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AI-Powered Technology Enables a Hyper-Personalized Gotengo Online Experience

GOTENGO AI-DRIVEN PLATFORM FOR INCREASED PERSONALIZATION. IMAGE: GOTENGO

The power of technology is all around us, its impact present in just about everything that we do. For decades, its development has been critical in providing support and satisfying vital infrastructure requirements for nearly every industry and sector around the world, aiding the evolution of virtually everything it’s touched. Today, it’s ubiquitous, so deeply embedded in our everyday lives, so connected to the things we do and the instruments we use, that the potential it poses to positively influence our experiences is profound.

The innovation involved in many of today’s advancements is also helping to drive a need in people for curated, personalized experiences that are informed and supported by technology. It’s a need that is perhaps most prominently pronounced by gaps in the online retail customer journey, one that’s resulted in a tremendous amount of retailer investment and the adoption of a singular focus and effort by many developers of software and digital technologies to unlock the door to the age of personalization for the consumer. And among these efforts is one pure-play e-commerce company that believes it just might have the key.

Gotengo, a Toronto-based online menswear retailer, has developed a proprietary AI-driven platform that it says “offers shoppers the ability to hyper-personalize their shopping experience” and makes shopping for apparel online easier and more convenient. Launched earlier this year, the online retailer promises a different kind of e-commerce experience and a unique way for consumers to shop for premium menswear in Canada.

GOTENGO AI-DRIVEN PLATFORM FOR INCREASED PERSONALIZATION. IMAGE: GOTENGO

Personalization and Customization

The technology, developed in collaboration with startup incubators MaRS and RU Fashion Zone, leverages a variety of deep learning and human intelligence to inform the AI, rating and ranking items on the website specific to the preferences of each user. Preferences are identified when the user answers a few simple questions, allowing for their customer profile to begin to take shape. Based on the preliminary information provided, which can include an uploaded selfie, if the user opts to provide one, the Gotengo platform is then able to make personalized recommendations that are more specific to the user and informed by current style, colour and sizing advice. In addition, users can search for product on the website based on their budget and the occasion that their purchase might be connected to.

“We’ve tried to build something that’s going to elevate the idea of personalization,” says Daniel Del Mastro, Co-Founder of Gotengo. “And we’ve done that by learning about our shoppers and by gaining a deeper understanding of the things that really matter to them. The platform that we’ve developed isn’t just another recommendation engine offering suggestions based simply on products viewed. Our platform goes a lot deeper than that to really inform our user with suggestions and advice that are more personalized than those offered by any other engine.”

In fact, there are several layers of personalization that a customer can choose to add to their profile, something that Del Mastro describes as Gotengo’s “hyper-tailoring”. This additional level of personalization addresses some interesting factors, including any ethical or body concerns that the user might have, as well as material and wash preferences, and more. Armed with all this information, the platform then aggregates a customized scoring system that’s used to support and help explain the recommendations being made to the customer.

“It’s all meant to take a lot of the friction out of the apparel shopping process,” Del Mastro asserts. “Everyone today is starting to expect personalization and customization. They want messages and information to be directed toward them. And we feel, with the introduction of Gotengo, that we’re at that starting point of a revolution that will result in true customization and a bridging of the gap between online and offline.”

GOTENGO AI-DRIVEN PLATFORM FOR INCREASED PERSONALIZATION. IMAGE: GOTENGO

Heightened Service and Selection

The company believes that one of the ways this can be achieved is through the building of customer trust in the Gotengo customized tailoring process and the accuracy of the recommendations that it provides. The current return rate for apparel bought online in Canada, according to most sources, hovers somewhere between 30-40 per cent. Boasting an early reported return rate significantly lower than the industry average, combined with its emphasis on fast next day shipping to anywhere in Canada, it seems as though Gotengo just might be on to something.

Another way the company’s attempting to bridge the gap between the online and brick-and-mortar customer experience is through the offering of a smart selection of brands and styles. Gotengo currently works with brands that include Ted Baker, Tiger of Sweden, Colorful Standard, Kovalum, L.L. Bean, Stone Rose, Bruun & Stengade, and others, providing a breadth of choice that it hopes will appeal to a range of shoppers.

“It’s frustrating sometimes to look at American websites and the wide selection that they offer,” laments Del Mastro. “There has always been a distinct lack of variety with respect to brand and style offering on Canadian e-commerce sites, particularly in the luxury menswear space. Everyone seems to be selling the same things. We want to disrupt that norm by offering the brands that people are familiar with as well as a selection of lesser-known brands that have smaller distribution in Canada to help provide that selection that’s currently lacking online in the country. In fact, later this fall, we’ll be introducing a number of brands that will be totally unique to the Canadian market, providing our customers with more choice than they could find anywhere else.”

So far, the company’s been able to deliver on its mandate of style and selection through meaningful partnerships that have been built with the many Canadian and global distributors and brands it works with. It’s a philosophy that Del Mastro says Gotengo is very proud of, and one that is currently reaping rewards for the online retailer and its customers.

“The way we approach our work with distributors and brands is from the perspective of true partnership,” he says. “We want to actively help strengthen the online menswear ecosystem and cultivate relationships that are mutually beneficial for Gotengo and our distributor and brand partners. We lean on them for the knowledge and expertise that they’ve gained through years of history. And they have the opportunity to leverage the power of our technology and personalized platform. The types of partnerships that we’re building are intended for longevity and designed to enhance all businesses involved, helping everyone to continue growing in a changing world.”

A Holistic Online Solution

Its varied assortment, made possible by its strong distributor and brand partnerships, along with the customization tools provided by the Gotengo platform, certainly puts the company on the map as one of today’s innovators in online menswear personalization. However, if a shopper wishes to shop Gotengo as they would on most other e-commerce websites, searching for product by brand or style or price, they can do so without taking advantage of the custom tailoring while enjoying the same great online experience. In addition, despite the way in which the shopper chooses to engage and interact with Gotengo, personal customer care assistance is available around the clock to provide almost immediate advice concerning style, fit or anything else.

“We want to cater to the needs and preferences of the customer, whatever they are” states Del Mastro, “allowing them the freedom to engage with us in whichever way they want. We simply provide the tools to help make their experience shopping for menswear online as personalized and curated as they’d like it to be. In that way, we offer a much more holistic solution than most others in the category.”

It may be early days for the fledgling online retailer, but Del Mastro confirms that sales have been positive so far, underscoring a desire in the consumer for a more personalized experience and an opportunity for Gotengo to exploit an underserved Canadian menswear market. And, although he recognizes the excitement of the company’s early success, he admits that the introduction of their platform is just the beginning.

“We want to become the go-to destination online for menswear in Canada and to continue to bridge the gap between the online and in-store experience. We want to continue developing ways that allow us to go deeper into personalization and customization, simplifying the online apparel shopping experience for the Canadian consumer even further. And we’re enthusiastic about our plans and the possibilities to leverage new and different technologies in the future to continue enhancing the overall Gotengo experience, enabling us to expand our unique and progressive offering and service.”

Canadians to Overwhelmingly Shift to Online Holiday Shopping: Survey

Friends celebrating Christmas or New Year eve party with Bengal lights and champagne. Image: Adobe Stock Images

This holiday shopping season no doubt will be unlike any other retailers have ever experienced and more shoppers are expected to conduct their activities online due to the on-going COVID-19 crisis.

The RedFlagDeals.com 2020 Holiday Survey confirms the trend in e-commerce which has received a boost since mid-March when the retail industry was first rocked by the pandemic amid store closures as shoppers who never shopped online before then turned in this direction.

93.55% OF PEOPLE WILL SHOP ONLINE THIS HOLIDAY SEASON ACCORDING TO RED FLAG DEALS

When people were asked if they will be shopping more online or in-person this holiday season due to COVID, 93.55 percent answered online and 6.45 percent answered in-person.

Kate Musgrove, Director of RedFlagDeals.com, said the most obvious result from the comprehensive survey was the percentage of people planning to do their shopping online.

“I think there are a lot of factors that we aren’t really sure of yet. I think we’ll certainly see it continue into 2021. I don’t know if we’ll see it continue into the holiday season for 2021 — a full year from now,” she said. “But certainly the beginning of the year we’ll continue to see people shopping online, taking advantage of the new features that some stores have rolled out like curbside pickup, click and collect style thing where they don’t have to enter the store and employees bringing the product to their car. It’s paid online.

“It’s that sort of hybrid that people have found really helpful in the past couple of months.”

When asked where people will do the majority of their shopping, 62.15 percent said online, 30.14 percent said online and in-person and 7.17 percent said in-person.

“It didn’t really surprise me. Everything considered anecdotally I know people like my mother-in-law who loves shopping in-store and has always done her holiday shopping in-store has now told me she’s now shopping online. These are the websites She has accounts at that she can shop on and this is where she’ll be getting our holiday presents,” said Musgrove. “She’s just not willing to gamble waiting to see if she’s able to shop in-store like normal. She doesn’t want to wait and see how the pandemic goes, how COVID numbers develop. She wants to do everything online and this is the first time in her adult life that she’s taken that approach.”

It’s an approach that will become increasingly more popular in the coming weeks and months.

When asked what major event do they plan on making their most holiday shopping purchases, 58.78 percent replied Black Friday with 9.47 percent on Cyber Monday and 12.43 percent on Boxing Day.

“People have appreciated having a shopping holiday that takes place before Christmas and sometimes before Hanukkah sometimes not depending on how the year falls and I think retailers have responded to consumer interest by saying let’s push out the deals, let’s push out some bargains, let’s stretch out the holiday shopping experience,” said Musgrove.

“There isn’t a retailer in Canada these days who is not taking advantage of Black Friday and that wasn’t true five years ago for sure.”

When asked when they plan on conducting their holiday shopping, 42.92 percent said November, 12.89 percent said October, and 10.62 percent said December.

The categories of retail that most people are interested in buying are electronics 89.91 percent, clothing 59.55 percent, and home goods/appliances 41.56 per cent.

When asked if they plan to spend more this year than last year, 16.58 percent of people said yes, 40.60 percent said no, and 42.83 percent said the same.

Toronto Program Aims to Invigorate City Retail Districts with Artwork Initiative

Gertrude Stein once said: “The subject matter of art is life, life as it actually is; but the function of art is to make life better”. It’s a statement as poetic as it is profound, and one that speaks to the potential that art offers us as a possible agent of healing, communication, education and growth. It draws attention to its capacity to help us expand our thinking as individuals, as well as to deepen our understanding of the world we live in, sustaining a compassion for the people and things that we share it with. Her words are simple, yet they seem to convey in a very powerful way all of the qualities and benefits that art imparts, the ways it lends light to dark places, softens the hard and makes accessible the things that may have previously been made remote. It’s a philosophy that recognizes the cerebral, physical and spiritual responses that art stirs inside of us, making life more interesting, more dynamic and, as Stein suggests, simply better. And it’s also the philosophy that helps support and inspire the work done by The STEPS Initiative – a Toronto-based cultural organization dedicated to the use of art as a means to beautify our streetscapes, connect our communities and, as a result, strengthen and reinforce local business.

The organization, which operates as a CRA-certified charity, works with business improvement areas and other groups to identify public spaces that may require an upgrade. And through its services and collaboration with its roster of artists, it helps to transform urban areas, injecting vibrancy and verve into their surroundings, improving and enhancing them through arts and culture. It’s work that advances STEPS’ goal to foster stronger communities and strengthen the connections of those living within them, something that Alexis Kane Speer, Executive Director of The STEPS Initiative, believes is an integral component in ensuring the health and continued growth of urban neighbourhoods.

“Art has a power to connect people,” she says. “It has the power to engender a sense of shared understanding, bringing people together. It can also help to stimulate and nurture dialogue around topics that might otherwise be difficult because of differences between people. There’s a range of lived experiences represented in cities across Canada. Art provides a beautiful platform for these experiences to be shared and to give voice to people in our communities who are underrepresented.”

Inclusivity through art

Kane Speer’s comments are insightful and reflect STEPS’ mandate to showcase the work of diverse Canadian artists, with an emphasis on supporting the work of those who identify as emerging, Black, Indigenous, Person of Colour, female-identified and LGBTTQQIAAP. It’s a mandate and support that ensures the organization operates with the same openness and inclusivity inherent in the very notion of art, resulting in a host of incredible works being created and showcased in and around the city of Toronto.

Throughout its 10-year history, The STEPS Initiative has helped to produce over 200 public art installations, ranging from large-scale projects, like the world’s tallest mural located at 200 Wellesley Street East, to smaller-scale, more temporary activations that might include the adornment of vacant storefronts or construction sites. In each case, the organization and its artists help to transform these spaces that might feel dormant within the neighbourhood, re-envisioning them as places of culture and community.

“Every installation that we execute is different, unique to the communities that host them,” says Kane Speer. “So, with every project that we initiate, we make sure that we have a thorough understanding of the space we’re working in, including any cultural needs within the community and the identity that they might want to portray. The use of art can be an extremely helpful tool in telling the story of an area or neighbourhood.”

STEPS also offers a scope of services that help support the work it does through the development of its artists and the advancement of its vision to “shift the way cities are planned”. As part of these services, the organization provides local artists with technical skill-building workshops, mentorships, residencies, coaching on public art proposals, as well as paid production and exhibition opportunities. It also administers creative placemaking services that help communities transform their spaces to meet their changing needs, and cultural planning assistance that’s delivered through consultations on cultural master planning, community arts program design, public art opportunity mapping and more. In addition, STEPS operates its PATCH program, which helps to facilitate connections and partnerships between developers, builders and marketing firms and the artists, helping construction sites in the city meet legislated public art requirements.

As a result of STEPS’ focused support for artists and the improvement of the communities we live in, it has managed to enable more than 5,400 paid artist opportunities, 1,000 youth leadership opportunities and in excess of 10,000 community engagement opportunities. And, by way of its activations, work executed by STEPS and its artist collaborators has become recognizable throughout Toronto, yielding breathtaking public art, from mesmerising murals in the city’s Garden District and at 1 St. Clair West to the revitalization of the Roncesvalles Bridge. Their collective work, which is often typified by an injection of beautiful colours and impressive creativity, is helping to improve the neighbourhoods and areas it effects, at times turning once unsafe, unwelcoming places within communities into vibrant and inviting spaces, stimulating pride among residents of the activated areas.

Impact on local business

The work STEPS does in order to improve our collective surroundings is extraordinary. And its impact is immense, its beautification and improvement of public spaces and streetscapes positively influencing many other aspects of the communities it effects, including the health and success of local business. In fact, STEPS recently launched its ‘I HeART Main Street Art Challenge’, which ran through the month of September, with the objective of activating Toronto’s street fronts. Presented in partnership with RBC Royal Bank, pieces of the Challenge could be found at 204 activation sites across the city, which included 42 new works of art created by 25 emerging Canadian artists and designers, resulting in support for 11 Business Improvement Areas.

The ways in which art can positively influence local businesses and economies are plentiful and are recognized by Mark Ainley, Contemporary Feng Shui Consultant and expert on space and flow, who suggests that the juxtaposition that art diffuses onto our urban landscape can help dramatically change the energy and impression of a given area or community.

“Our urban environments can at times be very imposing,” he says. “The architecture found in most North American cities is really large in scale and has been made using hard materials. As a result, it can give off an imposing, intimidating atmosphere. The colours that are used in the construction of the buildings are usually very plain, too, resulting in a distinct lack of vibrancy. And our cities have tended to be built on linear grids using straight lines. These linear forms can bring about a speedier and thereby more aggressive quality to these spaces and the movement by people through them, which can foster impatience and aggression. If all of a sudden all of this colour and creative expression is added to this hard, linear environment and largely colourless, utilitarian architecture, generally speaking, there’s a significant and supportive shift in atmosphere that can take place.”

Ainley explains further how the injection of art and creativity into our lives helps to invigorate our senses and engage our curiosity, connecting us more to the environment around us. And he suggests that the type of work executed by The STEPS Initiative is exactly the kind of resource retailers and other local businesses should be leveraging in order to increase traffic to the communities they operate in and heighten exposure to their offerings.

“Many of our city streets are unfortunately predictable and boring. There’s often very little that’s particularly creative in their design,” he bemoans. “But artistic expression is unpredictable and unique. When well done, it can provide people with an experience unlike any other. Retailers need to leverage these kinds of artistic initiatives to appeal to people’s innate curiosity and interest. When you can stimulate those two inner states, you move beyond simple, mundane functionality, which can result in a level of involvement and engagement that enriches everything and everyone involved. So, instead of sticking to the basic and functional, retailers need to look at the things they can do to enhance the environment and surroundings, which can positively impact the overall retail experience.”

Important role of BIA’s

There are many things that retailers can do independently to achieve an enhanced physical experience for their customers. Much of which, however, is limited to the store’s interior and facade. But with the help of their business improvement areas, according to Larry Leung, customer experience expert at Transformidy, business owners can realize the benefits of art in their communities as a tool for engagement, allowing them to develop a deeper connection within the areas they serve.

“There’s a lot of research that indicates quite strongly the correlation between community transformation and beautification projects that leverage the use of arts and culture and decreases in crime in those areas,” he says. “And the same correlations can be made with respect to the positive impacts on local businesses. Art provides a great way to draw people in, to engage them on a different level, generating traffic and interest in everything a community has to offer. And this is where BIAs’ involvements are so important. They are the ones with the capabilities and the resources to be able to understand what identity their community needs to convey, how special projects like STEPS can help to tell their story and present that message, and how local businesses can become a part of that story and message.”

Leung stresses that the possibilities are abound with respect to the ways arts and culture can be leveraged to benefit everyone involved and that any and all opportunities to do so should be explored. He also cites that, as well as the positive impact that arts and culture have on generating local traffic to communities and storefronts, it’s also incredibly effective in influencing travel and tourism, providing a reason for people to visit cities, thereby boosting local economies further. And although the COVID-19 pandemic has muted travel and tourism worldwide, in addition to a number of other things, he suggests that now may be the perfect time for businesses and communities to be leaning on art to innovate and engage potential customers locally.

“Let’s face it,” he says, “with COVID, a lot of people haven’t really ventured out of their home, much less their neighbourhoods. It almost doesn’t seem worth it for most. But what if there was a reason to go out? What if there was a really great art installation, something new to discover and interact with? In that way, you can draw people out, make them feel good about venturing out, and provide them with an experience that they can’t find anywhere else.”

Responding to community needs

To that end, and in response to the impact of COVID-19 on communities and local businesses everywhere, STEPS recently organized and launched its COVID-19 Creative Placemaking Rapid-response (CPR) initiative. As part of the CPR initiative, STEPS is offering free consulting to both the private and public sector, including Canadian municipalities, BIA’s, community and non-profit organizations or businesses. The intention is to help communities identify spaces where art might help lessen the impacts of the pandemic and to offer itself as a resource to provide direction concerning the use of certain spaces.

“Right now, there’s an apprehension in people. There’s a shared feeling of discomfort and distrust, both with spaces that previously felt safe as well as with the people we share those spaces with,” says Kane Speer. “As a result of COVID-19, we’ve been forced to rethink all the ways we interact with physical spaces and people. We see our work as a way of rebuilding that sense of trust and improving public spaces in the process. We’re helping community and business groups navigate through reimagining how spaces are used, as well as what interaction with shared spaces might look like going forward.”

CHINATOWN BIA ARTWORK BY JIEUN JUNE KIM FOR TABLETOP ACTIVATION.
CHINATOWN BIA ARTWORK BY LINH THAI FOR TABLETOP ACTIVATION.

Determining just how spaces are to be used in future as a result of the impacts of COVID-19 is still work in progress. But by way of the work done by organizations like STEPS, meaningful dialogue around the topic is being initiated. Pandemic or not, however, it’s all part of STEPS’ mission as an organization to help activate spaces for people and support the vibrancy and growth of communities through the use of art. In doing so, it’s helping to beautify our environment, stimulate our senses, connect people and raise engagement within neighbourhoods. In short, it’s raising the bar concerning what it means to be a community. Or, to borrow from the poetic wisdom of Gertrude Stein, The STEPS Initiative is simply realizing the function of art as a means by which life can be made better. And, according to Kane Speer, the organization doesn’t have any plans to halt the work it’s doing any time soon.

“Although most of our work to date has taken place in the Greater Toronto Area, STEPS has a national mandate. We’d like to support communities and facilitate more projects from coast-to-coast in Canada. This summer we supported initiatives in Victoria B.C. and Sydney, Nova Scotia, as well as a few places in between. Canadian public spaces have so much potential. And where we can, we want to continue connecting people, improving communities and fostering inclusiveness through arts and culture.”

Luxury Apparel Retail in Canada Expected to Slow Amid Pandemic: Expert

Handbags and clothes in a fashion store

The past five years have been a truly unprecedented period of growth for luxury apparel retailing in Canada resulting in Canada becoming a major worldwide market for luxury brands.

During the period, both the size of the Canadian luxury apparel market and the competitive intensity within the market has increased significantly, according to a new report by Trendex North America, a marketing research and consulting firm.

But the market has felt the negative impact of the COVID-19 crisis just like the rest of the retail industry this year.

First the good news. Trendex estimates that the sales of Canadian luxury apparel/leather goods in 2019 totaled $2.74 billion, an increase of 5.5 percent year-over-year. Luxury apparel/accessories accounted for 8.8 percent of total 2019 Canadian apparel sales.

And in 2019 luxury apparel e-commerce sales increased by 16 percent to $170 million. While e-commerce luxury store sales only accounted in 2019 for seven percent of Canadian luxury apparel sales, the channel has been growing at almost three times faster than the entire luxury apparel market.

But here’s the bad news because of COVID.

TRENDEX ESTIMATES A 16.8% DECREASE IN THE CANADIAN LUXURY APPAREL MARKET IN 2020

Trendex estimates that the Canadian luxury apparel market will decrease by 16.8 percent in 2020 and increase by only 1.6 percent from 2019 to 2023 to $2.8 billion. The decrease of the Canadian luxury apparel market will be driven in 2020 by a 17 percent decrease in luxury women’s apparel sales while men’s luxury apparel will decrease by 16.2 percent. Purse sales will decrease by 16.7 percent.

Randy Harris, president and owner of Trendex North America, said much of the luxury apparel market decline this year is due to the absolute shut down of retail for about three months.

“But it’s also due to the lack of tourists that are coming into the country. The borders have basically been sealed for over six months now. So those high-end tourists from Asia for example are just not shopping in luxury retail stores,” said Harris. “You also have a reticence on the part of consumers right now to just go out and shop because they’re not sure if there is a second wave coming around the corner or not. So there’s a reluctance among a log to people I think to make a purchase.

“The thing that helps the luxury retailers in Canada right now and why they’re surviving is they’re backed up by ‘daddy deep pockets’. In other words, there’s nobody behind a Reitmans, there’s nobody behind a Le Chateau. But when you’re talking about Gucci in Canada if business is bad, rents have to be paid, their parent will take care of that. I think that’s what you’re seeing. Yes they will get through it but their sales will reflect what’s going on in Europe and around the world with the luxury market but it might even be affected more in Canada because of the tremendous decrease in tourists coming in.

“It’s really a shame that the industry has grown, matured, expanded over the last three or four years and in a sense ready to bloom this year and then all of a sudden it got the rug pulled out from under it through no fault of its own.”

The Trendex report said the competitive intensity in the Canadian luxury apparel retail market over the next five years will continue to increase and will be driven by a number of developments including:

  • An increase in the number of luxury apparel retailer doors, both in A malls and on “High Streets”;
  • An increase in luxury apparel brand flagship stores on High Streets and in A malls;
  • An expansion of the traditional boundary for High Street areas in both Toronto and Montreal;
  • Increased presence of luxury apparel retailers in Canada’s better off-price malls (e.g. Toronto Premium Outlets);
  • Additional luxury mono apparel brand specialty retailers entering Canada for the first time;
  • Growth of luxury apparel e-commerce sales;
  • Luxury apparel mono brand apparel/accessories retailers upgrading/expanding the size of their existing Canadian stores;
  • Holt Renfrew expanding its “World of” concessions model, will in turn serve to reinforce its position as the premier Canadian luxury apparel retailer. Of all multi-brand luxury apparel retailers Holt Renfrew should gain the most share in 2020;
  • Multi-brand luxury apparel retailers will increase their collective market share at a rate faster than mono brand luxury retailers. This development will be driven by two factors. The first relates to consumers increasing preference to shop in multi-brand luxury apparel retailers that offer true omni-channel capabilities. The second factor is the increasing tendency of wholesale brands to take greater control of the distribution of their own brands. By cutting back or restructuring their distribution, luxury apparel brands become better positioned in Canada to control their pricing, marketing, etc.; and
  • Increasing use, at the expense of traditional print advertising, of social media, influencers and other forms of non-traditional marketing, including crowdsourcing and “pop-up” stores.

“Historically the Canadian luxury apparel/accessories market was underdeveloped. The degree of underdevelopment, lessened during 2017-2019 for numerous reasons including new foreign luxury retailers/brands entering Canada, Holt Renfrew stepping up its game, luxury e-commerce growing at double digit rates and luxury retailer construction exploding in Vancouver and Toronto. A concern however is that the “supply” of luxury retailers will increasingly exceed the demand (i.e. sales) for luxury apparel. A shake-out in the Canadian luxury apparel segment is inevitable, the question is when and where it will begin,” explained the report.

“The unknowns in the forecast of Canadian luxury apparel sales are whether there will be a major decrease in the number of Chinese tourists visiting Canada, whether Canada’s economy will slow, whether millennials will shun luxury apparel, and finally how long luxury apparel retailing will be directly affected by COVID-19. The greater the increase in foreign tourists, the more the demand line (i.e. sales) will be moved upward, in effect delaying when the shake-out in the Canadian luxury apparel segment will begin.”

Brief: Hudson’s Bay Receives Eviction Notices from Malls, Banana Republic Shutters on Bloor

Hudson’s Bay Receives Eviction Notices from Malls for Unpaid Rent

According to a French language report by Marie Eve Fournier in La Presse last week, the Hudson’s Bay Company has received eviction notices from three Cominar-owned malls in Quebec due to non-payment of rents. The Hudson’s Bay Company says that the move by landlords is a form of intimidation and ‘bad faith’ and that the retailer is looking to resolution.

Cominar REIT says in court filings that HBC hasn’t paid rent since April at Rockland Centre in Montreal (monthly rent $86,200), Mail Champlain in Brossard (rent $110,200/month) and at Centre Laval in Laval (rent $20,500/month). Notices of default were sent in June and notices of termination followed last month. In total, damages and unpaid rents claimed amount to $3.68 million for Rockland Centre, $26.95 million for Mail Champlain and $2.21 million for Centre Laval. All three stores in those malls are currently open.

HUDSON’S BAY STORE IN MAIL CHAMPLAIN. PHOTO: MAIL CHAMPLAIN

Another French language report last week in La Presse noted that landlord Oxford Properties is suing HBC for more than $2.29 million in unpaid rents at two shopping centres including Galeries de la Capitale in Quebec City (monthly rent of $220,000) and Promenades Gatineau near Ottawa ($145,900/month rent). The same report notes that HBC had not paid rents for eight of the 11 Oxford-owned malls in Canada containing Hudson’s Bay stores.

Employees from HBC’s offices in Brampton Ontario are being moved to offices in Toronto. The company notes that it’s part of a “new way of working” as the world shifts amid the COVID-19 pandemic.

We’ll continue to monitor the situation.

SHUTTERED BLOOR STREET BANANA REPUBLIC. PHOTO: CRAIG PATTERSON

Banana Republic Shutters Mink Mile Flagship After 25 Years

Gap-owned Banana Republic has shut its store at 80 Bloor Street West in Toronto. The store operated there since 1995 and was one of the first three Banana Republic stores to open in Canada (the first being at West Edmonton Mall and the other at CF Toronto Eaton Centre).

The Banana Republic store on Bloor spanned two levels and more than 6,000 square feet in a space that was once occupied by an Emporio Armani store (between 1990-95). Roots is the other retail tenant at 80 Bloor Street West, and Harry Rosen’s five-level flagship store is located adjacent at 82 Bloor Street West. A major proposal could see both 80 and 82 Bloor Street West demolished for a new mixed-use tower housing retail space as well as hundreds of residential condominium units.

The Gap has been quietly closing stores across Canada with a particular bright spot being Old Navy which has done well here.

Toronto’s prestigious Bloor Street West is seeing an unusually high number of vacancies, which shouldn’t be a surprise given the COVID-19 pandemic. A J. Crew store closed late last month and the beautiful Club Monaco building at 157 Bloor Street West is also on the market (the retailer has also been on Bloor for a quarter of a century). UK luxury brand Mulberry closed its store at The Colonnade at 131 Bloor Street West in the summer and several more retailers are said to be looking at pulling the plug on their Mink Mile operations. It’s not all bad news as brokers say there is interest and leasing activity in the area, which in November of 2019 saw Eataly open at the overhauled Manulife Centre.

LEE VALLEY TOOLS OTTAWA. PHOTO: LEE VALLEY TOOLS

Lee Valley Tools Launches Mobile Shopping Tool for Customer Safety

Ottawa-based retailer Lee Valley tools is innovating in the face of COVID-19 while restructuring its operations. This month the company launched a mobile shopping tool that integrates with its website allowing for mobile contactless shopping across Lee Valley’s 20 stores across Canada.

After the COVID-19 store shutdowns in the spring, Lee Valley Tools saw an opportunity to transition from express to curbside pick-up with the launch of the mobile app adding another level of safety to the in-store shopping experience. “The health and safety of our customers and staff is our number one priority and our new easy-to-use mobile feature provides another layer of protection while shopping in-store during these unprecedented times,” said Jason Tassé, Chief Operating Officer, Lee Valley Tools. “We’re thrilled to launch this mobile tool in all our stores across Canada to give our customers a user-friendly way of making the browsing and purchase process contactless.”

SCREENSHOT OF LEE VALLEY TOOLS WEBSITE.

The mobile feature was designed to be easy to use as customers don’t need to download it on their mobile device. Rather can visit LeeValley.com when they enter the physical store and click on the barcode icon, select their store location and start shopping. The online feature also allows customers to scan an item’s bar code and see a full description of every product offered by Lee Valley Tools before deciding to purchase.

The contactless shopping option is available at all 20 Lee Valley Tools store locations across Canada starting October 1 and is compatible on all mobile devices.

NEW DIESEL STOREFRONT AT YORKDALE SHOPPING CENTRE. PHOTO: NORMAN KATZ

Diesel Opens Yorkdale Storefront, Only Standalone Full-Priced Location in Canada

Italian clothing brand Diesel has opened a new storefront at Toronto’s Yorkdale Shopping Centre. It’s now the only standalone full-priced Diesel store in Canada after other locations have shuttered since last year. Diesel has had several different locations at Yorkdale since 2012.

The new 2,435 square foot Yorkdale Diesel features an LED facade that makes the store quite noticeable. The Diesel store is located between Innisfree and Oak + Fort in a retail space vacated by Reiss last year.

Diesel once had a bigger presence in Canada. Last year the brand shut several units including a flagship on Yorkville Avenue in Toronto as well as a large store on Rue de la Montagne in Montreal. Diesel still operates outlet stores in suburban Toronto and Montreal. The brand is also carried at multi-brand retailers in Canada such as Hudson’s Bay.

EXTERIOR OF FRANK AND OAK STORE. PHOTO: FRANK AND OAK

Frank And Oak Buyer Looks to Take Brand Global, Looks to Acquire Other Canadian Retailers

After filing for creditor protection in June, Montreal-based fashion retailer Frank And Oak was acquired this month by New York City-based Unified Commerce Group. In a paywalled report in the Globe & Mail on Sunday, information was provided by Unified about the future of Frank And Oak which currently operates nine stores after shutting 11 locations recently.

Many of the stores were reportedly unprofitable, as was the company which was saddled with pricey leases for some high-profile locations.

Frank And Oak started as an online men’s fashion business in 2012 and was funded by Hicham Ratnani and Ethan Song. Mr. Song resigned from the company in March of this year and Jeremy Brown, formerly CFO at Sephora, is now working with Mr. Ratnani during Frank And Oak’s transition.

An expansion into Europe and Asia is a possibility according to Unified Commerce Group co-founder and chief financial officer Greg Freihofner with China being a particular market of interest. It’s unclear if the expansion would involve physical stores or if the retailer would operate purely online.

Unified Commerce Group also said in the interview that it was looking at possibly buying other struggling Canadian retailers.

Oxford Properties Shopping Centres Partner with Food Banks Canada to Raise Funds to Help Alleviate Hunger

Yorkdale, Square One, Scarborough Town Centre, and Oxford Properties’ shopping centres across the country have launched the #PassThePlate2020 campaign in partnership with Food Banks Canada to help the organization reach its $150 million COVID-19 response fundraising goal to alleviate hunger in Canada.

As part of the effort to raise money for Food Banks Canada, the shopping centres have launched a social campaign encouraging Canadians to share a video or photo featuring a plate with the hashtag #PassThePlate2020. Oxford Properties will donate $5 for every post, equivalent to ten meals, to a maximum of $10K per shopping centre to Food Banks Canada. Canadian celebrities have shared videos of themselves passing the plate to launch the campaign and encourage Canadians to do the same.

“Food banks around the country have been seriously impacted by the pandemic, having to manage with fewer volunteers while adapting their operations and serving new clients affected by crisis,” says Bradley Jones, Head of Retail, Oxford Properties. “Our shopping centres play important roles in their communities, and we will use this reach to mobilize the wider community to take action against increasing food insecurity accelerated by the pandemic. Pass the Plate can inspire donations at a variety of levels as we partner with Food Banks Canada and work towards alleviating hunger.”

“We’re concerned for what’s ahead. The pandemic’s economic impact, especially as the income supports come to an end, will impact demand for food banks nationwide. With Oxford’s support we hope to increase awareness for our fundraising campaign and help deliver the nutritional support people need as we move into the holiday season,” said Chris Hatch, Chief Executive Officer, Food Banks Canada.

Food Banks Canada represents ten provincial associations, more than 700 affiliated food banks, and more than 3,000 community agencies. Oxford Properties’ commitment comes in response to Food Banks Canada’s “I ATE” campaign urging Canadians to make monetary donations with the goal of raising $150 million to help alleviate hunger in Canada. Food Banks Canada still needs more than $28 million to raise to meet this goal.

Additional ways to donate to Food Banks Canada include adding on a donation to a gift card purchased at any of Oxford’s GTA shopping centres, donating the balance of a gift card, or through a mobile device by scanning a QR code which will be posted throughout the centres. Oxford is committed to raising $175K in support of Food Banks Canada.

To donate or learn more about Oxford’s Pass The Plate campaign, please visit FoodBanksCanada.com

TORU AKITA

Question and Answer with Muji’s North American President Toru Akita

Retail Insider recently asked Muji’s North American President a few questions about the retailer’s Canadian operations. Muji opened its first store in Canada in Toronto in 2014 and the company now operates nine stores — five in the GTA and four in the Vancouver/Lower Mainland.

RI: How has MUJI been doing in Canada since it entered the country several years ago?

Toru Akita: Since opening the first MUJI store in Canada in November 2014, we have seen steady growth and developed a loyal customer base. We have since increased the number of stores in Canada to nine, across several provinces. We are grateful to our Canadian customers and supporters who have made this possible.

RI: Stores in BC and in downtown Toronto were expanded with a broader product assortment. Might we see more of the Ontario stores expanded as well?

Toru Akita: As we are able to expand the floor space in our stores, we can provide products and services closer to those offered in Japan–therefore we’re always thinking about which stores can be expanded and where we can offer more products. At the moment, we are considering the impact of COVID-19 on the lives of our communities, and any future expansions will have this in mind as we seek to become more useful to our customers.

MUJI STORE. PHOTO: MUJI

RI: In terms of product offerings, will we continue to see new categories in Canadian stores?

Toru Akita: We are constantly reviewing and reconsidering the products that we offer in each region, and will continue to introduce new products in our Canadian stores, especially in response to changes in changes in society and lifestyles after COVID-19. We want to create a store where all of the items necessary for life under this new normal are available in good quality and at a reasonable price.

RI: Is there a timeline for when Muji expands into the Alberta and possibly Quebec markets?

Toru Akita: We don’t have any plans to expand into these provinces for the time being.

RI: Might we see Muji grocery stores or hotels in Canada over the next decade?

Toru Akita: There are so many amazing MUJI services in Japan and elsewhere that have not yet been introduced to Canada, including grocery stores and hotels. Before we bring these major new categories to the Canadian market, we’ll need to do more work to understand how they could fit into the lifestyles, interests, and needs of Canadian consumers.

SCREENSHOT OF KING & BAY’S WEBSITE SHOWING VIROSHIELD MASKS.

King & Bay Innovate Once Again in the Face of COVID-19

Toronto-based retailer King & Bay have announced the launch of ViroShield, a face mask that protects 99.94% against COVID-19 with first-to-market technology.

The clothing company — which launched the charitable Mission2Mark program at the beginning of the COVID-19 pandemic — is once again on the frontline in the fight against COVID-19. The ViroShield face mask is unlike any other due to its three-layered design and the presence of the HealthGuard® AMIC coating — a specially formulated non-silver broad range Anti-Microbial and Anti-Viral formulated using cosmetic based chemistry which destroys SARS-CoV-2 – COVID-19 strain viruses — on its external layer. The under layers include a melt blown fabric and 100% cotton single jersey.

Other ViroShield face mask features:

• Anti-odour and hygienic

• Non-irritating with soft, lightweight, and breathable fabric

• Extra soft ear loop, minimizing pressure on the ear

• Durable to laundry wash without shrinking

King & Bay is distributing these masks in bulk, mainly for organizations (including retailers) to protect their employees at work. Organizations who are interested can contact King & Bay at MyKingandBay.com

Menswear Retailer ‘Ernest’ Unveils New Concept Store in Montreal Following Creditor Protection Filing [Photos]

By Craig Patterson and Maxime Frechette

Montreal-based men’s fashion retailer Ernest has unveiled a new store concept after filing for creditor protection last month. The new storefront at the Montreal Eaton Centre is a refresh of the brand which is expected to be rolled out into other locations.

The Montreal Eaton Centre Ernest location spans just under 2,500 square feet and features high ceilings in an airy space with wood accents and a contemporary feel. The store is located on the street level of Montreal Eaton Centre next to the recently opened Samsung and facing a new concept Pandora store as well as Uniqlo which opens on October 23.

Men will find a wide range of suits as well as sportswear and footwear. Tailoring is available with Ernest’s personalized customer service. The store features a wall dedicated to shirts.

The new store’s location is intended to be closer to the office towers of downtown Montreal, which are beginning to see some workers return. Ernest had two stores downtown further west, including a unit operating at 1199 Sainte-Catherine Street West a couple of blocks from the recently completed Holt Renfrew Ogilvy store. The future of the 1199 Sainte-Catherine storefront is uncertain — Ernest says that it is still in negotiations with the landlords and that it will most likely close as the lease expires amid a challenging retail environment. Foot traffic is also said to be a concern given construction on Ste-Catherine Street.

Foot traffic from the Time Out Market food hall was another attraction to the Montreal Eaton Centre according to an Ernest representative. The Market opened in November of 2019 and is expected to again be a traffic generator following COVID-19 mandated shutdowns in Quebec.

Earnest filed for creditor protection in September and used the opportunity to renegotiate some leases. The company has 40 stores (33 branded as Ernest, six under the Jonathan banner and one under the Anthony banner, all of which are located in the province of Quebec except for one unit in Moncton, New Brunswick. No jobs were lost with the filing and only one store on Ste-Catherine Street in Montreal shuttered as a result.

The retailer says that it is holding off on future expansion plans for the time being as it watches the industry and COVID-19. In a more favourable time, Ernest could expand into the Ontario market.

Ernest was founded in 1958 in Montreal by Ernest Iarrera with a store on Ste-Catherine Street East. The concept expand into Quebec Cit in 1991. The founder’s son and daughter now run the operations and Ernest is still family owned.

Brokerage Oberfeld Snowcap represents Ernest under the direction of Luc Lavigne.

Rethinking Holiday 2020: Retail Holiday Shopping Forum, October 20, 2020

As with most things during the pandemic, the traditional festive marathon, which has hinged on Black Friday & Cyber Monday deals, door crasher events, special promotions, and impulse buys, is being rethought in 2020 to meet today’s customer needs for the holidays in an environment of ongoing uncertainty.

To help retailers in Canada, who are already gearing up for the season, have the latest global and Canadian retail insights so they can build on the new opportunities to uniquely delight their customers this year,  Retail Council of Canada will hold a ½ day  online event, the Retail Holiday Shopping Forum on October 20, 2020.  The session will be packed with practical information to ensure it is a well spent 3 ½ hours during a very busy time of the year. 

Speaking at the forum will be influential retailers and industry insiders like Tal Zvi Nathanel, Founder and CEO of SHOWFIELDS; Luc Dumont, Vice President, Research and Innovation at Leger; Lee Jeyes, Senior Director, Store Process and Innovation at Walmart CanadaMatt Mackenzie, James Gott, Ciff Grevler, Partners at the Boston Consulting Group and more powerhouse speakers.

Key takeaways from the Retail Holiday Shopping Forum will include:

  • How to plan for success in the current retail landscape
  • Expectations of today’s consumer
  • How to prepare for the inevitable ecommerce explosion
  • Preparing staff and customers for a successful holiday season
  • And more

View the agenda. Retail Council of Canada is still adding speakers and content so check back often. 

Registration for this timely educational opportunity is completely free for RCC members and $49 for non-members.   

Anyone interested in participating in this highly informative ½ session can do can by registering here.

Retail Council of Canada also has a Holiday Resource for Retailers webpage which also lists other great tips and tools for retailers as they rethink their holiday 2020 planning and marketing approaches.

Commercial Rent Relief Revamp Announced by Canadian Government

Crescent Street in Montreal - Photo by Betakit
Crescent Street in Montreal - Photo by Betakit

The federal government announced Friday some major new changes to support businesses in Canada that have been hit hard, and on the verge of collapse, due to the COVID-19 crisis.

Those changes include:

  • The new Canada Emergency Rent Subsidy, which would provide simple and easy-to-access rent and mortgage support until June 2021 for qualifying organizations affected by COVID-19. The rent subsidy would be provided directly to tenants, while also providing support to property owners. The new rent subsidy would support businesses, charities, and non-profits that have suffered a revenue drop, by subsidizing a percentage of their expenses, on a sliding scale, up to a maximum of 65 per cent of eligible expenses until December 19.  Organizations would be able to make claims retroactively for the period that began September 27 and ends October 24;
  • A top-up Canada Emergency Rent Subsidy of 25 per cent for organizations temporarily shut down by a mandatory public health order issued by a qualifying public health authority, in addition to the 65 per cent subsidy;
  • The extension of the Canada Emergency Wage Subsidy until June 2021, which would continue to protect jobs by helping businesses keep employees on the payroll and encouraging employers to re-hire their workers. The subsidy would remain at the current subsidy rate of up to a maximum of 65 per cent of eligible wages until December 19;
  • An expanded Canada Emergency Business Account (CEBA), which would enable businesses, and not-for-profits eligible for CEBA loans—and that continue to be seriously impacted by the pandemic—to access an interest-free loan of up to $20,000, in addition to the original CEBA loan of $40,000. Half of this additional financing would be forgivable if repaid by December 31, 2022. Additionally, the application deadline for CEBA is being extended to December 31. Further details, including the launch date and application process will be announced in the coming days. An attestation of the impact of COVID-19 on the business will be required to access the additional financing.

“Canadian businesses and workers have shown tremendous resilience in adapting to the challenges posed by the global pandemic. With the country now in the second wave of this virus, our government knows businesses and workers need continued support. We were there to help businesses when the COVID-19 pandemic began, and we will continue to give them the support they need. As we get through this difficult situation, we will keep taking action to support our businesses, protect jobs, and keep Canadians safe and healthy,” saidChrystia Freeland, Deputy Prime Minister and Minister of Finance.

The Canadian Federation of Independent Business (CFIB) said it welcomes the announcement of a new rent relief program as well as extensions and expansions of the CEBA loan program and the wage subsidy (CEWS) for small businesses impacted by COVID-19.

“We are particularly pleased the government has delivered on CFIB’s three major recommendations for rent support, ensuring the program is independent of landlord participation, continues for the months ahead and provides support to businesses with revenue losses on a sliding scale,” said Laura Jones, CFIB’s executive vice-president. “The additional 25 per cent coverage for businesses facing closures due to public health orders is also good news.” 

PEDESTRIANS WALKING PAST RETAIL OUTLETS ALONG STEPHEN AVE IN AUTUMN, CALGARY, ALBERTA. STEPHEN AVE IS A FAMOUS PEDESTRIAN MALL IN DOWNTOWN CALGARY. PHOTO: VIEWFINDER – STOCK.ADOBE.COM

It said rent relief is critical to the future of many Canadian small businesses. The government’s original Canada Emergency Commercial Rent Assistance (CECRA) program was deeply flawed and left too many businesses without the help they badly needed. When it ended at the end of September, 47 per cent of small business tenants needed rent relief but were not able to access it. With only 30 per cent of firms back to normal revenues, it is more important than ever that small businesses have support to cover their fixed costs such as rent, said the CFIB, but it added it is disappointed that the government has not created a retroactive pathway to access funds for businesses that met the 70 per cent CECRA revenue loss criteria from April to September, but whose landlord chose not to apply.

“Many businesses have taken on tens of thousands of dollars in new debt to stay afloat during the last six months and they should not be left to deal with it with no help,” said Jones.

Dan Kelly, President of the CFIB, said it is pleased the government has agreed to expand the CEBA loan program by $20,000 with an additional $10,000 forgivable in the days ahead.

 “CEBA has been a critical lifeline to many small firms and offers the benefits of flexibility to be used for several purposes,” said Kelly. “But far too many very small firms have slipped through cracks in the program. Firms with business bank accounts still do not have access to the program despite repeated promises from government. And those without payroll still struggle to have access to the program due to the restrictive conditions and giant administrative delays. This needs to change.”

He said it is good news that the government will maintain the wage subsidy at a maximum of 65 per cent until December 19.

 “This will help small firms know how much help this critical program will deliver in the months ahead to allow them to determine how many staff they can afford to hire, retain or call back,” added Kelly.

“With fears of a second wave leading to further business closures, it is absolutely critical that the federal and provincial governments find ways to provide full economic supports for affected firms. These new federal measures need to be followed by extended commercial eviction protection and additional provincial supports as the Quebec government has announced in recent days. No firm should be forced into bankruptcy due to an order to close their doors from government.”

OLD STRATHCONA RETAILERS ON WHYTE AVENUE IN EDMONTON, ALBERTA. PHOTO: OLD STRATHCONA BUSINESS ASSOCIATION

Karl Littler, Senior Vice President, Public Affairs at the Retail Council of Canada, said the new CERS program shares features with the CEWS wage subsidy program – in that they both provide for a sliding scale of support, calibrated based on revenue loss and, as with CEWS, will be continued until June 2021. 

The following elements were not mentioned in Friday’s announcement and have instead emerged in discussions between RCC and senior officials, he said:

  • “Notably, the CERS program looks like it will extend to a greater range of rental settings and to companies of greater size levels than was the case with the previous CECRA program. We understand that the former limitation to enterprises with under $20 million of annual revenue will be dropped and that a cap of $300,000 in total assistance on a go-forward basis will be imposed instead.”;
  • “RCC also understands that the subsidy will apply to locations with up to $75,000 of gross monthly rent, up from $50,000 of gross monthly rent under the CECRA program. Further, we understand (but do not have formal confirmation) that locations with gross monthly rent of over $75,000 may still be eligible for support on that first $75,000.  This is obviously a critically important issue and we will be seeking further clarification.”

David Lefebvre, Restaurants Canada Vice President, Federal and Quebec, said the organization commends the government for “committing to act on one of our top recommendations to make rent assistance accessible directly to commercial tenants.”

“We appreciate the continued efforts of Minister (Mary) Ng (Minister of Small Business, Export Promotion and International Trade)to champion the needs of small and medium sized businesses like restaurants, who are a critical load-bearing pillar of communities across the country,” said Lefebvre.

Michael Smith, co-founder of Save Small Business, said Friday’s unveiling of the Canada Emergency Rent Subsidy (CERS) will be welcome news for main street businesses owners across Canada. The federal government has finally acted on what Save Small Business and other organizations have been saying for months: small business tenants need a better, more inclusive rent relief program that they could apply to directly. An estimated three-quarters of landlords, mainly small and mid-sized players, simply didn’t apply to CECRA because of poor design even though their tenants were eligible for the program, he added.

“It’s also important that there’s now a sliding scale of support based on revenue decline given the previous eligibility threshold of 70 per cent was too high. CERS will also provide support to property owners on their mortgage payments which will be helpful to many landlords,” said Smith.

“We’re encouraged by the longer-term signalling of the rent subsidy through June 2020 and the commitment to provide additional targeted support for those businesses ordered to close. This is very important because it will help small business owners have greater confidence they’ll be able to cover their major fixed costs and get through the pandemic, even if operating at reduced capacity, with lower than usual sales, or if required to close to protect public health. 

“Unfortunately CERS doesn’t address some outstanding issues caused by CECRA: an estimated 300,000 small business owners were eligible for CECRA and another 200,000 that would have benefited from some rent support during the April to September period. These small businesses will receive no retroactive financial support under CERS. This is an equity issue given tenants whose landlords applied to CECRA would have had 75 per cent of rent subsidized for up to six months. The expansion of CEBA and the $10,000 forgivable loan increase doesn’t come close to addressing the fact that main street businesses have been forced to take on an average of $135,000 in new debt since the start of the pandemic.”

The Retail Industry is Undergoing Dramatic and Unprecedented Change

The economic landscape of 2019 was vastly different to that of 2020. The trade war between the US and China loomed large, and threatened to end the stability of the global financial markets. This naturally impacted GDP growth which declined quarter on quarter heading into 2020. Analysts at Deloitte anticipated GDP slowing to a crawl at 1.6% in 2020.  We now know that the economy has been upended in an unprecedented way, what with the novel coronavirus destroying any hopes of a return to normalcy, any time soon. Consumer spending has contracted sharply, and uncertainty is the order of the day.

Prior to the outbreak of the pandemic, expectations of a 2.2% growth in real consumer spending were forecast. In these unprecedented times, it is exceptionally difficult to forecast the impact of the novel coronavirus on labor markets, wage growth, disposable income, and rising unemployment levels. Yet, even within this quagmire there is a degree of predictability with regards to certain trends. The Retail Apocalypse which began in 2010 has accelerated sharply in 2020. Tens of thousands of retail operations have shuttered their doors, owing to rising costs, declining footfall traffic, social distancing, and government-issued mandates to guard against the pandemic.

Meeting Customers Where They Shop

One of the most notable changes to take place in 2020 is the shift in retail industry trends where customers want to shop. There is no denying the rapid and unprecedented decline in the popularity of malls across the country. Once a staple of American retail enterprise, malls are trending towards persona non grata status for a variety of reasons. For starters, high fixed costs, limited market reach, and the decreasing popularity of shopping centers are a reality that retailers must contend with. Time.com writer, Josh Sanburn penned an op-ed titled, ‘Why the Death Of Malls is About More Than Shopping’, and he went to great pains to explain this phenomenon. Once a nexus of American social activity, malls no longer serve that role. Hundreds of thousands of jobs have been shed annually, as malls contend with declining footfall, increasing costs, and diminished sales.

This naturally lends to an entirely different set of thought processes around retail activity in the US, and elsewhere. Major brand names like JCPenney, Macy’s, Forever 21, Modell’s Sporting Goods, Pier 1 Imports, Dressbarn, Ascena, NY&C, Muji, Brooks Brothers, NPC International, Chuck E. Cheese, GNC, 24 Hour Fitness, Advantage Rent A Car, Neiman Marcus, Gold’s Gym, True Religion, and at least 100+ others in 2020 alone have filed for bankruptcy owing to the effects of the Retail Apocalypse. For many of these retail operations, there simply was no other alternative save for bankruptcy and liquidation. When multiple stores in a chain are unprofitable, divestiture from poorly performing units is the standard operating procedure. Whether it’s Chapter 7 bankruptcy, or Chapter 11 bankruptcy, many of these retailers had no choice.

Specific Case Studies: Modell’s Sporting Goods and Pier 1 Imports

Modell’s Sporting Goods is a 131+ year-old staple in American retail sporting goods apparel. It has an established presence across the north-east, and beyond. Brand awareness, market penetration, and industry-leading dominance are features of this brand. However, declining sales and profitability [exacerbated by current market conditions] rapidly led to an untenable situation with the company. According to industry reports, this sporting goods retail operation filed Chapter 11 bankruptcy proceedings in March 2020, and then requested an extension owing to the devastating effects of the novel coronavirus on proceedings. The company ran 134+ retail outlets, and was put up for sale after operations shuttered. Retail E-Commerce Ventures (REV), under the stewardship of investor-entrepreneurs Tai Lopez and Alex Mehr acquired the company’s assets for $3.64 million. 

Their motivation behind the purchase was simple: ‘Sporting goods is a great vertical to be in, and Modell’s is a well-known and beloved brand in that vertical.’ [Alex Mehr CEO of REV]. With social media icon Tai Lopez revolutionizing the retail industry, along with his millions of followers, Modell’s Sporting Goods has undergone a dramatic reconstruction with an e-commerce makeover. By meeting customers on their turf, Lopez and Mehr believe that the Modell’s brand can be salvaged, and ultimately prove to be profitable in a big way. Now, customers are able to purchase all their favorite sporting goods online. The shift from traditional retail operations to bricks and mortar is well and truly underway. Modell’s is one such example of how that transformation is playing out in real time.

Making the Case for Pier 1 Imports

Pier 1 Imports is another iconic brand in the US which recently announced that it was going out of business. Once again, the brains trust behind REV, Alex Mehr and Tai Lopez were front and center. They are of the opinion that the future of retail is e-commerce. In February 2020, Pier 1 Imports filed for bankruptcy and closed all of its retail outlets as the novel coronavirus was battering the global economy. At the time, REV [Retail E-Commerce Ventures] outbid its competition and purchased Pier 1’s virtual assets for a price of $31 million. REV now boasts an impressive portfolio of assets, from distressed retail brands that have been transformed into e-commerce success stories. These include Dressbarn, the Franklin Mint, Linens N Things, Mentor Box, ESR Holdings, Knowledge Society, and The Book People, et al.

The lesson learned from the changes in the retail industry are clear: Consumers are taking their business online and businesses that fail to heed this call will be relegated to the annals of history, along with the dinosaurs.

Salesforce Industry Summit: October 14

By Retail Insider

Salesforce Industries Summit showcases how the customer relationship management company is delivering innovative, purpose-built solutions to help companies go digital fast. Now, Salesforce is rolling out a new industries-specific product portfolio to its customers, focused on delivering value, ROI, and speed. On October 14, get on your path to growth with retail and consumer goods-specific innovations

[Register here]

Join the virtual Retail & Consumer Goods Channel. You’ll get an in-depth look at how retail & consumer goods organizations are designing digital-first experiences, reimagining best-in-class customer service, and leveraging the latest technologies to achieve faster time-to-value.

It will feature four 30 minute episodes highlighting dynamic speakers and compelling customer stories including:

  • A fireside chat with PepsiCo’s Dan Moisan, Chief Commercial Officer, PepsiCo Latin America
  • Consumer Goods Clouds’ newest innovations
  • How RMDY Growth Corp accelerated distribution growth across channels by going digital
  • Reimagine the customer experience for today’s digital shopper

Bring your questions to the live ‘Ask the Expert’ sessions, where you’ll join product and industry experts to get answers to your most relevant product adoption, best-practices, and how-to questions.

Get on the fastest path to digital transformation for the retail & consumer goods industry.

To register, visit: https://SalesforceIndustriesSummit_RetailConsumerGoods.splashthat.com/SFPD

*Partner content. To work with Retail Insider, email: craig@retail-insider.com