feet, which means there could be vertical expansion of the building.

The Roots building at 1001 Robson Street was occupied by women’s fashion retailer One + One from the 1980s until 1996, when Roots secured the lease. One + One said in an article published on October 12, 1996 in the Vancouver Sun, that its rent had been $88 a square foot and that the rent for new tenant Roots would be about $150 a square foot. 

Arc’teryx already has a store location very close by at 813 Robson Street, and parent company Amer Sports is said to be converting the 4,020 square foot building into a retail location for its brand Peak Performance. Arc’teryx substantially renovated the building in 2017 for its new store, having secured the space from previous retail tenant Le Chateau. 

There are rumours that Roots may have secured a smaller retail space formerly occupied by TWG Tea at 929 Robson Street, which are not yet confirmed.

Roots on Robson (at Burrard) in downtown Vancouver. Photo: Lee Rivett.
Arc’teryx on Burrard (at Robson) in downtown Vancouver. Photo: Lee Rivett.
Future JD Sports at former Club Monaco space on Robson Street in downtown Vancouver. Photo: Lee Rivett.

Club Monaco recently vacated its storefront at 1042 Robson Street after occupying the almost 9,000 square foot building for over two decades. Construction hoarding recently went up for UK-based JD Sports, which is expanding across Canada under a mandate with broker Jordan Karp of Savills Canada who negotiated the lease deal on behalf of the retailer. Mario Negris and Martin Moriarty of Marcus & Millichap represented the landlord in the deal. 

Other retailers are opening on the street, including watch brand Swatch which seems to have been delayed in its construction on a store at 1155 Robson Street. Lush Cosmetics has also finished renovations on its store to add a Lush Spa concept, a first for Canada, at 1020 Robson Street. 

Lush Spa on Robson Street in downtown Vancouver. Photo: Lee Rivett.
Future Esprit store on Robson Street in downtown Vancouver. Photo: Lee Rivett.

Fashion brand Esprit is about to make its return to Canada with its first concept store set to open at 1088 Robson Street. The retail space had been occupied by J. Crew prior to its Canadian exit about three years ago. Esprit also plans to open a flagship in Toronto this year.

On the 900 block of Robson Street, luxury brand Salvator Ferragamo is expected to eventually vacate its space at 918 Robson Street, in a building also targeted for redevelopment. Ferragamo would relocate its Vancouver retail operations to Oakridge Park in 2025, according to sources, vacating its 918 Robson Street premises where Ferragamo has had a store since the spring of 1981. 

The 800 block of Robson Street is now part of a public plaza with the Vancouver Art Gallery to the north and a courthouse complex to the south. The 700 block of Robson Street will also be seeing some significant changes as tenants are signed for the Nordstrom building which has been vacant since last spring when the retailer exited its Canadian operations. There are rumours that Quebec City-based large format fashion retailer La Maison Simons could occupy the top two retail levels of the former Nordstrom, though nothing is confirmed either by Simons or landlord Cadillac Fairview, which owns CF Pacific Centre. At some point in the future, if increased height and density could be obtained from the City of Vancouver, the site could see tower redevelopment.

Salvatore Ferragamo on Robson Street in downtown Vancouver. Photo: Lee Rivett.
Robson Street Walkway between the Law Courts and the Vancouver Art Gallery. Photo: Lee Rivett.

At the southeast corner of Granville and Robson Street, new retail is expected in a vacated space that once housed Payless Shoes. Prior to the pandemic, Japanese fashion brand A Bathing Ape (or BAPE) was said to have leased about 13,000 square feet, prior to deciding to cancel the deal (as well as two others in the city) due to issues overseas. 

The multi-level 90,000 square foot Bonnis-owned building at the northeast corner of Robson and Granville Street was recently listed for sale, housing big-box retailers including Best Buy and Winners. A recent Daily Hive article pointed out that the assessed value on the building is almost entirely in its land, indicating a potential redevelopment if the owner can obtain increased height and density allowances from the City. If substantial height and density were granted, an office tower could be expected.

Robson Street will continue to attract new retailers as shoppers continue to visit the clustering of stores in the downtown core. Since the 1980s, national and international brands have operated stores on Robson Street, which in decades before had been a street nicknamed Robsonstrasse with various German businesses. Robson Street struggles with aesthetics today, with its relatively narrow worn sidewalks having not been updated in decades. It might be a good idea for the City of Vancouver to consider downtown street updates, given that the Oakridge Park project on the West Side will be completed in the spring of 2025. Oakridge Park will be a sparkling new enclosed shopping centre that is expected to take retail foot traffic and dollars away from downtown Vancouver, particularly at a time when the downtown core struggles with social issues such as homelessness, addiction and crime. Robson Street will need to compete with suburban shopping centres in the years to come, and already we’ve seen notable vacancies in the area.

Multi-level 90,000 square foot building at the northeast corner of Robson and Granville Street. Photo: Lee Rivett.
Former Payless Shoesource on Granville Street and Robson Street in downtown Vancouver. Photo: Lee Rivett.

Wendy’s Bold Dynamic Pricing Move Has its Positives and Negatives [Op-Ed]

By
Sylvain Charlebois
-
Image: Wendy's

Dynamic pricing, a concept that may still be unfamiliar to some, is poised to become a more prominent feature in our daily transactions, particularly in the food industry. This pricing strategy, which adjusts prices based on demand, is not a novel idea. It has long been employed in sectors such as airlines, theme parks, and hotels, where prices fluctuate to either entice customers during off-peak times or capitalize on high-demand periods. The acceptance and understanding of this model as a means to optimize sales are well-established in these non-food domains.

The food service and retail sectors are no strangers to dynamic pricing either. With the advent of digital price displays, many retailers have been quietly implementing this approach, adjusting prices multiple times a day as needed. However, the sensitivities surrounding pricing in the food industry are distinct. Food is not just another commodity; it is a necessity, and the ethics of its pricing carry a different weight compared to, say, selling tickets for a vacation to Honolulu.

Image: Wendy’s

The recent announcement by Wendy’s in the United States that it will adopt dynamic pricing during busy hours marks a significant moment in the food industry. This public declaration is unusual in a sector where price changes are often made discreetly. Wendy’s is essentially advising its customers to visit during quieter hours to save money, which could be perceived as an inconvenience. It’s akin to transforming its operations into a stock exchange, where customers are encouraged to ‘buy low and avoid buying high.’ This move is particularly intriguing from a public relations perspective, given that Wendy’s competitors have not made any public announcements regarding dynamic pricing.

The power of dynamic pricing lies in its ability to bring predictability to the inherently unpredictable business of selling food. Factors such as weather, local events, or even comments made by celebrities can drive consumer behaviour in unpredictable and sometimes irrational ways. By implementing dynamic pricing, businesses can achieve a more optimal balance between supply and demand, thereby gaining more control over their operations, including inventory management, staffing, and other aspects of the business.

Moreover, dynamic pricing has the potential to reduce food waste, a critical issue in an industry characterized by low margins. According to a study published in Marketing Science, dynamic pricing can reduce waste in food retailing by 21%. While this model can create a better equilibrium between supply and demand during operating hours, it is not without its challenges for consumers. For example, during the empty shelves phenomenon of March 2020, dynamic pricing could have led to immediate price spikes, pushing food inflation to unprecedented levels when many were seeking to stock up and stay safe.

Image: Wendy’s

The increasing availability of artificial intelligence and other technological tools has made dynamic pricing a more viable option for food executives. Wendy’s decision to publicly embrace this strategy could be seen as an attempt to demystify a practice that has already been in use, albeit quietly, within the industry. As consumers become more aware of time-based pricing, they may realize that many prices have already been affected by such an approach, even if it was not explicitly known.

The repercussions of Wendy’s announcement will be interesting to observe. Customers may choose to penalize the chain for its transparency on dynamic pricing and opt for competitors, unaware that these alternatives have likely been employing similar pricing strategies for years. In the end, the public’s response to this shift towards more dynamic pricing in the food industry will provide valuable insights into consumer behaviour and the acceptability of such practices in the context of essential goods like food.

Growing Crisis in Retail Inventory in Canada as Factory Direct Liquidates Stores [Interview]

By
Mario Toneguzzi
-
Factory Direct Closing (Image: A.D. Hennick & Associates)

The liquidation sale process for Vaughan, Ontario-based discount retailer Factory Direct’s 14 stores which are closing, may be a signal of more to come in the industry that continues to be challenged.

Alex Hennick, of A.D. Hennick & Associates, along with partner Jonathan Ordon from Danbury Global, is handling the Factory Direct liquidation and said the process which began recently has gone really well.

Alex Hennick

Hennick said the liquidation industry has been “overwhelming” recently. 

“We are getting so many more calls than we’ve ever had. For excess inventory, a lot of manufacturers are sitting on goods. They had record sales in 2020 when everyone was at home, interest rates weren’t as high. In 2021 very similar, even better than 2020. People still had disposable income. They weren’t maybe traveling as much. 2022 it was terrible. It was something almost where Black Friday never really happened for a lot of the retailers. Christmas sales were down,” he said.

Factory Direct Closing (Image: A.D. Hennick & Associates)
FactoryDirect.ca

“But what happened is because a lot of people had record sales in 2020 and 2021 they got ready for 2022 and over-inventoried . . . And the sales never happened. So we’ve seen in the last couple of years, but definitely way more now, a lot of manufacturers are sitting on inventory. Retailers shutting down. So they have canceled orders. It’s been pretty significant in terms of excess inventory.

“To me it’s pretty scary. And I think it’s getting worse, at least from what we’ve seen. There’s a lot of inventory on the market these days that just doesn’t have value at all. It’s going to be a tough time ahead.”

A.D. Hennick & Associates began in 2009. 

“We work with manufacturers, distributors and bankruptcy trustees to purchase larger quantities of inventory. When we work with manufacturers and distributors we’re typically purchasing last year’s model, canceled orders, discontinued. We’re working with brands where we’re working on major brand restrictions. So the number one question is where do you not want your products sold and do you want to avoid any specific retailers, do you want to avoid these countries, do you not want to have it online,” said Hennick.

“So we find out restrictions as to where we can’t sell it and then we’ll purchase it in volume and then resell it to the appropriate channels.”

FactoryDirect.ca
Factory Direct Closing (Image: A.D. Hennick & Associates)

Hennick said the company is seeing more stock right now for anything relating to the home for example. Because interest rates are high, many people are not buying homes therefore they’re not doing renovations. Anyone who sells furniture, lighting, appliances, etc., are sitting on a lot of inventory. With retailers having a sale to the public with inventory going on the market at 50 to 80 per cent off, it is going to affect every other retailer.

“So not only has it affected them but for a period of say two months while they’re running a bankruptcy sale why would any other customer go to their competitors when they are closing at that price. Now these other stores are affected. Maybe it comes back where there’s less market share and there could be more opportunity for them down the road but temporarily it’s bad and it gets even worse.

“Similar to what we’re doing right now. We’re running the sale right now for Factory Direct . . . It’s an exciting opportunity for us to be able to run an incredible $10 million liquidation sale with high end goods, brand names Apple, Samsung, LG. We’re doing everything from store level. So we have 14 stores. But we have the best brands and the best products in the world at incredible prices. So because of this our stores are packed. We’re restocking daily and the deals are there. But a lot of other people who sell similar products, for customers it wouldn’t make sense for them to go and buy there until such time that our sales are over because our prices are very aggressive and our quality of products is also good. It’s something where by us doing this sale it further impacts the market for the kind of product we’re selling.”

Factory Direct Closing (Image: A.D. Hennick & Associates)

In a previous interview with Retail Insider, Hennick said that Factory Direct was a terrific retailer, and that the business had struggled financially due to a variety of factors and as a result, is no longer viable.

Hennick said a large amount of the company’s business comes from excess inventory but bankruptcies are another area where it builds relationships with the trustees to get an opportunity to bid on the assets of the bankrupt company.

“And depending on the situation, we’re either going to be running an auction, we’re going to be running a retail sale, we might buy it and then sell it wholesale.”

In the Factory Direct situation, the company was appointed to be the liquidators for the sale. All 14 stores are open where the liquidation sale takes place. A distribution centre is utilized where the stores are constantly filled with stock. There’s also a closing plan when the liquidation sales process is ending by first shutting down a few stores and depending on locations and leases over the next couple of months there will be a plan to shut down all locations and sell all the goods through retail. 

“We’re working on another deal right now. We’re making a bid to purchase the assets of a bankrupt company. If we win the bid, what happens is we purchase the inventory, I’ll send my team in and we’ll have four or five days to clear out their entire warehouse and in time we’ll just bring everything directly back to my warehouse where four to six weeks later we’re going to have an auction and we’re going to auction off all the inventory we bought in my facility.”

Factory Direct Closing (Image: A.D. Hennick & Associates)

Factory Direct filed an NOI under the Bankruptcy and Insolvency Act on February 7 and court approval gave the green light to liquidate the chain.

Factory Direct said in filed court documents that it had struggled with declining sales and increased costs following the pandemic. The retailer listed liabilities of about $3.5 million as part of its filing, including approximately $1.6 million in termination and severance pay owed to its employees.  High economic inflation and increased minimum wage requirements resulted in significantly increased overhead costs for the company, which failed to see sales increase enough to make the business profitable. The company lost about $1.7 million for the 11 month period ending November 30, 2023, according to court documents. 

Here’s What We Can Learn from Canada’s Response to Inflation in the 1980s and 1990s [Op-Ed]

By
Retail Insider
-
While the current episode of inflation has created challenges for many, this is not the first time Canada has gone through such an experience. THE CANADIAN PRESS/Sean Kilpatrick

For the last two years, inflation has been at top of mind for Canadians. It is a tax on households. When prices rise, the purchasing power of each dollar earned falls.

This generates huge losses for the economy, as well as households on fixed incomes, and increases uncertainty, making it more difficult to plan for the future.

The real question in the minds of many economists is what the trend in inflation will be going forward, and when interest rates will begin to fall and bring relief to Canadians.

While this episode of inflation has created challenges for many, this is not the first time Canada has gone through such an experience; we have been here before.

Inflation in the 1980s and 1990s

A middle-aged man in a suit speaks to someone while looking off screen
John Crow, Governor of the Bank of Canada from 1987 to 1994, talks to reporters at a news conference in Ottawa in March 1993. CP PHOTO

Canada faced a serious inflation problem in the 1980s and 1990s when the consumer price inflation (CPI) index hit 13 per cent in 1980 and was still at seven per cent in 1991.

To solve this issue, in 1991, the Bank of Canada and the Minister of Finance agreed on a plan to bring inflation down to a target level. Initially, this was six per cent, but this was lowered to two per cent (within a one to three per cent range).

The Bank of Canada uses the overnight rate to control inflation. This rate determines the rates of government treasury bills, the bank rate and variable rate mortgages.

In August 1981, the Bank of Canada pushed this rate to well over 20 per cent — equivalent to a variable rate mortgage cost today of almost 23 per cent. In May 1990, the central bank increased the rate to almost 14 per cent. In both cases, the central bank brought inflation down, but at the cost of a serious economic slowdown.

The pandemic fuelled inflation

The inflation target was most recently renewed in December 2021. It was remarkably effective until summer 2021, when inflation exceeded the three per cent range and peaked at over eight per cent in June 2022.

The root cause of this inflation was not domestic like it had been in the 1990s. Rather, it was in response to the COVID-19 pandemic, which affected all major Western economies.

Canada was not alone in increasing its debt so citizens could stay home and limit the spread of infection. The Bank of Canada lowered the overnight rate to 0.25 per cent and intervened massively to buy the government’s debt.

Initially, it was believed these inflation increases would reverse as supply chain challenges resolved, so central banks were slow to react.

But this assumption proved false. As the pandemic receded, Canadians began spending the money they had stored away during lockdowns. With low interest rates, the prices of assets like houses and shares dramatically increased. The Russian invasion of Ukraine added another economic shock.

By this point, high inflation had started to become entrenched in the expectations of businesses, unions and individuals. As history shows, once inflation becomes entrenched in the economy, it is very difficult to reverse.

Taming inflation

The Bank of Canada, although slow to react, successfully reversed the increasing inflation trend with 10 interest rate increases between March 2022 and July 2023 and by increasing the overnight rate to five per cent.

Inflation fell to 3.1 per cent in October and November 2023, creating optimism about returning to levels that would assure the Bank of Canada that inflation had been tamed.

An older man in a suit speaks into a microphone while a woman sits beside him. Behind him, Canadian flags can be seen.
Tiff Macklem, Governor of the Bank of Canada, and Carolyn Rogers, Senior Deputy Governor, hold a press conference at the Bank of Canada in Ottawa on Jan. 24, 2024. THE CANADIAN PRESS/Sean Kilpatrick

Despite core inflation remaining stubbornly above three per cent, this relative success allowed the central bank to hold the overnight rate at five per cent, increasing the possibility of lower interest rates.

This confidence was confirmed with the January CPI coming in at 2.9 per cent, just inside the Bank of Canada’s operating band.

It’s clear that central banks must act as soon as they can to prevent inflationary expectations from becoming entrenched in the economy. Once entrenched, the economy ends up bearing significant pain to reverse it — pain that is not spread evenly across the population.

Food and shelter costs

Interest rates and inflation are inextricably linked and they affect households in different ways. The CPI measures the rate of inflation on a basket of goods, but not all households consume every good in the basket, and not all prices increase at the same rate. Therefore, the impact of inflation varies across groups.

Younger, poorer households spend a disproportionately large portion of their income on food, which has seen major price increases over the last two years. Similarly, those commuting from the outskirts of metropolitan areas faced higher commuting costs when gasoline prices spiked.

However, the biggest anomaly is in housing costs, where increasing interest rates designed to lower inflation automatically translate into higher rental costs and imputed housing costs.

In its January 2024 CPI report, Statistics Canada reported that rental costs increased by 6.2 per cent year over year, while food price inflation was still up 3.9 per cent.

Together food and shelter costs amount to 45 per cent of the CPI, but younger, poorer households have disproportionately suffered because their price index is skewed more toward food and shelter.

A waiting game

The impact of higher interest rates in Canada’s mortgage market depends critically on the maturity of someone’s mortgage and rent controls.

Many households with variable rate mortgages, or those renewing mortgages during this period of high interest rates, are struggling with significantly higher mortgage payments.

Additionally, those who know they will have to renew their mortgage in the coming year are taking steps to adjust to those increases.

In fact, approximately 20 per cent of mortgages held by some of Canada’s biggest banks are negatively amortized, meaning homeowner payments do not cover the monthly interest charges. So, each month, the amount owed on the mortgage increases. Needless to say, many are urgently hoping for interest rate reductions in 2024.

Right now, the Bank of Canada is waiting to see what happens to inflation in the coming months before deciding whether to hold the overnight rate where it is, decrease it or increase it. This decision hinges on whether it feels the underlying or core rate of inflation aligns with its target zone.

The central bank is well aware that signalling a reduction too early could feed into greater consumer spending and higher inflation. So interest rates could stay where they are for several more months. While shelter and food price inflation will moderate, don’t expect actual prices to revert back to pre-pandemic levels.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

By Walid Hejazi, Professor of International Business, Rotman School of Management, University of Toronto and Laurence Booth, Professor, Rotman School of Management, University of Toronto

Food Preferences in Canada Changing as Millennial and Gen Z Demographics Shift [Op-Ed]

By
Sylvain Charlebois
-
Too Good to Go at Ponesse Foods in St. Lawrence Market in Toronto (Image: Dustin Fuhs)

Millennials now outnumber Boomers in our country, as per Statistics Canada. As of July 1, 2023, the millennial generation (born between 1981 and 1996) has surpassed the baby boomer generation (born between 1946 and 1964) in population size for the first time. Boosted by immigration, Canada’s median age has dropped to 40.6 from 41.0 just two years ago. Consequently, Canada is more populous, younger, and no longer dominated by Boomers. Generation Z (born between 1997 and 2012) is expanding and has surpassed Generation X (born between 1966 and 1980) to become Canada’s third-largest generation, projected to become the largest within the next 30 years.

The implications of a growing and younger population for the food industry are multifaceted.

Millennials are distinct from other generations in their racial diversity, higher education levels, and technological literacy. They also face financial hardships later in life, unlike previous generations that typically encountered a challenging job market or an unforgiving economy at a younger age. Now at their economic prime, with some having families, Millennials are feeling the financial pinch from higher interest rates and rents. After a period of low unemployment and cheap money, this generation is facing a severe financial reality check.

This shift is evident in their grocery shopping habits. Over 86% of Millennials are actively seeking discounts, and over 66% have switched primary grocery stores in the last 12 months to find better deals, both percentages being the highest of all generations. Additionally, 43% are using food-rescuing apps to buy expiring food at a discount, again the highest usage percentage of all generations. The economic and financial transition Millennials had to navigate has been drastic.

Previously, Millennials frequented specialty stores, seeking fresher, natural, environmentally conscious food with clean labels. However, their new financial reality has forced a shift in priorities. Despite this, their values will not disappear, and as they become more economically influential, they will shape the food industry. Millennials’ preferences for ethnically diverse food and snacking will continue to influence grocers and food service operators. Our recent survey found that 28.3% of Millennials often replace meals with snacks, compared to just 8.7% of Baby Boomers, with lunch being the most replaced meal.

Interestingly, Millennials rely on friends and family as their primary source of information about food, unlike Boomers who turn to health professionals. They also pay close attention to food labels. Supported by social media, Millennials have challenged the food industry, advocating for clean labelling, better sourcing of ingredients, and healthier options. Despite facing financial challenges, they will likely continue to influence the industry and rely on the growing Gen Z group to push for changes for the betterment of everyone.

As the food industry adapts to the evolving preferences of Millennials, it will also need to anticipate the emerging trends brought by Generation Z. Gen Z’s values, shaped by their digital-native upbringing and heightened social and environmental awareness, will further push the industry towards transparency, sustainability, and innovation.

For instance, Gen Z’s preference for alternative protein sources is likely to accelerate the shift towards more sustainable food production. Their comfort with technology will also drive the adoption of online grocery shopping and food delivery services, which have already seen a surge during the pandemic and beyond.

Gardein Plant-based Products at Metro (Image: Dustin Fuhs)

Moreover, Gen Z’s emphasis on authenticity and experiences may lead to a rise in experiential dining and unique food offerings. They are also more likely to support local and small-scale producers, aligning with their values of sustainability and community.

As Millennials continue to exert their influence on the food industry, the upcoming Gen Z cohort will bring its own set of preferences and values, further shaping the future of food. Understanding and adapting to these generational shifts will be crucial for businesses in the food sector to stay relevant and thrive in the years to come.

1...638639640...1,394Page 639 of 1,394