Robert K. Brown of Axis Communications Discusses Intelligent Analytics and AI for Retail
Craig has a discussion with Robert K. Brown, Solutions Engineer at Axis Communications, about topics including intelligent analytics and artificial intelligence, machine learning, and how cameras are being used as a tool to coordinate the enhancement of the overall retail experience in stores.
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Interviewed this episode:
Robert K Brown, Solutions Engineer at Axis Communications
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Retailers these days are being hit with a double whammy – the pandemic and the war in Ukraine – which are both creating supply chain challenges and driving up their costs.
Those two punches are also hitting the consumer as the flow of goods is interrupted and prices are increasing to meet those rising costs.
But one retail expert said certain parts of the supply chain are still making a lot of money.
George Minakakis
“Inflation itself, it’s not you and I buying more products. It’s profiteering and greed that is actually driving inflation and the consumer is about to be punished by higher interest rates because there’s no other control on inflationary pricing that is being put on product to be brought across the ocean,” said George Minakakis, Principal of advisory firm Inception Retail Group Inc., and author of The New Bricks & Mortar Future Proofing Retail.
“I was reading an article on the weekend that said if you bought a container ship today and you filled it with containers, one voyage will pay for the ship. That’s how much money these guys are making.”
“So there’s no suffering on the part of the supply chain distributors, the logistics of it. The brokers are making money. People who have containers are making money. Everyone seems to be making money along the food chain when it comes to bringing product over but the retailers aren’t. I’ve heard crazy stuff – that retailers are being asked to pay as much as 19 per cent more for product. How do you justify 19 per cent more when inflation is 5.7 per cent? It doesn’t make sense.
“So in order to stay in business you’re going to have to pass this along to the consumer. But how do you successfully deliver that to me as a consumer and now tell me my barbecue is going to cost me 19 per cent more if I want to buy one than it did a year ago? I’m going to put that sale off unless you bring that price down to a reasonable level. Most of the rational retailers are saying they’re going to have to price product slightly under inflation in order to be able to move it. I still have to make up my costs but I’m going to have to price it under inflation. Retailers are going to have to respond to this with higher prices and consumers are going to make choices.”
Canadian Tire at CF Toronto Eaton Centre (Image: Dustin Fuhs)
Minakakis said his company did a survey in the middle of March asking consumers what changes they were going to make to offset inflation and 41.9 per cent said they were going to cut back on everything and save money while 24.8 per cent said they were going to cut back on going out, 18.3 per cent said they would make no changes, and 15 per cent were going to spend less on vacations.
This is going to impact every retailer. They’ve had two rough years already of opening and closing because of health restrictions and now they’re open again. But questions remain about the pandemic with a new variant out there now. Also, how confident are consumers to be going out with mandates on mask wearing lifted. Minakakis said it’s going to be a tough year this year for retailers.
He said government money has kept many businesses from closing permanently but we need to keep in mind that we don’t know how many businesses actually failed without filing for bankruptcy because bankruptcy costs money and many small businesses can’t afford it.
“The big failures will either happen this year or there’s enough small businesses that have failed that will offset that,” explained Minakakis. “It all depends on how bad inflation gets.”
Retailers will have to discount prices to keep consumers spending, price their products correctly, and cut their costs down to compete.
“If you want that higher price, you better back it up with great value and great service because how else are you going to retain customers? They’re going to have to feel it was worth that 5.7 per cent or eight per cent higher price they paid,” said Minakakis.
Gary Newbury
Gary Newbury, Chief Supply Chain Officer On Call and Founder of RetailAID.ca, said it’s a very challenging situation for retailers today.
“Just stepping back and thinking about who will survive, I suspect it’s the luxury organizations that already have brand loyalists, they already command pretty heavy margins or pretty high margins, and at the other end the discounters, the Walmarts, the dollar stores. Their consumer base has got stretched budgets already so they’re in a good position to capitalize on those people being constrained on their budgets,” said Newbury.
He said the retailers in the middle, the mid-price point retailers, should be very, very concerned at this point in time because their ability to get stock has been constrained over the last two years and it’s not going to get much better.
“And the costs of getting that stock to them through a global transportation system is going up and up and up and there doesn’t seem to be a ceiling for it to come down. It just keeps going. We thought it would stabilize and contain the price but it went to about tenfold increases and that’s still going up and we’re adding the energy costs to actually physically move things. There doesn’t seem to be a ceiling to any of this,” said Newbury.
“So they must be worried that they’re faced with a situation where they can’t put the price up and it’s highly understood. They have to continue to wear some of these excessive costs but they haven’t got a consumer base that’s particularly loyal to them beyond what the price is on the shelf.’
He said old strategies in the retail sector and ways of doing things need to be rethought as retailers need to get back to the basics and if that means they have to lose a lot themselves to try and get a much closer idea of what the consumer is, try to build loyalty within that smaller segment, that’s what they need to do.
Winners at 110 Bloor Street W in Toronto (Image: Dustin Fuhs)
How much could they boost prices by, lose say 40 per cent of their business, and still be profitable?
“I’m not sure how many retailers are thinking in that way because we’re just talking about the basic economics in how to run a business,” said Newbury. “I think they’re still stuck in we’ve got stores, we’ve got e-commerce, we’re running promotions, we’re doing this, we’re doing that, which wasn’t particularly working in the 2010s, but they have to untick some of these things and re-imagine them as to what 2022 will look like.”
Newbury said he had thought that the fourth quarter of 2021 would have been a defining period with a massive shakeout for retailers but coming into January of this year nothing happened – and that’s most puzzling to him.
“This is almost illogical and all I can assume is the arrangements around the leases and the landlords being cooperative, maybe they got money from the government . . . it’s just been enough to get them to now. If that’s true and they haven’t started to do that rethink of their business and how they’re going to compete for 2022 . . . I think we’re going to find a situation where we’re going to see a reshaping of the retail industry during this year in Canada,” said Newbury.
Space NK at Queen Street flagship. Photo: Hudson's Bay
Hudson’s Bay has added three Space NK locations to its Canadian stores, effectively doubling the number of shop-in-stores for the UK-based beauty apothecary concept in the Canadian market. It’s part of an effort on the part of Hudson’s Bay to grow market share for its beauty business as competitors such as Sephora continue to open stores.
New Space NK locations at Hudson’s Bay in Canada include shop-in-stores at the Queen Street flagship in downtown Toronto, at CF Carrefour Laval near Montreal and at CF Market Mall in Calgary. They join three existing Space NK shop-in-stores at Hudson’s Bay that opened in October of 2021 in downtown Montreal and downtown Vancouver as well as at Toronto’s Yorkdale Shopping Centre.
Online portal TheBay.com also carries the full range of prestige and indie beauty brands from Space NK including haircare, makeup, skincare, bath, body, and fragrance.
“Space NK at the Bay is an unmatched experience—customers will discover the most sought-after brands, many of which are new to Canada, complemented by our incredible and expansive beauty assortment,” says Laura Janney, Chief Merchant at The Bay.
CF Carrefour Laval. Photo: Hudson’s BayCF Market Mall in Calgary. Photo: Hudson’s Bay
Currently, 18 brands are featured at Space NK in Canada including Chantecaille, Boy Smells, Tata Harper, Sunday Riley, Dr. Dennis Gross, R+Co, Kevyn Aucoin and most recently Malin + Goetz. In addition to the availability at Hudson’s Bay locations, 25 other stores also feature branded Space NK ‘haircare towers’.
Hudson’s Bay says that it plans to open more Space NK shop-in-stores into 2023. The move signals the retailer’s intentions to beef up operations in its beauty halls that are seeing increased competition.
That includes LVMH-owned Sephora which said in a press release last year that it was planning to open an additional 50 stores in Canada. Sephora already has expanded aggressively in the Canadian market including in 2016 when it launched a ‘takeover’ of the Toronto market which saw new stores open and others expanded.
Shoppers Drug Mart has been adding more beauty brands to some of its stores as part of its beautyBOUTIQUE initiative. Even brands such as Chanel can be found in some Shoppers Drug Mart stores and competitor Rexall has also been growing its beauty business, albeit at a slower pace.
Large-format retailers Holt Renfrew and Nordstrom also have robust beauty floors — Holt Renfrew’s six large stores boast many of the world’s top brands while Nordstrom offers a range of unique products at various prices. At the more affordable end is Walmart which in the US will be launching some Space NK shop-in-stores according to an announcement last month.
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 24 hours.
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 24 hours.
Kitchy US-based candy retailer IT’SUGAR is expanding into the Canadian market this year with its first store set to open at West Edmonton Mall in Edmonton.
The West Edmonton Mall storefront will span about 4,000 square feet on one level and will be located on the main floor of the mall beside an entrance to the Galaxyland amusement park. A West 49 store is located directly next to it and a Footlocker House of Hoops across the way.
The location will become an added attraction to West Edmonton Mall which years ago had a large candy store that has since closed. The chosen location next to Galaxyland is strategic with a corner storefront that has high visibility both to shoppers in the mall as well as those in the amusement park.
Click image for interactive West Edmonton Mall map
Image: IT’SUGAR
Image: IT’SUGAR
IT’SUGAR has become one of the largest of its kind in the world. Its website says that the retailer is “known for their absurd sugar innovations that celebrate lighthearted rebellion”. IT’SUGAR caters to young adults with sweets with names such as ‘Dingle Bearies’ (chocolate covered gummy bears) ‘Flinging Poo’ (chocolate covered banana chips) and ‘Schweddy Balls’ (based on the Saturday Night Live-inspired treat, being salty chocolate balls). Products range from well-known brand names to creations by the retailer. Many products are exclusive and private-label which also includes apparel and novelty items which make up an incredibly substantial part of the business.
The goal of IT’SUGAR is to create a positive customer experience. Posting brand messaging includes statements such as the brand encouraging “the world to not take itself too seriously” while providing “access to the pure joy that comes from indulging in a world with fewer rules and more sugar”.
Candy veteran Jeff Rubin founded IT’SUGAR in 2006. He grew up in Michigan where his family owned a candy store chain called Mr. Bulky — as a child he sold chocolate bars and bubblegum to his classmates. As an adult he joined US toy retailer FAO Schwarz in New York City where he operated the company’s candy department dubbed ‘FAO Schweetz’.
Image: IT’SUGAR Honolulu, Hawaii
In 2000 he and Dylan Lauren (daughter to fashion designer Ralph Lauren) founded Dylan’s Candy bar and in 2005 they parted ways before he founded his own candy business.
IT’SUGAR operates almost 100 stores in the United States. The stores are located in major shopping centres, tourist attractions, outlet malls, urban street-fronts and even inside of Macy’s in New York City.
In 2017, BBX Capital invested in IT’SUGAR, enabling the retailer to grow faster including opening its largest location during the pandemic at American Dream near New York City. That three-floor store is described as being the “world’s first candy department store” spanning a whopping 24,000 square feet.
In Canada, it’s unknown if more locations will be opening. We’ll follow up on this story when IT’SUGAR opens its first Canadian store at West Edmonton Mall.
Bri-Mor Developments continues to build out its retail presence in Calgary with its latest project an 85,000-square-foot centre called Cityscape Square in the northeast, which is anchored by an ethnic grocery store.
Aleem Dhanani
Aleem Dhanani, Managing Director of the company, said the development will provide a full range of services from family-oriented restaurants, retail and local specialty shops, daycare, health and wellness and professional services along with three drive-thru pad locations.
“We know that Calgary is a great place to do business. The demographic is great. There’s a lot of economic potential in Alberta and Calgary is kind of the leading engine there and there’s a great entrepreneurial spirit. It’s a city that’s made up of entrepreneurs and with a lot of great values and great ambition,” he said.
“So we know we want to be here and we’ve created a set of tools to help us absorb the ups and downs of the market. You can make a success of any market but you have to adapt to that market and you have to adapt over the different times.”
Click image for interactive Google MapCityscape Square (Image: Colliers Canada)
The retail development is located on the highly-visible corner of Metis Trail and Cityscape Boulevard.
“It’s in the northeast which is the fastest growing quadrant in the city and it’s in the fastest growing node in that quadrant where even during COVID the price point was such that home sales didn’t really stop,” said Dhanani. “It’s growing at such a fast pace. When it’s a build out, we’re expecting 80,000 people within three kilometres and with those projections as well as the future LRT, this abuts to Metis Trail which is such a great collector. It means our tenants can service not only the community but then they get to service people going and coming from work.”
Across the street, a 1.9-million-square-foot industrial real estate development is also under construction.
“So we get the benefit of residential on one side and then we’ve got the worker customers. That’s a sizeable industrial play so we’re expecting it to become a significant employee base.”
Cityscape Square (Image: Colliers Canada)
The first openings include Guru Fine Indian Dining and Sweet Shop, southwest Calgary’s premier Indian fine dining restaurant with a second location with a concept that incorporates a private dining room, sit down restaurant and a sweet shop. Guru specializes in a wide range of dishes from the Indian subcontinent.
Sanjha Punjab Grocery is one of Calgary’s best known independent Indian and South Asian grocery stores, offering a wide range of authentic high quality grocery items and fresh produce and this is their fourth location in Calgary.
There will be nine buildings on the site. Retail will take up about 70 per cent of the space.
“In the face of COVID we actually started construction of Cityscape when the vaccines weren’t out yet and society was wondering what’s going to happen but we made the decision to dig because we have that confidence. As we look forward, the one thing that is highlighted about Calgary, particularly the entrepreneurs in Calgary, is that there’s still a lot of entrepreneurial courage to actually start a business again,” said Dhanani.
“So as much as there was challenge over the last several years with COVID, we haven’t found that retailers are not excited to come, expand or to build out.
Cityscape Square (Image: Colliers Canada)
“I think what’s important for retail is to make sure that there’s people ready to purchase their products. You want to be close to rooftops is what we say. When you have 80,000 people within three kilometres there’s a lot of rooftops there and that makes for an even greater success of your site. Our projects are quite strategically placed.”
Cityscape Square will include a 7-11 Convenience, Gas and Carwash, Crown Liquor, Apollo Physio, Cityscape Dental, Cityscape Optometry, Subway, Crown Barbers, Mary Browns Chicken, Dominos Pizza, Lahori BBQ, Madras Café, and Summit Kids Day Care.
Dhanani said the area has a heavy concentration of South Asian and Asian people and it is very culturally diverse and culturally animated.
He said the company has been blessed with very strong strategic homebuilding partners in some of its developments such as Mattamy, Brookfield, Qualico, Cedar Glen.
Cityscape Square (Image: Colliers Canada)
“It’s because of those partnerships that we get an even greater source of strength in dealing with the market and bringing the best in class assets and teams to the table. Strategic partnerships have been really critical,” added Dhanani.
Bri-mor Developments was launched in 1988 by Haider Dhanani but, after his death, his wife Fatima took the reins determined to celebrate her husband’s vision of a company run on a value-based approach to managing real estate assets, with a focus on trust of customers and industry partners, value creation and a strong work ethic.
Fatima said Bri-mor started as a property management company and evolved to where it is today.
“From property management, I started acquiring small apartment buildings because at that time, and this was about 25 years ago, the market was conducive to that segment of the real estate and profitable at that time, and once I got the handle of managing that and learning the ropes of making profitable transactions, I went on to picking up small parcels of land and that’s where the development side of the business started,” she said.
“It evolved very slowly. It was all market driven. We have followed the market. We have also entered the residential single-family and that has been pretty good.”
In recent years, mega retail optical chains have entered the Canadian market, making headline news about their grand expansion plans.
Gina Kay
But some independent stores like Cristall Opticians in Toronto continue to survive and thrive despite the challenge presented by these big players.
“Being in the business for so long, we’ve seen a lot of changes,” said Gina Kay, owner/optician of the company. “We offer value and it’s always been fair and we can compete price wise on quality eyewear. So it was never a challenge for us.
“We tried to create our own niche and market so we never have to compete with anybody. But our priority was never price. It was never number one. So you don’t have to compete against price if that’s not your main issue.
Image: Cristall Opticians
“We compete against service and frames that you cannot get anywhere else. That’s our focus. Not selling frames on the internet that can be found on the internet. Not selling frames that can be found in any other store. That’s our drive and our focus and that’s how we separate ourselves.”
Cristall Opticians has been located on Bay Street, just south of Bloor, since 1980. The business was founded by Kay’s father.
“When that building was built, we moved in,” she said. The store is located at the base of the 1166 Bay Street luxury condominium tower that was originally developed by Cadillac Fairview.
“My father had a friend that he went to university with at U of T and he was in real estate. My father was an eye doctor but also very entrepreneurial with stores out West and he said he had a spot available in this building and if he wanted it. My dad came and took a look at it and they shook hands and it was ‘pay me rent when you can, make some money’ and it was all on a handshake and here we are now.
Gina Kay and Sister Alison. Image: Cristall Opticians
“My dad always knew you had to be in the middle of everything to make money and to get the people and he just knew that that was going to be the best place for us.”
The family is originally from Brandon, Manitoba, and her brother has some locations out there under the same name.
“Our father taught us a few things over the years. We started working very young with him. The most important thing is what we offer, selection that’s unique to anywhere else,” said Kay.
“We have service that’s unique to anywhere else. And he also taught us value, that the price should be fair. So that’s the focus we go for. The top three.”
Kay said her sister, who owns the Toronto business with her, and herself are not interested in opening another location. They want to focus on this one location.
Gina Kay and Alison Dressler
with new store hoodies circa
1993
The store was named for our maternal grandmother, Jessie
Cristall circa 1960.
“We know the more you divide yourself the more difficult it is. Staff is always the biggest problem in any business because you can’t replace yourself. You can only do your best to find the best people and it’s not unique,” she said.
“We plan to keep doing what we’re doing. We plan to do a little renovation in our store. We need a little bit of a facelift and we just want to keep increasing our reach. I would say one of the most important things to us, to me, is social media. I’ve always said that Google and Google Reviews has changed everything. It’s really evened out the playing field for big optical and the independents because it doesn’t cost anything to advertise. Well pretty much it doesn’t have to cost anything to advertise. You just get your reviews out there and you get good reviews and people will come from all over. And they do.
“And there has been a massive shift in our ability to reach people – the diversity of our clientele and it’s been really interesting to watch. There’s a lot of unsatisfied people who can’t find what they’re looking for and we can solve their problems. That’s very exciting for us.”
Kay said that over the pandemic it established an online store but not with the intention of competing against the big optical online retailers. She said the initiative was done as an extension of its business for people who are further away to take a look at what Cristall Opticians has and what it offers. But most of the time people look online but then come to the store, which has been a source of the company’s wider reach.
Cristall Opticians (Image: Craig Patterson)
Kay said the store has three full-time opticians and three optometrists who split up their week with Cristall.
“We have doctors there three to four days a week right now. We are hoping to expand that. That would be a goal. I’d love to have more doctors because we’ve really grown that part of our practice as well which has been a great thing for us,” she said.
“Our sales are better than they’ve ever been. I’m comfortable with who we are and our growth. We offer value. We don’t try and find things that we can charge a ton for. I just want people to know that there’s independent optical out there. All these big companies are buying up the little companies. We’re probably the oldest independent store, for sure in our area.”
“These strengths include outstanding customer service, premium location in Yorkville which allows them to serve affluent customers at higher price points, wide assortment of numerous brands covering all customers, personalized services where customers are on a first name basis and finally the flexibility and agility to pivot to online during the pandemic,” he said.
“These go-to-market strategies and tactics are in sharp contrast to popular optical chains and digital natives who may lose some of the personal service aspect of the experience and focus on lower price points to drive higher unit volumes. In fact, the online optical market has become quite crowded of late with U.S. brands such as Warby Parker entering Canada.
“Congratulations to Cristall Opticians for celebrating more than 40 years and thriving in a very competitive landscape. Perhaps a blueprint for other independents competing against larger players in other markets.”
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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.
