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MEC Looks to Future Growth Following Insolvency: Interview with CEO Eric Claus

By
Sean Tarry
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Exterior of Vancouver’s new MEC flagship store. Photo: MEC

There is a short list of retailers in Canada that hold a special sort of place in the hearts and consciousness of consumers across the country. It’s not a list that’s been physically recorded, yet it’s one that is understood by most. It’s comprised of companies and organizations that have made significant contributions to their communities, supported the needs and lifestyles of their patrons and woven themselves, in one way or another, into the overall fabric of Canadian society. It’s a list that denotes an iconic status as leaders of the industry in the country, and of brands that reflect the values and beliefs of its citizens. Among this list, surely, is Vancouver-based MEC. And, to help celebrate an incredible 50 years of operation, the leading Canadian outdoor retailer is doubling down, refocussing on its commitment toward creating positive social and environmental impact and to continue leading into another half-century of business.

Eric Claus

“The brand has always meant so much to Canadians,” says Eric Claus, CEO and Chairman of MEC. “It’s experienced such a beautiful trajectory of growth throughout its history with respect to the value and trust that it’s engendered in people across the country. To many, MEC is more than a business. It means something more to Canadians, reflecting and representing the needs and desires of the outdoor community. Today, we feel really lucky to be the stewards of this incredible brand and to build on the legacy of the first 50 years. We have a lot of exciting plans to take MEC to the next level and to continue enhancing the experience and rewards that we offer customers.”

The MEC Philosophy

Though plans for the future may be exciting, Claus reflects on the year 2020 as a very difficult one for the brand, referring to it as “the most challenging in the company’s history”. He says that financial problems which were compounded by impacts of the COVID-19 global pandemic were too much to withstand, problems that culminated in the co-operative with an estimated 5 million members becoming a privately-owned company via its sale to Los Angeles-based investment group Kingswood Capital Management in October of last year. Claus, a former grocery executive, was appointed to his current position in the same month, representing one of the first orders of business of the company’s new owners. He says that, although the ownership structure of the company has changed, the philosophy by which the company operates has not.

“The ethos of the company and the way we conduct ourselves as a brand remains the same,” he asserts. “We’re committed to continuing the legacy that MEC has built through the years, giving back to the community and supporting and highlighting the benefits of the outdoors. We’re pleased to be able to do that, solidifying the foundations of the brand further and our dedication to everything we believe in.”

Significant Community Support

To that end, the outdoor retailer recently announced the development of its Outdoor Impact program through which, during the course of the next year, MEC will donate $1 million to benefit and support non-profit organizations across the country that are responsible for critical work in the outdoors. Partnering with national organizations, which include Avalanche Canada, Spirit North, Parks Canada, Association of Canadian Mountain Guides, Park Bus, Alpine Club of Canada, Canadian Parks and Wilderness Society, Protect Our Winters, Leave No Trace Canada, The Royal Canadian Geographical Society and Take Me Outside, the company will provide funding and gear to help build capacity in areas that support shared priorities. 

“This type of community support is not something new to MEC,” Claus says proudly. “We’ve now invested more than $45 million into non-profit organizations that share the same vision as us and passion to support outdoor recreation and conservation. The brand has always backed these kind of community initiatives. And, through our Outdoor Impact program, we’ve also made sure to partner with organizations that prioritize diversity, equity, inclusion, responsible outdoor recreation and accessible skill building. These are things that are really important to the brand and very much a part of who we are.”

MEC store on Toronto’s Queen Street. Photo: MEC

Sustainably-Focused

In addition, as one of the industry’s leaders in sustainability, the company will also be concerting efforts to support the advancement of its goals and commitments toward improving its social and environmental impact. As such, MEC has dedicated to producing 30 percent of its clothing in a Fair-Trade Certified factory by 2023, and 50 percent by 2025; ensuring that 50 percent of the polyester in MEC Label products is made from recycled content by 2023, and 100 percent by 2030; and by partnering with producers that abide by ethical employment standards and responsible practices with respect to the end-of-life of their products. They are lofty goals set by the company. But, as Claus points out, it’s all about continuing to do the right thing.

“This is another area in which MEC has always been known for,” he says. “We’ve set some really aggressive sustainability goals which requires us to work really hard with our supplier-base and push the limits in order to ensure that our product is ethically-sourced. We’ve agreed as the leadership team at MEC that responsible and sustainable practices will continue to be a cornerstone of the brand and one of the critical components of our business that will continue to drive us forward. It’s about doing what’s right for our customers, the planet and the people who help produce our products.”

People Power

It’s an approach that the company has never strayed from in its previous 50 years. And through intensified goals and targets, it’s already setting the tone for the future of MEC. Much of the direction and execution of these ambitions through the years have been supported not only by the foundations that the company was built on, but by the people that it has employed. And, according to Claus, it’s another aspect of the outdoor retailer that has never changed. In fact, he credits the strong relationship between the brand and the employees it attracts as the most important contributor toward ensuring MEC’s continued success during challenging circumstances.

“The team of people at MEC are absolutely amazing and have really shown their qualities over the course of the past 14 months or so to help the company get through a very difficult time,” he says. “They’ve been instrumental in making sure that our valued MEC customers receive safe and efficient service throughout the COVID period. As a result of these unique circumstances, many of those working in the stores have been dealing with a great deal of stress. And, as a business, we’re very cognizant of that and are supporting those frontline workers in whatever ways we can to ensure their physical and mental health. They’ve been incredible though in supporting shifts that we’ve needed to make as a result of store closures. We’ve taken almost the entirety of our online business in the east of the country and are shipping from stores, temporarily leveraging them as mini fulfillment centres. The level of commitment and dedication from everyone involved has been tremendous and critical in allowing us to make these necessary shifts.”

Increased Outdoor Activity

Claus’ praise of the MEC team seems endless, emphasizing the importance of their response to the current situation. And, in conjunction, he’s also recognized a similar response from the Canadian consumer who, according to recent studies, is showing an increased interest in self-care practices and habits as well as outdoor activities. In fact, MEC is already experiencing record increases in camping and hiking sales for spring 2021. And, according to the company’s CEO, it’s helped affirm yet again the values and qualities that define the brand and the direction of its focus going forward with respect to the product it carries.

“There has been a massive shift in the categories that are selling during the pandemic,” he says. “Anything that is directly related to an outdoor activity like cycling, camping, and climbing is doing very well. People have decided to get outdoors over the course of the past year, to take advantage of the time they have to improve themselves. The increase in these categories has been incredible and have actually helped direct us and refocus on tailoring our assortment around the products and gear that have made MEC what it is today and providing our customers with the most relevant items possible. And, going forward, we’re going to continue to put a lot of emphasis on the MEC label to improve the fit of the garments and to strike the right balance between the functional, technical and stylistic aspects of the pieces.”

New Member Benefits Program

As part of the recent increase in outdoor activities undertaken by Canadians across the country, Claus says that the company has been very fortunate in helping to introduce many first-time MEC customers to their offering and the value of outdoor recreation. It’s allowed the company to continue extending its reach to and broaden its awareness among a whole new set of customers. And, to reward its growing base of customers further, the company recently introduced its new no-fee MEC Membership. Developed to provide more meaningful benefits, the program offers MEC members online expert appointments, exclusive bike and ski service promotions, access to outdoor skill building workshops and seasonal events, exclusive offers and promotions on new product, as well as a 30-day price match guarantee. They are, indeed, attractive benefits. However, Claus, who has been a MEC member himself since 1984, believes that the true value of shopping and engaging with MEC remains its commitment toward best-in-class customer service.

“I’ve always known that when I visit a MEC location that I’m going to receive the best advice from experts who actually know what they’re talking about,” he says proudly. “This continues to be a massive focus for us, to maintain that consistently high level of customer service and to continue to be the leader in outdoor gear and advice. The combination of the exceptional experience that we provide for customers and our new member benefits is really helping to position us well as we continue to build out our programs and services further.”

Opportunities for Further Growth

Beyond the moves that the company has made to strengthen its proposition to customers, its also downsized its head office and retail footprint and introduced a new hybrid work-from-home structure for office employees in efforts to streamline the operation and reduce overhead costs. Claus is confident that all of these tweaks to the business, while adhering to the aspects of the brand that have made MEC what it is today, have positioned the company well to not only deal with current challenges in a COVID-ravaged society, but to grow exponentially post-pandemic as well.

“We’re working diligently to continuously increase our brand relevance and to reconnect to our roots as the leader at the forefront of the outdoors in Canada and the place people go for the best product and advice. We’re also looking at certain markets where we can potentially include additional store locations in order to reach even more prospective MEC customers. There are still opportunities for the brand to improve and grow on its achievements to date. It’s a really exciting time to be involved at MEC and to have the opportunity to be a part of the continued success and evolution of this iconic Canadian brand.”

Canadian Consumers Lose Trust in Big-Brand Retailers During Pandemic: Study

By
Mario Toneguzzi
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Exterior of Amazon warehouse. Photo: Amazon

There has been a dramatic shift in consumer loyalty and purchase considerations in the latest 2021 Gustavson Brand Trust Index (GBTI) following a “tumultuous” year with the on-going COVID-19 pandemic.

The Index found that previously trusted brands such as Amazon, Whole Foods, Air Canada, and Tesla Inc. dropped in the rankings as consumers felt that the companies’ values no longer aligned with their own.

Saul Klein

Saul Klein, dean of the Gustavson School of Business at the University of Victoria, said more than ever CEOs are being viewed as societal leaders entrusted to take a stand on social issues from climate change to addressing racial injustice.

“As the world climbs out of the pandemic, brand awareness is no longer the currency of business — consumer trust is the priority. There is a need for companies to rethink how they are driving positive societal change,” he said.

“Amazon may be past its peak in terms of brand trust. While more Canadians have used Amazon services than ever before, concerns about the company’s broader impact have resulted in Amazon dropping sharply in this year’s study. Whole Foods had always prided itself on its employee culture, but the company’s brand trust and advocacy scores plummeted in 2021, and employee relations may have played a part in that.”

This is the seventh year of the Index.

According to the study, Amazon lost 17 points in overall brand trust in 2020. The report attributed this sharp decrease in its brand trust score to the numerous controversies Amazon had faced, including accusations of monopolistic behaviour and allegations of poor employee treatment/working conditions, which culminated in employee rallies and concerns over privacy.

The 10 Most Trusted Brands in the study were:

  1. Canadian Automobile Association
  2. Dyson
  3. Lego
  4. Interac
  5. President’s Choice
  6. Costco Wholesale
  7. Home Hardware
  8. Mountain Equipment Company
  9. Quaker Oats
  10. Lactalis Canada
  11. Canadian Tire
  12. Chapters/Indigo

“This year it’s all about how brands behave responsibly during the pandemic. We’ve been looking at the three dimensions of how consumers look at brands. Ability, which is a product functionally-based dimension. Affinity, which is really relationship and service-based. And thirdly is the value-based, authenticity dimension, and it’s this one that we’re seeing start to take strong shape this year — more strongly connected with overall brand trust, it’s a stronger indicator of part of the word-of-mouth sentiment than it has in the past,” explained Klein.

“The brands who have responded in ways that were perceived by consumers to be acting in the best interests of society have enjoyed increased levels of trust, while brands that were seen as acting more in their own self interest, and trying to protect themselves during the pandemic, saw a fall.

Exterior of Dyson Store. Photo: Dyson

“And it’s not necessarily correlating with usage. To me one of the most interesting findings this year was around Amazon and we have seen trust in Amazon dropping before the pandemic but during the pandemic it continued to drop quite sharply even though people were using Amazon more and more. The key weakness in Amazon that we saw coming out was on that authenticity, value-base dimension where consumers just don’t trust Amazon to be acting in the broader societal interest.”

Klein said trust in key institutions, in society, and in business, has been eroding over the past few years.

“I think our societies have become much more polarized. There’s much more concern about truth and who you believe, what you believe, and in some cases, certainly spilling over from the United States, a very deliberate undermining of truth and that certainly erodes trust,” he said.

“But overall trust in brands has actually been pretty constant. At the brand level it’s a little bit different because consumers are really basing the trust more on their experience and what they’re seeing about a particular brand rather than the social media context.”

Lego at CF Richmond Centre.
Lego at CF Richmond Centre. Photo: Geetanjali Sharma

Other key findings from this year’s Index include:

  • Younger consumers are less trusting than older consumers. The GBTI study found that millennials are less trusting compared to older generations. This appears to be due to the younger generation’s inclination to assign their loyalties to proactive organizations who they perceive to be helping solve long-standing societal issues and contributing to making the world a better place;
  • Trust in media is at an all-time low. In the Spring of 2020, the media category saw a spike in trust as people tuned in at the beginning of the pandemic. Since then, the trust bubble has burst, with all traditional and new media brands (except for Maclean’s Magazine) giving up most (if not all) of the gains they saw early on. Social media brands such as Facebook remained among the least trusted in the Index;
  • Trust in Canadian telecom companies is on the rise, but it is still the second least trusted category. Past year-on-year results had telecom companies showing signs of trouble, with nearly all of the companies seeing a decline in their brand trust scores. Three of the big four telecom companies, however, saw significant improvement after COVID-19 struck as they provided critical infrastructure for both work and social interaction.

The report highlighted four brands to watch in 2021:

  • Amazon’s trust scores plummeted last year. Will Amazon continue to fall out of favour with Canadians in 2021?
  • After coming under fire for hiring influencers to promote travelling, will Air Canada see brand trust fall?
  • In the first four months of 2020, Google saw a 14-point jump in its brand trust score. Will Google sustain its recovery in 2021?
  • How will the sale of MEC to a U.S.- based private investment firm affect consumers’ trust?

Canadian Retail News From Around The Web For May 4, 2021

By
Retail Insider
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K-Beauty Brand Innisfree Shutting All Canadian Stores Due to Pandemic

By
Craig Patterson
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Innisfree Yorkdale

South Korean ‘naturalism-oriented’ cosmetic brand Innisfree is closing all of its Canadian stores and the company is blaming the COVID-19 pandemic. Innisfree opened its first Canadian store almost two years ago and plans were in place for a cross-Canada expansion. 

“Circumstances have changed over the past year and we anticipate that the health and safety risks of COVID-19 will be impacting our ability to deliver the right experience for the remainder of 2021 and beyond,” said Innisfree in a statement on social media. “In that challenging context, we unfortunately had to make the difficult decision to close all Innisfree retail stores in Canada.” 

Innisfree said its stores at the Yorkdale Shopping Centre and the Scarborough Town Centre in Toronto will both shut forever on May 8. The same statement noted that the CF Toronto Eaton Centre and CF Markville stores had already been shut. Ontario is currently in an extended retail lockdown until at least May 20.

Instagram Story: Posted May 3rd, 2021 via instagram.com/innisfreecanada/

The Yorkdale Innisfree location was the first in Canada when it opened in August of 2019. The CF Toronto Eaton Centre location came soon after as part of the beginning of a cross-Canada expansion that never came to fruition. 

In 2020, Innisfree had planned to expand its Canadian operations by adding more stores to the Greater Toronto Area as well as markets including Vancouver. Brokers in CBRE’s Vancouver office had said that they were working with the brand on a multi-location expansion including at the Metropolis at Metrotown, and industry chatter noted that West Edmonton Mall was in line to possibly get a store as well. The mall-based expansion could have seen Innisfree open stores in most of Canada’s leading shopping centres coast-to-coast over the course of several years. 

The pandemic took the wind out of the sails for many brands expanding in the Canadian market, and Innisfree is a surprising one to announce its Canadian exit. The beautiful bright Innisfree stores were often busy with customers seeking out the brand’s popular beauty products that quickly became highly coveted as they gained consumer awareness. 

Innisfree announced in February that the brand would be available at Sephora stores in Canada as well as online. It hasn’t been confirmed if the announcement was made in anticipation of Innisfree shutting its own standalone stores. The standalone direct-to-consumer brand store model was a trend that picking up speed across the country prior to the pandemic.

Innisfree, which operates hundreds of stores globally, is part of the Seoul-based AmorePacific Corporation, which features 33 health, beauty and personal brands under its corporate umbrella. AmorePacific launched the Innisfree brand in 2002. The brand had several stores in the United States and had shut all of them by late 2020. The brand is carried at Sephora in the US according to Innisfree’s website. 

Innisfree’s slogan is “Clean Island, where clean nature and healthy beauty coexist happily,” and the brand is known to be eco-friendly — something sought by many consumers lately. Particularly targeting women aged in their 20’s and 30’s, Innisfree is said to be South Korea’s first all-natural brand with many of its ingredients being sourced from Jeju Island. Its products include a wide range of products for both women and men including skin care, makeup, hair and body products, fragrances, beauty tools, and sun care. 

About 80% of Innisfree’s ingredients are natural and the company says that its products are “plant-to-bottle”. The company also promotes its “green life” with activities such as reforestation efforts, recycling programs, and even an ‘eco-hankie’ to replace disposable paper products. The company donates 1% of its profits to eco-initiatives. 

Photo: Innisfree Yorkdale (via Facebook)

Prices are considered to be affordable with many products ranging in the $20 to $30 range.

Innisfree is the latest international retailer to pull out of the Canadian market, and the second beauty brand to shut since the start of the pandemic last year. We reported in November of 2020 that L’Oréal-owned NYX Cosmetics was also in the process of shutting its Canadian stores after entering the market in 2015. At the same time, we’re getting word from industry insiders that several new international brands will be entering the Canadian market by opening stores this year, and we’ll be reporting on several of these in the coming days.

Several Canadian Shopping Centres to Turn Unused Outdoor Parking Spaces Into Patios for Food Tenants: Interviews

By
Mario Toneguzzi
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Exterior of CF Market Mall. Photo: Cadillac Fairview

Some Canadian shopping centres are turning unused outdoor parking space into patios to help support their food court tenants who have been devastated during the COVID-19 pandemic with business being impacted by public health measures restricting indoor dining.

Darren Milne, General Manager of CF Market Mall in Calgary, said the popular shopping centre in the northwest part of the city will have 25 picnic tables with about half of them covered by a huge tent.

Darren Milne

“We’ve done this in response to the government order for no in-person dining and as a way to support sales for our food court tenants. But, given the positive initial response, I suspect we’ll keep this patio in place until at least September,” he said.

“Deciding to move forward with the patio was really in response to the government closing indoor dining most recently. While I think COVID has been difficult on retailers, for our food court retailers this is the third time since April of 2020 that we’ve had to remove seating out of the food court. Generally speaking, when people eat at the mall it’s because they’re already here. People don’t generally drive to the mall to go to a food court outlet to get takeout. 

“And so we just felt we had to do something to provide some kind of seating as a way to support food court vendors. So the patio was twofold. It was done in a way to support our food court vendors but we also wanted to do some placemaking and really just make sure if we were going to do a patio that it had a comfortable feel and atmosphere to it. It’s not just picnic tables thrown onto the sidewalk just to try and create space. We’ve not only made sure that the picnic tables are spaced appropriately per the guidelines. We’ve got some planters and flowers out there. We’ve done it in an area that actually has some trees in the parking lot. So while you’re on concrete it certainly actually feels a little bit like being in a really nice patio atmosphere.”

In Alberta, the guidelines stipulate that up to six people from the same household can partake in outdoor dining. So the seating capacity for Market Mall’s outdoor patio for food court tenants is anywhere from 25 to 150 people. 

Cadillac Fairview said it can confirm that the company is also extending patios at CF Pacific Centre and CF Richmond Centre in BC as well as CF Chinook Centre in Calgary.

Milne said CF Richmond Centre last year was probably the first to do the outdoor patio. 

“There’s at least four of us at CF that are doing this. I suspect that you’ll see a couple of more centres add patios as well as we have some further learnings on how this is working,” he said.

In a statement, Oxford Properties said: “Oxford Properties has introduced outdoor seating and dining at its shopping centres to support our Food & Beverage brands. Currently, Kingsway Mall in Edmonton and Southcentre in Calgary have placed exterior seating in proximity to the food court and restaurants. Supporting our shoppers, employees, and our retailers through this period of indoor dining restrictions gives us the opportunity to try new concepts. Outdoor dining areas will be introduced at our properties in Ontario and Quebec as government restrictions are lifted and patio dining is permitted. Outdoor dining areas provide shoppers and employees an opportunity to relax and recharge while supporting the restaurants and food and beverage brands in our centres. We also introduced designated parking spaces near food court entrances and restaurants to expedite and streamline pick up of take-out  and delivery orders.”

  • CF Market Mall’s outdoor patio to facilitate the food court tenants. Photo: Cadillac Fairview
  • CF Market Mall’s outdoor patio to facilitate the food court tenants. Photo: Cadillac Fairview

Milne said the shopping centre doesn’t have an end date firmed up yet for the outdoor patio area.

“But the feeling is this. Even if indoor dining restrictions were lifted in the beginning of June, we still think that there will be people who might not be comfortable eating inside,” he said. “So we’re going to continue to have the patio until some time in September. The other piece of that is we’re going to give some consideration if this is something we want to do every summer. The reality is that now we’ve purchased the tent and the picnic tables, there might be an opportunity to make this as part of the experience of coming to the shopping centre. And I think even outside of COVID, on a nice day, if people have the option of eating outside, they’ll want to do that.

“COVID has kind of pushed us to do something we might not have normally done but in creating this patio we’re going to continue to think of ways if it can become permanent in the summertime and how that would look and what else we would need to do. There’s some good things that have come out of that.”

Canadian Retailer Peavey Expanding Brick-and-Mortar Store Base Amid Shifting Omnichannel Strategy [Feature]

By
Sean Tarry
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Exterior of Peavey Mart store. Photo: Peavey Mart

Adversity, disruption, and uncertainty. They are likely the three descriptors that will be most often employed in future to help identify the tenor of our current times, both here at home and around the world. They will be helpful in framing many of the difficulties that people in communities everywhere have struggled with for more than a year now, difficulties that are set to persist at least through to the foreseeable future. And, they’ll also most accurately describe the turbulence that’s been experienced by most retailers within the industry to this point. Despite the reality of these times, however, there are organizations that have managed to withstand the impacts of the pandemic to varying extents. And there are even some, like Peavey Industries LP, that have continued to grow.

Boasting a storied history within the industry that spans more than a half century, the company is not unfamiliar with the effects of adversity, disruptions, and uncertainty. Originally founded in Winnipeg, Manitoba in 1967 as part of National Grain, the company opened its first National Farmway Stores location in Dawson Creek, British Columbia. After early success that saw the retailer open 20 stores within its first couple years of operation, it underwent a couple of acquisitions, a change to the brand name, and a lingering unpredictability concerning its future. However, in 1984, on the back of two years’ worth of hard work and creative efforts, the company was bought by management, establishing it for the first time as a wholly-owned Canadian company. The nature of Peavey’s first 17 years of business, and the resilience that was required from everyone who was involved, helped to lay a foundation for the brand and cultivate a culture of perseverance and innovation within the organization that remains very much intact today.

Youtube video

Growth Amid Uncertainty

The foundation and culture that it’s developed has also lent toward the development of qualities and characteristics that include agility, nimbleness, adaptability, and courage, enabling it to cope with impositions on its business and the industry at large, positioning it well to meet the tumult of the current situation. Operating three brands — Peavey Mart, Ace Canada, and MainStreet Hardware — the company also possesses an intimate understanding of and relationships with its loyal rural customers, supplying them with an impressive array of products and services that cater to their down-to-earth lifestyles, including agriculture, farm and ranch, pet, workwear, lawn and garden, hardware and homesteading supplies. It’s this combination of strong organizational foundation and dedication to its customers, along with its fortune of being deemed an essential retailer, that allowed Peavey Industries LP to assume a leadership role during these past 13 or so months. And, according to Dave Simmonds, Chief Operating Officer at Peavey Industries LP, it also helped to inform the company of its responsibilities and direction.

Dave Simmonds

“COVID has obviously been a real game-changer for many within the retail industry,” he recognizes. “Very early on, we realized the seriousness of the situation and got to work immediately on creating a safe and comfortable environment and experience for our employees and customers. It’s remained our first and foremost concern throughout the pandemic. And what we’ve learned is that execution really matters in a situation of this magnitude. And it’s through effective execution that you build further trust with customers. Unlike a lot of other retailers, we were considered essential. Because of this, we didn’t have time to go off in a closed environment to figure out how we’d do this. We did this quickly as an organization, collaborating daily in real-time with our store operators across the country, allowing us to remain nimble, receiving and acting on constant feedback in order to continuously improve our operations throughout the pandemic.”

Digital Enhancement

In addition to ensuring the safest, most comfortable environment possible for its employees and patrons in its stores, the company has also been incredibly busy throughout the pandemic, finishing work that it had started prior to the global spread of COVID-19 while breaking ground on new projects as well. The company completed the acquisition of TSC Stores at the end of 2017, converting 51 locations in Manitoba and Ontario into Peavey Mart stores, adding to its 34 existing locations in British Columbia, Alberta, Saskatchewan, and Manitoba. It recently wrapped up the conversion in full on March 20 of this year, followed closely by the launch of the company’s new peaveymart.com website on April 1, which merged both tscstores.com and peaveymart.com to create an entirely new digital experience for the brand and its virtual customers. It’s a feat that Jest Sidloski, Vice President Marketing, Customer Experience and eCommerce at Peavey Industries LP, recognizes as a massive achievement and the final piece of the company’s national brand alignment.

Jest Sidloski

“The entire team has put so much work into the store conversion,” he explains. “It was a monstrous task and an accomplishment that we’re really proud of. It’s the reason we’re celebrating with our National Grand Opening Month at all Peavey Mart locations in Canada throughout the month of April. Our brand conversion finalized, and our celebrations started with the soft launch of our website, which has been introduced as a starting point from which features and benefits can rapidly grow. There are a lot of enhancements coming to the website, including personalization and a more intuitive search. PayPal will also be added into the system very soon. But, initial traffic on the site at the moment is incredible. Site and checkout speed improvements have been made and sales are off to a good start as well. In fact, our conversion rate today is about three-times higher than it was on our old platform. Consumer feedback has been amazing. We really couldn’t have asked for a better launch.”

Expanding Store Network

Sidloski also points out that peaveymart.com e-commerce sales in 2020 were twice that of the previous year, but says that the best is yet to come with an improved experience supported by a more robust infrastructure. However, digital is not the only area that the company is investing in. It also recently completed impressive expansions of its Camrose and Vegreville Peavey Mart stores in Alberta, and announced three new locations in Airdrie, Alberta, Brooks, Alberta and Prince Albert, Saskatchewan. What’s more, a new flagship location for the brand will be erected in Red Deer, with ground breaking in May of this year and an opening scheduled one year later. The addition of new locations to the Peavey Mart store network is clearly a signal of intent from Canada’s national farm and ranch retailer. But Simmonds believes that it’s also a testament to the character of the company and the path it had long ago set.

“We’ve been very much a growth company for quite some time,” he asserts. “In fact, many of our most recent initiatives, including our acquisition of Ace Canada, new locations, the development and launch of our new website, were all part of our strategy long before COVID. We had already identified them as opportunities for growth. Staying on track with the company’s vision and delivering on these critical pieces has been key to much of our success. And, of course, maintaining an unwavering focus on our customer helps to drive everything that we do. Our customer-base had been growing year after year prior to the pandemic. But COVID has in a big way highlighted Peavey Mart and got the brand recognized by people outside of our traditional markets. As a result, there are a lot of customers that have recently discovered the Peavey Mart brand and the fact that we have the items that they’re looking for. Because of this, we were presented with a massive opportunity to be there for Canadians during a difficult time.”

Exterior of Ace Canada store. Photo: Hardware Retailing

People Power

When speaking of the tremendous growth that the company has experienced in recent years, as well as the opportunities that it has managed to seize, Simmonds directs much of the credit toward the people at Peavey Industries LP. He describes the company’s employees as its greatest asset, saying that they have been instrumental in executing on all of the initiatives that have been undertaken over the course of the past five years or so. And he says that the role they play in helping the company continue to move forward amid further growth will be just as critical.

“The biggest reason for our success, both prior to COVID and during the pandemic, is our people,” he states. “They’ve helped to support our growth strategy and are so important in helping to collectively achieve our goals and targets. Without them and their level of commitment to the company, we wouldn’t be able to deliver on anything that we’re currently doing. And, as a group, the company continues to learn as we grow. It’s very much a part of our culture and history. The Red Deer flagship is exciting because it gives us the opportunity to take all of the things that we’ve learned over the last several years and leverage them to create an incredible experience for our customers. And that learning and evolution helps us consistently look toward the future as well. For instance, there’s tremendous opportunity for us to really grow the Ace brand in Canada and further develop what it means to Canadians.”

Continuous Improvement

Complementing the growth of its store network and investment into enhancing the digital Peavey Mart experience, the company also offers its highly successful private label products, including OxGear, Harvest Gear, Harvest Grade, Harvest Goodness. And, it just recently launched its online seed store, onlineseeds.ca, a service that delivers garden and vegetable seeds right to the customer’s front door. It’s all representative of the company’s relentless pursuit of growth and commitment to the communities it serves. But, according to Simmonds, it’s also indicative of Peavey Industries LP’s dedication to constantly improve its offering and the experience it provides for its customers.

“Internally, we’re working through a number of different projects that are aimed at improving our efficiency and effectiveness operationally. We’re adapting some of our systems to enhance the work we do and how we do it. It’s going to enable our current and future growth. We’re also having a lot of great conversations around further store growth for both Peavey Mart and Ace. There’s a lot of white space across Canada. And as a national retailer, we’re going to be looking to introduce our brands to new markets. We’re also always looking very closely at product lines and assortment that will complement what we do, presenting us with lots of opportunity for organic growth. And, enabling a lot of our growth is our new digital omnichannel strategy. It’s allowing us to extend our reach even further into communities right across the country. It all adds up to very exciting things for the company, its brands and our customers.”

Why Fewer Physical Stores Makes Sense for Retailers Amid a Shift to Digital: George Minakakis

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Retail Insider
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Gone are the days when having a hundred or a thousand stores was the only way to meet consumer needs and demand for your products. About five years ago, I said that retailers in Canada didn’t need more than 30-35 stores across the country. I don’t believe a brand operating in North America needs more than three hundred and fifty locations. E-commerce made that a straightforward decision for me. A plethora of stores used to be a symbol of power and influence in the retail world. With the exception of a few sectors, that’s not quite the case anymore.

Take Grocery as an example; the pandemic opened the door to home delivery. In a decade, we may not need that many physical locations. I see grocery delivery growing and becoming very competitive.

I wonder if they are ready for consumers who shop in the store and want their groceries delivered? It’s going to be an added service, especially for those who don’t drive. Why? Consumers want more convenience, and they have immersed themselves in a digital world to save their personal time for activities that give them pleasure.

Marketing has also changed; once radio, tv, print, and emails dominated and drove traffic to stores. That, too, is behind us. However, the cost of marketing and acquiring new customers has not come down. Of course, the digital noise is deafening. This digital frontier is elusive for many, especially when a single store operator with a mobile phone and a homemade video can go viral. That has placed pressure on marketing teams everywhere to crack the code and deliver that coveted ROI. It used to be just another marketing channel; not anymore; everything is about a brand channel. The strategies must provide a return, or store closures and brand failures will only accelerate.

Going digital has been an expensive and complicated process over the last few years. Many retailers who claimed that they were well on their way with their digital transformations failed before they finished. However, as technology has evolved, it has become a lot easier to be visible and engaging on all social channels. Of course, that didn’t always mean sales and profit growth. As long as you engage and build awareness, a following and conversion will happen. At least that’s the goal. Digital experts would tell you that if your strategies failed to deliver results it is because you stopped too early or did not put enough resources behind them. In translation, management didn’t put enough money into the meter. Nevertheless, this is part of keeping your distribution channel alive today.

Even with this transition, many are still in shock when they hear about store closures. A battle-hardened retailer will tell you that it’s just another day in retail. Store closures are usually a part of rationalizing how much presence you need in a marketplace. Not to dismiss the fact that retailers even today get it wrong when making real estate decisions. The facts are this, too many stores mean financial vulnerability, especially if some of your locations have a four-wall EBITDA that’s zero.

Store closures today don’t need much analysis. Consumers have been sending loud messages directly through declining store revenue. Which is, by the way, a lag indicator that something is wrong. Successful strategic operators use data and research to stay ahead of consumers and the marketplace — closing stores and spending more on their digital marketing strategies. Having a thousand stores no longer makes you a leader in the retail universe. The present and future of retail are about reaching and communicating with consumers — telling your brand story in a way that fills functional and essential needs and touches the publics’ social and aspirational values. If you are going to do anything in the coming years double down on aspirational messages.

In retail, you need to have some form of physical presence. For example, take Disney, they announced back in March of this year that they would be closing stores. It’s not a surprise; Disney is even rethinking how they release and distribute movies. Consumers are telling us things have changed. Disney’s physical presence and business are its parks; stores are only a brand extension and not all of Disney’s profit centres. The same thing is happening with e-commerce only players. The store is an extension of their brand; it’s not a plan to abandon e-commerce. Disney acknowledges that you can still sell products online.

George Minakakis
George Minakakis

At the end of the day, rationalizing a brand’s store presence doesn’t mean there will be millions of square feet of empty commercial real estate. We may face a short period that looks that way, but things will recover. There will be plenty of new retailers that take up that space; they will have fewer stores and a much more robust digital footprint than their predecessors. That’s just the continuous evolution of retailing. Resilience calls for visionary leadership and courage to move in the right direction faster. It’s not complicated, and you don’t need to break retailing down into convoluted nomenclatures to impress anyone, it’s not necessary nor valuable. Success in retail is about creating a brand with the right business model coupled with the right consumer model in all channels, and if you need to hear it, that means physical and digital.

George Minakakis is the CEO of Inception Retail Group inc. Author of The New Bricks & Mortar: Future-Proofing Retail. To be released Summer 2021.

Canadian Retail News From Around The Web For May 3, 2021

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Retail Insider
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Amazon Climate Pledge Adds Canadian Businesses

By
Mario Toneguzzi
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Outside the Edmonton International Airport. Photo: Edmonton International Airport

The Edmonton International Airport is one of several companies and organizations that have recently signed The Climate Pledge initiative by Amazon and Global Optimism.

The Airport joined well-known brands such as Alaska Airlines, Colgate-Palmolive, Heineken, PepsiCo, Telefónica, and Visa in signing the Pledge which now boasts more than 100 companies. Those companies in total generate more than $1.4 trillion in global annual sales and have more than five million employees across 25 industries in 16 countries.

Signatories to The Climate Pledge agree to:

  • Measure and report greenhouse gas emissions on a regular basis;
  • Implement decarbonization strategies in line with The Paris Agreement through real business changes and innovations, including efficiency improvements, renewable energy, materials reductions, and other carbon emission elimination strategies; and 
  • Neutralize any remaining emissions with additional, quantifiable, real, permanent, and socially beneficial offsets to achieve net-zero annual carbon emissions by 2040 — a decade ahead of The Paris Agreement’s goal of 2050.

Edmonton International Airport is a self-funded, not-for-profit corporation whose mandate is to drive economic prosperity for the Edmonton area. EIA is Canada’s fifth-busiest airport by passenger traffic and the largest major Canadian airport by land area. 

Amazon said EIA’s Airport City Sustainability Campus “is a living lab for accelerating the development, testing, implementation, and commercialization of technology”. EIA offers non-stop connections to destinations across Canada, the U.S., Mexico, the Caribbean, and Europe. EIA is a major economic driver, with an economic output of over C$3.2 billion, supporting over 26,000 jobs.

Tom Ruth

“Being dedicated to sustainability is our core value and it guides all of our decisions and actions in everything we do,” said Tom Ruth, Edmonton International Airport President and CEO. “We are proud of what our team has achieved to tackle environmental challenges, but we can go much further. We are convinced that by joining The Climate Pledge, we will make significant progress in achieving net-zero carbon by 2040.”

Myron Keehn, Vice-President of Air Service and Business Development at the Edmonton International Airport, said sustainability is one of the airport’s core values and it has been for more than 20 years.

“We build sustainably and it’s how we do our business. Very much like Amazon does. It’s a core, critical part of their business. It’s not a separate part of the business. It’s not like we’ve got a strategy sitting somewhere on a shelf. Our ESG (Environmental, Social and Governance) is built into our business strategy and our business strategy drives our ESG. It’s a symbiotic relationship between them,” said Keehn. 

“We were looking around the world for like-minded companies that we could align with and help to propel and drive forward at a faster pace the adoption and the implementation and the meaningful movement in helping global climate basically. 

Myron Keehn

“We have a long-standing and meaningful relationship with Amazon in many different fields. This is exactly the type of global organization of like-minded companies that are living those values that we want to align to.”

Amazon said all signatories to the Pledge are taking science-based, high-impact actions to tackle climate change by innovating in supply chain efficiency, sustainable transportation, circular economy, clean energy solutions, and more. Many organizations are also meaningfully involving customers in their journey to net-zero with initiatives focused on innovative packaging and sustainable product design and development, while delivering solutions to empower customers to reduce their own emissions with educational campaigns and sustainable shopping experiences.

“Less than two years ago, Amazon co-founded The Climate Pledge and called on other companies to reach the Paris Agreement 10 years early — today more than 100 companies with over $1.4 trillion in global annual revenues and more than five million employees have signed the pledge,” said Jeff Bezos, Amazon Founder and CEO, in a statement . “We are proud to stand with other signatories to use our scale to decarbonize the economy through real business change and innovation.”

“We helped to initiate The Climate Pledge to prove a model that accelerates decarbonization with the most ambitious companies,” said Christiana Figueres, the UN’s former climate chief and now founding partner of Global Optimism, in a statement. “Today over 100 companies, including household brands and companies from all industry sectors, have joined The Climate Pledge with its goal of net-zero by 2040. They are demonstrating that moving faster toward decarbonizing their businesses is a pathway to competitive advantage. There is no doubt we’re at a tipping point to establish the low carbon economy envisioned in the Paris Agreement. I commend the leadership of the companies that have joined The Climate Pledge already and look forward to welcoming the next 100.”

Keehn said the airport’s top priority is health, safety and security and after that a key priority is driving economic prosperity in a sustainable way.

“It’s very unique. A lot of airports are very good at what they do and they’re an airport. But we’re so much more than an airport. So for us you can’t be economically sustainable without being environmentally sustainable, without being socially sustainable, without having proper governance. It doesn’t work,” he said.

“For us, the why we’re doing it is we want to leave the planet a better place for our kids but it makes good business sense as well. They’re not mutually exclusive.”

Keehn said that in three years the employment base at the airport has doubled, the economic output increased by over $1.6 billion, and that was driven by ESG. It’s building the world’s largest solar farm at an airport, partnering with a company to produce solar powered products on airport property from solar panels, it has just launched its cogeneration unit.

“We doubled the size of our terminal building in 2012 and cut our energy intensity in half. It’s just inherent in how we do business. We were the first airport in the world to put a natural gas fuelling station in for vehicles with ATCO as a partner,” said Keehn. “We’re the only airport in Alberta, second in Canada, to offer an incentive to taxi drivers to convert their vehicles from just regular gas to hybrid electric or pure other alternative fuel and we did that 10 years ago.

“What we believe is important now more than ever is for corporations and entities to stand up and publicly commit to these things.”

Recently, Amazon announced its first renewable energy investment in Canada—an 80 MW solar project in the County of Newell in Alberta. Once complete, it will produce over 195,000 megawatt-hours (MWh) of renewable energy to the grid, or enough energy to power more than 18,000 Canadian homes for a year.

Sobeys Expanding In-Store Vertical Farms Across Canada

By
Mario Toneguzzi
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Exterior of Sobeys grocery store. Photo: Supermarket News

Grocery store chain Sobeys is expanding its unique Infarm vertical farming units to more stores across the country as it takes advantage of the growing consumer appetite for made local products.

Niluka Kottegoda, Vice President Customer Experience, Sobeys, said Infarm is a vertical farming company based out of Germany.

Niluka Kottegoda

“We searched far and wide to find a really great best-in-the-world, unique, innovative solution for our customers as we were looking for a vertical farming solution,” she said.

“Infarm provided us with an opportunity to get farms into our stores, with end to end service. So they made it very easy for our stores and most importantly our customers’ best experience when it came to vertical farming globally. Each unit that you’ll see in the stores is a farm unto itself. The plants grow right in that module and they control all of the nutrients, the amount of water, the amount of food our plants get, and the amount of light that they get from a central farming platform.

“Just before COVID hit, I had the opportunity to go and see their office. And it’s really very special. On a screen you can see every farm that they have around the world. They know exactly the condition of that plant and what it needs and if there’s a problem they can quality control. It’s all managed through the cloud and each one of the farmers has a tablet and information is passed on to the units and the farmers through their central platform.”

Local farmers manage the vertical farming at the individual grocery stores, where a variety of herbs, microgreens, leafy greens, and lettuces are grown year round. Produce is grown directly in store in a controlled energy-friendly environment and harvested sustainably.

Sobeys first unveiled its partnership with Infarm in 2020 and began its national rollout by unveiling Infarm vertical farming units in Safeway and Thrifty Foods stores in Vancouver and Victoria, B.C.

  • Sobeys Infarm station. Photo: Sobeys
  • Sobeys Infarm station. Photo: Sobeys

Kottegoda said generally there are two units per store but in larger stores more units can be added.

“Right now we have them across Vancouver and Victoria. We have one installed in Halifax with 25 more coming. We have two installed in Calgary with 22 more coming. And one installed in Edmonton with 18 more coming,” she said.

“Once these latest ones are installed we’ll be closing in on 100 stores across the country. At the moment, we’re probably about 55 percent of the way there. We’re expanding across seven cities in the country.”

Kottegoda said the company does an assessment of all of its stores across the country to see whether it’s viable to put a farm into certain locations.

“The reason we’re going city by city is to make sure that we have the farmers ready. You just can’t put a unit in the store and hope for the best. You have tons of farmers there to support it. We have to make sure the local infrastructure is there and then we can expand across the country which is why you see us going city by city,” she added.

The company said these crops are harvested using 95 percent less water, 90 percent less transportation, and 75 percent less fertilizer than industrial agriculture.

“One of the great appeals of them is you can get fresh herbs, and leafy greens, all year round even through the winters as fresh as possible in our stores,” said Kottegoda.

Rendering of the new Sobeys Infarm station. Rendering: Sobeys

“We can change up the assortment every five weeks. So the five-week cycle is from when our herbs and leafy greens and plants grow from seedlings until they’re ready to harvest. We can switch up the assortment anytime we need to. We can be really relevant to all of our local customers which is pretty exciting.”

She said locally-grown products are very important for consumers these days and the company has seen the importance of partnering with local producers in its stores.

“It’s also about the freshness and the taste experience. All of our customers are always looking for the best in terms of food and we pride ourselves in being able to give that to them. This is the freshest possible product, locally grown all year long,” added Kottegoda.

“And it’s been an interesting journey because we have been expanding during the pandemic and we have seen incredible trends in terms of at home cooking, getting more and more popular. Going along with that people are getting more adventurous with the ingredients that they use, and the different herbs that they use.”

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