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Some Grocery Retailers Are Struggling to Adopt eCommerce Amid COVID-19

By
Retail Insider
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FEMALE SHOPPER WITH FACIAL MASK LOADS SHOPPING CART. SOURCE: DEPOSITPHOTOS

By Ralph Tkatchuk

Coronavirus has forced a shift in shopping habits in Canada and beyond. Many people are opting for home deliveries of only essential items. And the retail food market has been affected in a number of significant ways.

Big brands like Sobeys have seen a marked increase in foot traffic. Visits to smaller local grocers have also increased.

But it’s the eCommerce sector that has experienced the fastest growth, with huge surges in online sales across the board in Canada.

SOURCE: STATISTA

In this post, we’re going to ask what this move online by consumers has meant for independent grocers. We’ll also look at the ways that they’ve responded to the new demand.

Coronavirus: Good or Bad for Grocers?

On the surface, the global surge in demand for food products seems like a good thing for grocers. And while more demand usually equates to more sales, the bigger picture is much more complex.

A large number of food retailers, both big and small, have found themselves ill-equipped to deal with hordes of new customers. A myriad of factors, from disrupted supply chains to diminished staff levels, have contributed to and compounded this central problem. Competition from larger companies that have the resources to be much more agile in their response has also presented a challenge. 

To cope with greater online demand, cater to existing customers that are unable to shop in-store due to self-isolation regulations or vulnerability, and avoid losing out to competitors, grocers have started to sell through online portals.

Yet the technical demands of combining an eCommerce solution with a well-established brick-and-mortar operation are beyond the skillsets of most small business owners.

Certain tasks, including packing, shipping, inventory management, and so on, can only be completed by experienced employees. With most grocers shoring up financial assets to protect their businesses going forward, hiring new people is problematic or even impossible.

All of these challenges have led many managers and business owners to look for alternative solutions.

The Big Problem With Third-Party Marketplaces

Eager to leverage the opportunity for home deliveries but daunted by the prospect of building a bespoke eCommerce portal, many grocers have instead turned to third-party marketplaces like Instacart, Urbery, and Inabuggy (among others). All of these companies have benefited from increased demand in Canada, from both grocers and customers.

Yet marketplaces like these aren’t without their problems. Grocers are charged high fees in a sector that’s already operating on razor-thin margins. What’s more, by opting for a third-party solution, small companies are forgoing the chance to build their own customer bases while inadvertently adopting many of the issues already present in often-cumbersome platforms.

It’s also common for customers to blame problems with marketplaces on grocers. This “guilty by association” effect can detrimentally affect a small grocer’s reputation, leading to a stream of negative reviews and dissatisfied customers. There have even been reports of Instacart shoppers stealing people’s food.

What’s more, many grocers have come to see the opportunities offered by big players like Instacart as more of a curse than a blessing.

Instacart’s activity in the US, where it has nearly a 60% share of the grocery delivery market, is a cautionary tale. Inordinately high fulfillment fees have forced many well-known brands like Kroger to operate at a loss in the interests of maintaining customer loyalty.

For large corporations, this may be tenable, at least in the short term. Smaller grocers, however, will quickly find themselves in dangerous territory. The only solution is to raise prices for online purchases, which most business owners will be reluctant to do for a variety of reasons, including the risks of opening themselves up to competition, alienating existing customers, deterring new customers, and more. [gr]

Bridging the Tech Gap: How Can Grocers React?

One way that grocers have avoided issues associated with third-party platforms like Instacart is by opting for an intermediate solution. These solutions overcome many common problems without placing a heavy burden on busy grocers.

All-in-one eCommerce platforms are user-friendly apps that sit between third-party marketplaces on one side and completely bespoke solutions on the other.

They allow grocers to build online stores quickly and integrate them with existing infrastructure, including fulfilment networks, POS, marketing channels, and more, all with an absolute minimum of technical knowledge.

These tools have proven very popular among grocers. For example, a grocery eCommerce platform named Self Point has reported a significant uptick of nearly 300% in new users compared to the previous year.

SOURCE: SELF-POINT

The fact that integrations can be used to streamline time-consuming tasks like delivery, marketing, and customer service, with numerous options available, has also largely removed the need to hire new staff.

Conclusion

Building your business on a third-party platform is fraught with danger. In the vast majority of cases, the marketplace will own all your customers’ details. They have no reason to favour your store, and will often showcase better offers from your competitors. There’s also the possibility that issues that aren’t your responsibility will hurt your brand.

Moreover, companies like Instacart, Urbery, Inabuggy, and others, aren’t necessarily better-equipped than independent grocers to deal with problems caused by coronavirus. There have been reports of overstretched delivery teams and failures to process refunds.

While the long-term impacts of COVID-19 remain unknown, a broader shift to digital retail is likely. It’s important for grocers to embrace this change on their own and take advantage of new opportunities to increase sales volumes and revenues.

Ralph Tkatchuk

Ralph Tkatchuk is a freelance data security consultant and expert with over 9 years of field experience working with clients of various sizes and niches. He is all about helping companies and individuals safeguard their data against malicious online abuse and fraud. His current specialty is in eCommerce data protection and prevention. You can reach Ralph via Twitter (https://twitter.com/TkatchukRalph).

Canadian Apparel Brand DUER Secures 3rd Retail Space in Calgary

By
Mario Toneguzzi
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PHOTO OF EXTERIOR OF NEW DUER STORE IN CALGARY.

Canadian apparel brand DUER has expanded to its third location in Canada, taking up a 2,000-square-foot retail space in Calgary that was formerly occupied by Lululemon.

“Expanding into Calgary has been on our radar for a couple of years,” said company founder Gary Lenett. “Although opening a new retail location in the current climate isn’t a simple task, it hasn’t clouded our enthusiasm.

“Prior to the pandemic, our focus was on growing our retail business and we had a few markets in mind. We’re optimistic that after our Calgary store opens its doors, we’ll resume discussions of plans to expand south of the border.”

The retailer also operates stores in Vancouver and Toronto. The retail stores are currently by appointment only and safety precautions such as masks and sanitizers are on-site due to the COVID-19 pandemic.

GOOGLE MAP OF CALGARY NEIGHBOURHOOD. CLICK FOR INTERACTIVE MAP.

Calgarians Demonstrated a Demand for a Physical DUER Store

“Calgary has been in our radar for quite awhile. We’re not a company with a strategy to have thousands of stores. We don’t intend to put more than one store in any single city and probably our current plans call for 20 stores worldwide,” said Lenett.

“For Calgary, it was really consumer demand. We have per capita more brand fans in Calgary than probably anywhere outside of Vancouver. Our plans are to make a pretty aggressive push into some key U.S. cities. We thought Calgary made the most sense because we already built up this audience there that makes it a bit of a no-brainer.”

The Calgary location is expected to open July 2 for the Canadian performance denim retailer. The location is ideally situated in the city’s entertainment and retail district near the 17th Avenue S.W. strip at 4th Street.

“We are doing business globally through what I call four different channels and our own retail stores being the smallest part of that right now,” said Lenett. “We have about a thousand stores worldwide that sell our product. We call that our wholesale channel. We have of course key drivers in ecomm. And due to COVID we started a fourth channel which we’re calling NEXT which is essentially a pre-sale channel because we lost the two retail channels overnight in March. We introduced the new concept called NEXT which hopefully complements all the other programs.”

Experiential Retail is Imperative to DUER’s Business Model

Design features in the Calgary location will include DUER’s famous indoor playground complete with monkey bars, swings, and soft rubber flooring. The experiential approach originated at the Vancouver flagship store and grew from the desire to have customers experience the stretch, durability, and comfort characteristic of all DUER products.

“We’ve done this from the beginning going back five years. What we found was people would go into the change room and put on pants and they would come out and start doing high kicks and crouching down. It quickly occurred to us that we should build out some sort of playground for people to test out product. And we’ve done that subsequently when we built out our real stores in Vancouver and Toronto – they both have playgrounds in them,” said Lenett.

“So we have swings and monkey bars and bicycles and other things that you can get on. It’s a point of differentiation. Our point of differentiation is it’s supposed to be clothing that you can do everything in. So we give a mechanism to test out that brand promise.”

QSR Concept ‘Hangry Chicken’ Launches Store Expansion with Long-Term Growth Plans

By
Mario Toneguzzi
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EXTERIOR OF BURLINGTON HANGRY CHICKEN LOCATION. PHOTO: HANGRY CHICKEN FACEBOOK PAGE

A new quick-service restaurant concept building on the principles of traditional Portuguese chicken launched in southern Ontario last fall with plans for eventual expansion in the Greater Toronto Area.

Hangry Chicken specializes in the famous Piri-Piri Chicken but has added a modern twist to the food offering.

The Quick-Service Restaurant has Sights set on Toronto Expansion

“The long-term goal will be to get to about five to six locations and then we’re going to start franchising,” said David White, Director of Operations for Hangry.

The first location was launched in November 2019 in Burlington, Ontario. Stoney Creek in the Hamilton area is opening in July.

“We already have a waiting list of people who have already approached us to purchase locations. We’re kind of waiting to hit that five to six restaurant mark and then start the process,” said White, adding the Toronto area is next on the list.

“Toronto has always been on the radar. We have a site secured for Toronto already. I don’t know if it will be ready for this year because of the delay with COVID and construction being behind schedule. But we’ve also been approached by a handful of landlords that have space for our requirements and it stretches anywhere from downtown Toronto, uptown Toronto, Mississauga, downtown Hamilton. We have a lot to choose from but we’re going to be very picky about where we go because we want to make sure we don’t overlap with any of our current locations,” added White.

Owners of Hangry when they were thinking of a name for their unique establishment felt the food was so good that it would cure people’s most basic hunger feelings — past the point of hungry feeling. They landed on the name Hangry.

White said traditional Portuguese chicken tends to be cooked over a grill and a flame. Hangry’s chicken is cooked on a rotisserie.

MAP OF BURLINGTON SHOWING HANGRY CHICKEN LOCATION. CLICK FOR INTERACTIVE MAP.

“I would say our food has a little bit of twist to it. It’s almost like a new fusion. We’re doing our piri-piri sauce but we’ll add it to a poutine or we’ll do our piri-piri tacos. So it’s two different foods. Tacos on the Mexican side mixed with our Portuguese influences,” said White.

“Our sauce, which is our trade secret sauce, was created by the ownership group after many trials and errors and we feel it’s probably the best representation of a traditional piri-piri sauce but with a bit of a twist.”

White said piri-piri is a mixture of seasonings that trace back to Portuguese and South African roots. It’s a blend of seasonings that would be used to marinade and season chicken as well as other meats.

White said he would describe Hangry as a quick service restaurant but because everything on the menu is made fresh it’s not what you would typically find in a QSR. It’s a step above that category. The locations have a small dine in area as about 90 percent of the business is takeout.

James Schwartz, Executive Vice President and Broker at Paracom Realty Corporation Brokerage, said the company has Hangry as a client in helping them locate real estate that would be suitable for expansion.

Hangry Chicken Experiencing Higher Sales Post-COVID

He said the Burlington location was an immediate hit in the community and when restaurants in the province were ordered to offer only take out and delivery due to COVID, Hangry was already set up for that – and it was a smooth transition.

It actually went so well that sales continued to climb even after lockdown, and today the first Hangry location is doing higher sales than what it had done prior to COVID.

Schwartz said Hangry has taken possession of a unit at Winona Crossing, the new Costco-anchored Penequity large format centre at the QEW/50 side road in Stoney Creek.

Right now, the focus is on increasing brand recognition by looking for one to two units in downtown Toronto as well as Mississauga. They will require 800 to 1,200 square feet and preference will be given to busy pedestrian street front locations in urban areas, and inline units of grocery-anchored plazas in the suburbs. The founder wants to first look at conversion opportunities whereby they take over locations where a restaurant had been operating, to save on basic services and upgrades that will have already been brought to the premises.

Customer Experience will Help Retailers Overcome the Financial Hit from Coronavirus in Canada

By
Retail Insider
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GROUP OF SHOPPERS WEARING MASKS AND LOOKING AT THEIR PHONES OUTSIDE ZARA STORE

By Frederic Dimanche

Retail was in trouble long before COVID-19 hit. The past five years saw daily reports of store closures and retailer bankruptcies.

The growth of online commerce eroded many retailers’ top-line revenues, forcing them into an ongoing cycle of discounts and promotions just to keep up.

But even amid this debacle, direct-to-consumer brands increasingly expanded their physical presence. Warby Parker, the online eyewear provider, currently operates 65 outlets and Away, the luggage company, recently raised US$100 million to open 50 stores.

But when COVID-19 brutally put a stop to physical retail, many strained small- and medium-sized businesses quickly moved their business online, as shown by Shopify’s 47 per cent revenue growth in this year’s first quarter.

Customers previously reluctant to shop online placed their first orders, boosting e-commerce numbers proportionately.

Typically, it takes an average of two months before a new behaviour becomes a habit, adding more pressure on struggling brick-and-mortar retailers that don’t have good online offerings if they can’t get customers back in stores promptly to satisfy them. Some worry they might never recover.

Not all bleak

Nevertheless, all is not gloom and doom. After months of confinement and a surprisingly flawed online experience, people yearn to return to normal. The COVID-19 restrictions have exacerbated our natural need for social connection.

Despite being digitally connected, people crave face-to-face human contact. That’s evident in the retail activity in recently reopened countries.

At its Guangzhou, China, flagship store, Hermès registered US$2.7 million in sales on its first day.

In Paris, long lines stretched in front of the Champs-Élysées H&M store.

PEOPLE WAIT OUTSIDE THE LOUIS VUITTON SHOP ON CHAMPS-ÉLYSÉES AVENUE IN PARIS ON JUNE 3, 2020. (AP PHOTO/THIBAULT CAMUS)

And in Montréal recently, dozens stood patiently outside a downtown Zara, eager to buy summer clothes. The urge to get out and socialize prevailed over safety concerns.

Some employees are similarly impatient to leave the house to resume work. While most office staff transitioned easily to remote work, some suggest COVID-19 has exacerbated the loneliness and lack of social interactions, despite companies’ claims of sustained productivity.

For retail staff who thrive on human contact, the situation has been difficult. Most are itching to return to their stores.

Personal human connection versus digital

Beyond the craving for social contact, the human touch is also what many retailers rely upon, especially in the beauty and luxury sectors, where sensory experiences are critical.

A recent PwC Consumer Intelligence Survey of 15,000 global consumers confirms what has been observed in countless shopper-retailer interactions: The human touch still matters, with 75 per cent stating they want more in the future, not less. Furthermore, most shoppers consider customer experience more important than price and product quality.

Similarly, in the hospitality and travel sectors, human contact prevails. When COVID-19 hit, personal connections with travel advisers helped hundreds of travellers return home after their flights were cancelled. Customers with e-platform reservations, meantime, struggled.

A TRAVELLER ARRIVES ON AN INTERNATIONAL FLIGHT AT TORONTO’S PEARSON AIRPORT IN MARCH 2020 AFTER THE COVID-19 PANDEMIC WAS DECLARED. THE CANADIAN PRESS/CHRIS YOUNG

In the COVID-19 recovery period, physical stores are uniquely poised to offer this crucial human interaction. A 2015 study led by Marshall Fisher, professor of operations, information and decisions at the Wharton School of Business, clearly shows the importance of human interaction in retail, and its impact on revenues.

Yet in 2020, as retailers slowly reopen, they’re focusing on safety and hygiene protocols but continuing to fail to invest in their own human capital. Instead of recognizing the long-term benefits of devoting attention to their employees, they obsess over minimizing labour costs, leading to increased employee turnover and poorly managed stores.

With less traffic coming into stores, expectations from those brave enough to venture out are significantly higher, and retailers must invest in their teams if they want to stay relevant.

They could borrow from a Toronto bike store’s playbook that saw revenues double during COVID-19, the owners recently told me. Open less than 18 months, the Dismount Bike Shop team built a reputation for cutting-edge merchandise selection, precise product and industry knowledge and outstanding customer experience.

When the crisis hit, the company’s seamless pivot to online bookings with well-organized physical appointments helped achieve 100 per cent conversion rates.

Training is key

Product and industry expertise are not negotiable. Fisher’s study found that retailers who train their front-line employees sell 125 per cent more than those that offer no training. To overcome the current COVID-19 sanitation requirements and foster an authentic human experience, retail workers must also demonstrate specific interpersonal soft skills.

To do so within a no-touch situation means capitalizing on other senses to engage. From that initial eye contact and open body language to a warm welcome, empathetic and friendly communication is key. Companies that commit to training sales advisers to expertly sell products while demonstrating high levels of relationship-building skills won’t just attract and retain the best employees. They will also drive in-store sales and customer retention.

It’s time to stop considering employees as a cost and stores as showrooms. Instead, retailers should invest in their in-store teams and train them to become revenue generators. The human touch will define who the winners will be post-coronavirus.

This article was co-authored by Solange Strom, former CEO of L’Occitane Canada.

Frederic Dimanche

Frederic Dimanche, Professor and Director, Ted Rogers School of Hospitality and Tourism Management, Ryerson University. Thirty years of professional and academic experience in service marketing and consumer behaviour, particularly in hospitality and tourism. Academic experience in the USA, France, and Canada.

Hand Sanitizer Brand ‘SoPure’ Targets Canadian Retailers

By
Jessica Finch
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Image: SoPure

Canadian brand SoPure is hoping to assist retailers in their transition back to in-store shopping with its premium quality spray hand sanitizer and a variety of dispensers to ensure retailers can provide customers with a safe and sanitized shopping environment.

“At this point, as we’re trying to get back to normalcy, we are focused on providing our retailers with what they need to open their doors for business, and keep their customers and staff safe and protected” said Tamar Matossian, SoPure President. “As COVID-19 began to turn into a pandemic, our facility went into overdrive to accommodate the needs of our country as a whole. For years, we’ve been able to protect and safeguard our customers and their families, but for the past few months we were honoured to protect our front line workers such as the Toronto police force, hospitals, nursing homes, banks, and many other organizations and facilities that were deemed essential.”

SoPure Ensures Hydration in Addition to Sanitation

Developed in 2004 by a chemist to keep his young family free of germs, SoPure spray hand sanitizer is made of 80% pharma and cosmetic grade Ethanol, and is also enriched with Vitamin E and proprietary emollients ensuring hydration while, most importantly, protecting against bacteria and viruses. SoPure is specifically formulated to keep your hands moisturized, with a quick-drying consistently that does not leave any residue behind.

Available in unscented, lavender, honeysuckle, or energy scents, SoPure’s spray hand sanitizer is Health Canada approved and does not contain triclosan, which makes it safe for all ages to use.

“What makes the product very unique and stand out in the range of other sanitizers available on the market is its formula which was tested and enhanced over years. You can use the product all day long and your hands will always feel moisturized and not dry. The spray format makes it versatile in use which is a gives it an advantage over gel which can only be used on hands,” said Tatiana Kunitskaya, Sales Rep for SoPure.

SoPure Innovates in the Face of COVID

In the wake of the COVID-19 pandemic, SoPure has added a range of product sizes and sanitizer dispensers to its product lineup, all of which are designed to work in communal areas such as offices, condos, stores, and schools.

Table top dispensers, wall mounted dispensers, and free standing dispensers are all available on the SoPure website. These newest additions are designed for both style and practicality as retailers and establishments begin to reopen for business.

The hands-free motion sensor desktop dispenser is designed to release the ideal amount of sanitizer into your hands. Suitable for office desks, banks, gyms, retail and restaurant counters, this touch-free option is non-intrusive and easily adaptable to your space.

A sleek wall-mounted hands-free dispenser is designed for communal spaces, you can adjust the quantity distribution to fit required needs.

SoPure also has a dispenser stand available for those who are looking for a more conspicuous station. Portable and easy to assemble, the modern wood sand comes in black and white.

“We also have a very cute mini table top hand sanitizer and diffuser (two in one) which is a great addition to a spa or your home with great features to sanitize your hands while adding a nice ambiance to your environment with a fresh scent of your choice.”

SoPure hand sanitizer is available in spray bottles (2oz and 8oz) and refills are available in either 946mL or 4L Bottles. These can be used to refill your personal spray bottles, as well as your hands-free desktop, wall, and floor dispensers.

The company is offering readers 5% off with code RI5. You can find more information on dispensers and sanitizers at sopureproductsinc.com or if you would like to inquire about product distribution contact company sales representative Tatiana Kunitskaya at tanya.kuni@gmail.com or 647 298 6980.

Retail Pulse Check: June 24, 2020

By
Retail Insider
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Retail Pulse Check

This week on Retail Pulse Check, Craig Patterson and Stephen O’Keefe discuss the current state of the Canadian retail landscape, emerging industry trends in a post-COVID world, the visible and ever-evolving consumer habits, best practices for retailers who wish to grow their omnichannel presence, and tips on how best to prepare for a potential second wave of COVID-19.

Speaker Details:

Craig Patterson, Founder, Editor-In-Chief @Retail Insider

Craig Patterson is the founder and Editor-in-Chief of Canada’s most-read online retail industry news publication, Retail Insider. He is also a Director at the University of Alberta School of Retailing, as well as a research consultant at Retail Council of Canada. Craig has studied the Canadian retail landscape for over 25 years, and has also been involved with strategy pertaining to urban revitalization in several cities, as well as retail and shopping centre-related design. He is an industry consultant who also gives retail tours and and is a public speaker. He is a graduate of the University of Alberta and holds a Bachelor of Commerce degree and Bachelor of Laws degree.

Stephen O’Keefe, Founder @Bottom Line Matters

Stephen O’Keefe is a 30 year veteran of the retail industry having worked with major brands such as Sears, Hudson’s Bay, and Walmart where he was Vice President of Loss Prevention and Risk Management. He founded Bottom Line Matters as a source for retailers of all sizes to draw upon his experience and expertise and deal with what matters – maximizing their bottom line. Stephen clients have included major retailers, BIAs, vendors as well as the Industry Association itself. He was awarded the Lifetime Achievement Award for his work with the retail loss prevention community, sharing best practice to combat shrinkage and advocating for legislative changes to support retail business.

Adeptmind and U.S. Polo Assn. Announce Partnership to Leverage AI on Apparel Brand’s U.S. and Canada Website

By
Retail Insider
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Toronto, Ontario, June 24, 2020– Adeptmind, the Canadian-based AI technology company transforming the Retail and Ecommerce industry, and U.S. Polo Assn., the official brand of the United States Polo Association (USPA), have officially announced a partnership. Now U.S. and Canadian shoppers can experience Adeptmind’s advanced retail product discovery solution, complete with the patented Guided Discovery™, in both the search and category browsing experiences on the U.S. Polo Assn.’s U.S. website, USPOLOASSN.com. This will ensure shoppers browsing the U.S. Polo Assn’s website find the products they are searching for quickly and with greater accuracy leading to a more efficient shopping experience online.

“We knew we needed a sophisticated and innovative AI solution to address our site search needs, and help our shoppers find the most relevant products in the fastest way possible, but one that didn’t jeopardize our conversion rate and average order value,” said Jose Nino, Vice President of Global Digital Strategy for USPA Global Licensing, the company that manages the global distribution of the U.S. Polo Assn. brand.“We believe our partnership with Adeptmind will help take U.S. Polo Assn.’s eCommerce shopping experience on USPOLOASSN.COM to the next level.”

As an indication of the commitment to the partnership, Daniel Hoffstein, Vice President of eCommerce for JRA Corporation, U.S. Polo Assn.’s licensing partner in the United States and Canada, will be joining Adeptmind’s customer advisory board, providing in-depth market intelligence and validation of product roadmaps including new innovations.

“The customer experience is pivotal online and this partnership with Adeptmind will give U.S. Polo Assn. customers access to the best machine learning search and category navigation experience,” said Ezri Silver, SVP of Retail, for JRA Corporation. “Our expectation is that the use of this technology will drive a significant lift to our online business.”

“Adeptmind believes in understanding shoppers and their needs by providing an advanced AI-infused product discovery solution for search and browse,” said Adeptmind’s VP Product, Yoav Artzi. “This will enable shoppers to find what they’re looking for faster than ever before, and facilitate their journey from discovery through checkout.”

In just three short years, Adeptmind’s technology has taken over brand and retailer eCommerce experiences, launching partnerships with retail leaders including Decathlon, WIT Fitness, Cadillac Fairview, and over 600+ shops on Shopify and Prestashop. Offering the most accurate search results in the industry, along with the patented Guided Discovery™ for search and category navigation, Adeptmind has created a self-aware engine that connects shoppers to products faster and has increased speed of conversion by 3-4 times.

For more information on where to find Adeptmind and U.S. Polo Assn. together, visit https://uspoloassn.com/ or adeptmind.ai/news

About U.S. Polo Assn.

U.S. Polo Assn. is the official brand of the United States Polo Association (USPA), the nonprofit governing body for the sport of polo in the United States founded in 1890, making it one of the oldest sports governing bodies. With a global footprint of $1.7 billion and worldwide distribution through 1,100 U.S. Polo Assn. retail stores, department stores, independent retailers and e-commerce, U.S. Polo Assn. offers apparel for men, women and children, as well as accessories, footwear, travel and home goods in 180 countries worldwide. Recently ranked the 4th largest sports licensor and 36th overall in License Global magazine’s 2019 list of “Top 150 Global Licensors”, U.S. Polo Assn. now takes its place alongside such iconic sports brands as Major League Baseball, National Football League and National Basketball Association.

About Adeptmind

Adeptmind was founded in 2017 by two former employees of the Microsoft-exited tech startup Maluuba. As the leading AI based, e-commerce product discovery company, Adeptmind uses state-of-the-art active and deep learning techniques to enhance the customer purchasing journey. With offices in Toronto, San Francisco, Paris, and Tel Aviv, Adeptmind supports more than 400 retailers, shopping centres, and SMB’s with innovative technology in and around the world. To learn more about Adeptmind, please visit www.adeptmind.ai, follow Adeptmind on LinkedIn and @adeptmindai on Instagram.

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Media Contact: Anne Morello, NorthPR anne@northpr.ca 647.224.2806

Stacey Kovalsky, U.S. Polo Assn. skovalsky@uspagl.com 954.673.1331

LUSH Cosmetics Implements ‘People First’ Phased Reopening of Stores in Canada

By
Mario Toneguzzi
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Exterior of Lush Cosmetics at Square One Shopping Centre. Photo: Square One
Exterior of Lush Cosmetics at Square One Shopping Centre. Photo: Square One

Popular brand Lush Cosmetics is taking a people-first phased approach to its reopening strategy.

The retailer’s reopening strategy includes a phased roll-out of contactless pickup, before moving towards shops opening at reduced capacity.

Each phase is based on current local government regulations, health authority recommendations, the establishment of cleanliness standards, supplies and training in shops, and local staff sentiment and comfort with reopening.

“We’ve missed our community more than you can know and want to take a moment to thank all of our fans for sticking with us through this,” said Elisa Torres, Director of Retail for Lush North America. “While things continue to evolve, we’re doing everything we can to bring fresh products back into the hands of our Lushies—whether that be carefully welcoming folks into a store or safely passing parcels of handmade goodies on.

“Needless to say, the road back to normality is bound to be a little uncertain as the world changes around us, but we’re committed to safely and consciously starting afresh together.

“We have a phased approach to our openings. We were one of the first to close. We closed quite promptly. And I would say that we’re not necessarily one of the first that has rushed to reopen. We’ve really taken a good look at what is required to open safely not just for our customers but for our staff and we’ve taken into account a lot of considerations.”

INTERIOR OF LUSH STORE. PHOTO: INTERIOR DESIGN

In Canada, the company has about 50 stores. In total, it has 264 stores.

Phases of Reopening for Lush Cosmetics

Torres said the retailer has created five phases so shops can open in a phase one which is completely contactless and curbside only. Customers place BOPIS (buy online pick-up in store) order and can walk up to the shop door to collect their purchase.

“Phase two means they can shop at the door, contactless again through mobile but they can also place an order at the door to be fulfilled right there and then the rest of the stages are really opening the store but with limited capacity. The reason we did that is we want to be able to operate safely no matter what’s happening externally with the virus and the virus count,” said Torres.

“We want to be able to allow stores to operate in different phases and be able to flex phases if they need to. One of the things that we’re certainly hearing right now is that in some areas that reopened early the case count is starting to spike so the idea is not well let’s just shut down all the stores again but the idea is to go back to a phase one and still be able to learn how to operate safely but be able not have to have a full closure.”

Additional phases include customers being able to enter the shop, but at a reduced capacity, with a socially spaced line up outside the door. Customers are advised to continue to check the status of their local shop through Lush’s online store locator at www.lush.ca, Google listing and on local shop Facebook pages.

The retailer said that from day one, the health and wellbeing of Lush staff, customers, and the community has been top priority. While customers can expect the same highly personalized service Lush is known for, the instore experience will look just a little different in order to maintain everybody’s comfort and safety, it said.

Here are some of the new health and safety protocols that will be in place:

  • Reduced capacity;

  • Six-foot social distance guide markers;

  • Access to clean sinks and soap for requested hand-washing upon entry (no purchase required);

  • Contactless payment only;

  • Sanitized cash desk and debit terminal after each customer;

  • Regular sanitization of surfaces throughout the shop;

  • Compulsory hand washing before staff assist different customers;

  • New product available if customers are not comfortable purchasing package-free or display product on shelves;

  • Masks for Lush team members and a request that customers wear them, too; and

  • At this stage, demos will also be paused to maintain hygiene levels.

Maintaining Morale Within the Lush Community has been Imperative

Lush shop managers have stepped into offering one-to-one online consultations for those seeking advice on bath, shower and skincare regimes, and individual shop Facebook pages have become a hub for groups of local Lushies to swap tips, tricks, and product recommendations, echoing the close-knit online discussion boards that spurred a cult following Lush still attracts today.

“We’re really trying to keep it a good experience from the knowledge that our staff have and the engagement that they can have with the customer but also looking at other ways versus having the tester out there and that kind of engagement where we would do demonstrations directly on their skin,” said Torres.

“We have to provide different ways for customers to engage with us.

“We’ve taken a lot of precautions to make sure it can still be a good environment but a safe environment because we’re certainly not by any means out of the woods at this point.”

Torres said the retailer is really known for doing private parties and events in the stores. So because it has not been able to do that during this environment, it has done virtual parties.

Q&A with Retail Expert Antony Karabus on the Future of Retail in Canada

By
Mario Toneguzzi
-
Antony Karabus

Antony Karabus, CEO of HRC Retail Advisory, based in Toronto, has been consulting with retailers for 30 years since 1990.

He recently spoke to Retail Insider about the current state of the Canadian retail industry and its future.

Here’s an edited version of that discussion:

Retail Insider: Tell us a little bit about your retail background.

Karabus: “I’ve been in the retail consulting business for 30 years. Before that I started as a CPA in Cape Town, South Africa in 1982 at Arthur Andersen & Co.. Many of our major audit clients in Cape Town were retailers and by auditing numerous retailers, I discovered I had a passion for it. I moved to Canada in 1987 and joined Arthur Andersen in Toronto and worked there doing retail-related consulting for a couple of years before starting my own firm in 1990.”

Retail Insider: Can you talk about the digital transformation that has taken place in the industry?

Karabus: “Before the whole digital transformation started 10 or 12 years ago, retail’s ups and downs were mostly correlated to economic cycles. In 1994 when Walmart came to Canada, the disruption began. Their increasing domination of the discount/value sector and the inability of some of the domestic retailers to “ step up their game to compete” resulted in numerous retailers going out of business including one of the biggest players, namely Zellers as well as others such as Sears Canada, Eaton’s, Biway Stores, SAAN stores, Bargain Shoppes, White Rose Nurseries, and many more. Many of us remember Zellers’ jingle “the lowest price is the law”, which became irrelevant when Walmart and then Costco expanded across Canada. While the strongest retailers survived and some thrived, the weaker retailers, including many “mom and pops” disappeared.

“In about 2005, the digital transformation really started. Some sectors were going faster than others, with US luxury being ahead of the curve including Neiman Marcus and Nordstrom. In Canada, luxury retail was slower to adopt digital retail. In 2008/9, the rate of digital growth started to accelerate through to 2016 or 2017 when digital as a channel started to reach maturity with most consumers being comfortable to shop online. Digital continued to grow at 10-15% annually while store sales for many retailers began to decline at a mid-single digit annual rate

Retail Insider: What did that do to brick and mortar stores?

Karabus: What retailers slowly began to realize was that most Digital sales were simply a shift from store sales. Digital was in effect cannibalizing store sales. That was a massive awakening around 2014-2015. Retailers realized that they had made massive investments to enable their digital capability . . . but as much as 95% of digital sales were really shifts from their brick and mortar stores. What that meant was the net sales growth of the total business was minimal because most of the ecommerce sales were simply shifts from store sales and most of the total market increases were going to online-only retailers such as Amazon.”

Retail Insider: So, where do we go from here?

Karabus: “Very few retailers re-invented their business model fast enough to keep up with the cannibalization of store sales by digital and the massive investments required to enable digital, omni-channel and to fresh up their store fleet. For numerous retailers, their store fleets were gradually becoming less profitable and less productive. In many cases, the simple act of closing stores didn’t help as most stores were still contributing to earnings but at a lower rate and this is without the extreme pressure being placed on numerous retailers by the behemoth, Amazon—which is still growing and taking massive market share from traditional retailers as total retail sales is only growing at early single digits. What that means is most of Amazon’s sales are market share shifts from traditional retail to Amazon, which is adding yet another massive stressor to brick and mortar retailers. About 10-20 medium to large chains have filed for creditor protection in the US and Canada annually for the past few years.”

Retail Insider: What about the COVID-19 pandemic?

Karabus: “Most retailers that have filed for Chapter 11 or CCAA since COVID-19 were in fact incurring significant losses before COVID-19. In addition, the essential retailers have significantly increased market share during since March 2020, even for their non-essential categories, but just at a lower rate. Amazon is continuing to increase market share. For non-essential retailers, they were limited during the store closure period to selling through digital channels. Now that most stores are open, stores have signs everywhere telling shoppers to “walk in this direction, follow the arrows, watch the plexiglass between you and the staff working in the store etc”. In a sense, a consumer will want to enter a store to get what they want and get out. In store shopping will be different and serve different needs in the short to medium term. The closure of their retail fleets for 3 months resulted in many retailers losing 50% or more of their total sales. Experiential retail which was a big buzz word in the last five years is going to be much less relevant for at least 2020-2022 as customers will go into stores with a specific intent rather than a browsing outing. I am confident that it will change once we have a vaccine or consumers feel more confident in being in stores. We advise retailers to de-emphasize experiential investments for 1-2 years as liquidity for numerous retailers is tight and capital needs to be directed towards enabling digital, omni-channel, and curbside pickup as well as improving supply chains and inventory management.”

Retail Insider: What will retailers have to do?

Karabus: “They have to create a more agile business model that is centred around a stronger and larger digital channel, with the added ability to serve customers using omni-channel capabilities such as BOPIS and curbside pickup. Retailers will need to have the ability to position inventory in the right spot so when the customers want it in a particular location and time the higher the likelihood is that it will be there. The importance of inventory management has gone through the roof because you’ve got to make sure the product is in the right place. There will be a lot of rent renegotiation and restructuring.” Already in 2020, store closures have been announced by Reitmans, Henry’s, SAIL, JC Penney, Nordstrom, Pier 1, Tuesday morning, Victoria’s Secret and the Chapter 11/CCAA processes will likely see more store closures from Aldo, J.Crew, and Neiman Marcus. Children’s Place has just announced they will close about 300 stores across North America within the next 18 months and I am sure there will be many, many more to close stores even among the healthy retailers. The pressure on retail real estate companies is likely to be significant during this period

Retail Insider: What do you see as consumer spending habits going forward?

Karabus: “Almost forty million Americans and over two million Canadians are now unemployed. In addition, many of those that are still employed are insecure about how long they will still be employed. The government has been funding a lot of unemployed consumers’ day to day essential living costs through the CERB and other support programs. For these consumers, there isn’t much left for discretionary purchases. For consumers that have more money, they are spending less but also are spending money on their homes. There is some pent-up consumer demand now for some categories. While we expect unemployment to gradually decline over the next 2 years as the economy re-opens, we expect unemployment to remain high for at least two years, which is not good for retail sales, I see three categories of success in the future. Firstly, the essential retailers (such as the grocers, drugstores, convenience stores, home improvement chains and auto and marine service) who are getting increasingly stronger and winning market share. Secondly the online giants such as Amazon that have now amassed significant share and data about customer shopping and buying habits and thirdly, the retailers who are the “authority” in their categories.

Retail Insider: What are the steps retailers need to take for the future?

Karabus: “First and foremost, retailers need to develop a new business model to profitably compete over the next few years in this new retail environment. This business model will involve making key decisions around issues such as:

“Is your inventory placed in the right spot? Forecasting is going to be important in terms of how much is going to be online, how much demand is going to be in what stores?

“Do you have the liquidity/cash flow to sustain your business over the next few years as you transition to a more effective business model.

“What should your new store fleet size be and what decisions need to be made to maintain profitability at a time of lower store sales and higher costs to keep consumers feeling secure to shop in stores”

“Last but not least, is your supply chain properly configured for this new world?”

Antony Karabus, CEO, HRC Advisory, can be reached at akarabus@hrcadvisory.com. Visit HRC Advisory at www.hrcadvisory.com. The HRC Advisory team has been advising retailers on improving profitability and transforming their businesses since 1990 at every stage of the economic cycle

How Canadian Retail Sales Took a Plunge in April: Strapagiel

By
Ed Strapagiel
-

According the latest data from Statistics Canada, the April numbers show the deep impact of COVID-19 on retail sales. Total unadjusted retail sales were down 13.7% year-over-year for the three months ending April, and down a whopping 32.8% for the month of April alone. Considering all the store closures, this was pretty much as expected.

The above chart shows the plunge in 3 month average (orange line) retail sales growth, the most precipitous on record. Note that this is spread out from February to April, only about half the period affected by COVID-19. For April 2020 alone, the plunge is twice as deep, and the numbers are likely to be even worse in May.
 
On the other hand, overall sales performance is a combination of different retail industry sectors and a mix of winners and losers.

Food & Drug

The Food & Drug sector is actually registering record sales increases due to COVID-19. For the 3 months ending April, retail sales were up 9.4% year over year. This was a combined effect of many other retailers being closed, consumer hoarding and panic buying, and more people cooking at home rather than going to restaurants. These conditions continued into May, so more of the same is expected going forward.

Supermarkets & other grocery stores benefitted significantly from the pandemic. Their retail sales were up a scorching 17.0% for the 3 months ending April versus a year ago, and up 18.7% in April alone.

On the other hand, retail sales at health and personal care stores were mostly flat. Their sales declined just 0.4% for the 3 months ending April, but that is still a good result when many other non-food retailers were down by double digits.

Store Merchandise

Retail sales in the Store Merchandise sector have fallen off a cliff. They were down 13.7% year-over-year for the 3 months ending April, and off 33.2% in April alone.

General merchandise stores however seem to be keeping their heads above water. Their retail sales gained 0.6% for the 3 months ending April versus a year ago, a very respectable result when many other retailers are seeing their sales evaporate. This group includes combination stores like Costco and Walmart which are also major grocery stores, as well as larger retailers like Canadian Tire and Hudson’s Bay which may have more developed e-commerce capabilities and online presence to fall back on.

At the other end of the scale, clothing and clothing accessories stores are suffering greatly. Many of these are mall based retailers dependant on walk-past traffic – of which there isn’t any when the mall is closed.

Note that Statistics Canada is now suppressing the breakdown of general merchandise stores for confidentiality reasons. The figures in the “By The Numbers” table below are estimates based on previous trends.

The Automotive & Related sector has been decimated. Retail sales were down 31.0% for the 3 months ending April versus a year ago, and down 58.4% in April alone.

Retail sales at automobile dealers have crashed. April sales were down 65.4% year-over-year, and are off 35.3% for the 3 months ending April.

At the same time, gas station retail sales declined 47.8% in April versus a year ago. This is a result of both less driving as people stay home, and lower gasoline prices.

By The Numbers

Special Note: Statistics Canada revised historical data with the February 2019 release. Unadjusted monthly data were revised back to January 2018, while seasonally adjusted data were revised back to January 2015. Those keeping score should update their files. The analysis in this report is always based on unadjusted data.

For definitions of store types, see Statistics Canada NAICS.

Canadian E-Commerce Sales

While there were major declines in location-based retail sales, StatsCan data shows a huge increase in e-commerce. In April, e-commerce retail sales were up 120.3% year-over-year. This is a gain of $1.9 billion from one April to the next, but still not nearly enough to explain the $16.7 billion decline in location-based retail. In fact, bricks & clicks stores appear to have gained more from e-commerce than pure play operators.

Overall, e-commerce represented about 4.1% of Canadian retail sales for the 12 months ending April 2020, including both pure play sellers as well as the online operations of brick & mortar stores. In April 2020 alone however, e-commerce’s share of total was up to a record high of 9.5%. Note that Canadian consumers may also buy online from foreign websites which is not captured in these numbers.

Location based retail is the same as that in the preceding “By The Numbers” table. It’s what’s normally reported as Canadian retail sales. Except that it isn’t. Location based retail excludes another section called Non-Store Retailers (NAICS code 454), which includes electronic shopping and mail-order houses, which in turn is where (mostly) pure play e-commerce businesses are. For the 12 months ending April 2020, electronic shopping and mail-order houses had an estimated $16.1 billion in e-commerce sales.

But that’s not the only source of e-commerce, as (mostly) bricks & mortar location-based retailers also sell online. For the 12 months ending April 2020, this group had an estimated $9.1 billion in e-commerce sales. With electronic shopping and mail-order houses, there’s a grand total of $25.1 billion in e-commerce sales by Canadian operators. Note that this does not include foreign e-commerce purchases made by Canadian consumers, but it does include e-commerce purchases made by foreigners at Canadian operations.

For electronic shopping and mail-order houses, an estimated 87.3% of their sales are allocated to e-commerce. For (mostly) bricks & mortar retailers, it can be estimated that just 1.5% of their total sales are attributable to e-commerce.

In the final section of the above table, (mostly) pure play operators (namely, under electronic shopping and mail-order houses) generated an estimated 63.9% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers’ share of e-commerce was 36.1%.

For more explanation on the e-commerce numbers, see Statistics Canada: Retail E-commerce in Canada.

This analysis is updated monthly as new numbers are published by Statistics Canada. If you would like notification of when an update becomes available (and you’ve read this far), please connect with Ed Strapagiel on LinkedIn.

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