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NEW PAYMENTS CANADA RULE ENABLES WIDER USE OF DIGITAL DEBIT PAYMENTS

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Retail Insider
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Merchants can now more easily offer debit option as an alternative to cash for small purchases like transit

OTTAWA, January 30, 2020 – Though Canada is a global leader in debit card use, Canadian consumers have not been able to use their debit cards for certain everyday purchases, such as transit payments. To offer more flexibility in payment methods for Canadian consumers and merchants, Payments Canada today announced a new rule to enable broader point-of-sale (POS) debit card acceptance. Current debit acceptance requirements, as defined by Payments Canada’s existing rules, require merchants to have consistent online connectivity to accept debit payments making debit impractical for some high-volume, time-sensitive transactions, such as paying bus fare.

The new Payments Canada rule, Rule E5, offers flexibility through delayed authorization, which removes the requirement for immediate online connectivity. Public transit operators, whose business models require quick authorization, were a key reason behind the development of Rule E5.

With delayed authorization, a merchant can now opt to provide a service before a payment transaction is authorized. In the example of a transit operator, this will support a passenger being able to pay and ride without having to wait for payments authorization. Beyond transit, Rule E5 is designed to enable other possible use cases, for example payment at parking meters, payment for on-board purchases (airline/train/ferry) and payment for vending machine purchases. As with other Canadian debit transactions, debit payments in these new scenarios will still be cleared and settled via Payments Canada’s systems.

“We know Canadians want easy, fast, digital payment options and fewer and fewer are carrying cash,” says Andrew McCormack, Chief Information Officer of Payments Canada. “Modernizing the rules framework for payments in Canada will enable merchants and service providers to deliver on these evolving consumer needs.”

Data from Payments Canada’s annual Canadian Payments Methods and Trends Report reveals that debit card use continued to outpace cash in 2018, where Canadians used debit cards for nearly 35 per cent more transactions than cash. Canadians are also now using their debit cards more frequently for their everyday lower value purchases and this trend will only continue with changes to the underlying rule framework.

“Interac welcomes the adoption of this new rule which will support acceptance of debit in a broader range of settings including transit fare payments,” Kirkland Morris, Vice-President, Enterprise Initiatives & External Affairs, Interac Corp. “Millions of Canadians already use Interac Debit to securely and conveniently pay everyday; by expanding the ability to pay with debit, Interac is focused on ensuring Canadians can pay how they want, where they want and with their own money.”

“Rule E5 benefits consumers as it enables the ability to offer debit card use to pay for transit and other services where rapid payment is needed,” said Don Mercer, President, Consumers Council of Canada. “Canadians stand to benefit from new secure ways to pay. However, as with all payments choices, consumers should become informed on the terms and conditions before choosing any method of payment.”

To learn more about Rule E5, titled Exchange of Point-of-Service Delayed Authorization Debit Payment Items for the Purpose of Clearing and Settlement, or Payments Canada’s POS payment rules framework, click here. The announcement of Payments Canada’s new rule comes in follow up to public consultation.

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About Payments Canada

Payments Canada ensures that financial transactions in Canada are carried out safely and securely each day. The organization underpins the Canadian financial system and economy by owning and operating Canada’s payment clearing and settlement infrastructure, including associated systems, bylaws, rules and standards. The value of payments cleared and settled by Payments Canada in 2019 was over $55 trillion or $218 billion each business day. These encompass a wide range of payments made by Canadians and businesses involving inter-bank transactions, including those made with debit cards, pre-authorized debits, direct deposits, bill payments, wire payments and cheques. Payments Canada is a proud supporter of the Catalyst Accord and the 30% Club.

For more information or to schedule an interview, please contact:

Ailie Somerville, 613-816-7540, asomerville@payments.ca  

Alissa Liotti, 416-355-7432, alissa.liotti@ketchum.com

203: Canadian Store Closures in Early 2020

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Retail Insider
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This week Craig & Lee discuss challenges in retail with more than 700 store locations in Canada that will shutter early on this year as well as some of the retailers affected.

The Weekly podcast by Retail Insider Canada is available on Apple Podcasts, Stitcher, TuneIn, Google Play, or through our dedicated RSS feed for Overcast and other podcast players.

Sponsored by Peregrine/Acorn: We are a team of creative engineers and skilled fabricators collaborating to design and manufacture highly effective retail environments. In 2017, they acquired “Acorn Wood Designs” – an award-winning architectural millwork company by focusing on quality craftsmanship and relationships. Visit Peregrine at https://www.peregrine.build to see their portfolio!

Article Details: 

  1. Hundreds of Stores to Close in Canada in Early 2020 [Analysis]

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Fort McMurray Launches Rebrand as it Targets Major Retailers

By
Mario Toneguzzi
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FORT MCMURRAY. PHOTO: WOOD BUFFALO ECONOMIC DEVELOPMENT CORPORATION

Despite a struggling oilpatch and the devastating wildfires of a few years ago, Fort McMurray is aggressively sending the message out to retailers that it is open for business and it’s an optimal time to explore and invest in the northern Alberta city.

Kevin Weidlich, President and CEO of Wood Buffalo Economic Development Corporation, said investment opportunities exist in Fort McMurray and now is the time to take advantage of these as the city has ideal conditions currently for retailers to set up shop and thrive.

“Our region is ready and positioned for growth,” he said.

The region boasts many factors that make it a prime location for retailers – an unemployment rate that is lower than the Alberta average, high levels of income, elevated spending per capita compared to other jurisdictions, a young population, accessibility to labour and perhaps most importantly plenty of serviced, commercial land available for development which has come on stream only in the last few years.

FORT MCMURRAY. PHOTO: WOOD BUFFALO ECONOMIC DEVELOPMENT CORPORATION

“We’re still a pretty vibrant community. There’s still a lot of work and business that goes on in Fort McMurray,” said Weidlich.

“We don’t have as many retail stores, particularly the larger international brands and national brands, that other communities in Alberta have and we wonder if that’s because of a misperception of the opportunity that’s here. Our goal is to attract much more retail investment in the community. Some $435 million a year actually drives down the highway and is spent in other municipalities in the province, namely the Edmonton metro region. We’d like to capture some of that.”

“And that number is still only a small percentage of the actual leakage that is leaving our community when you consider airport flight leakage and other activities as well. So there’s still a pretty strong spending capability in the region. Those that are willing to take the risk and invest quickly will see a payoff. As with all things, if you’re the first in, you’re going to be successful.”

FORT MCMURRAY. PHOTO: WOOD BUFFALO ECONOMIC DEVELOPMENT CORPORATION

The Wood Buffalo region is home to 111,687 people, with 73,974 people living in Fort McMurray, the region’s urban service area, and 37,713 living in rural hamlets or work camps. The community is one of the youngest in Canada with 47 per cent of the population between 20 and 44 years old and a male to female split of 54/46 per cent respectively. Despite popular belief, Fort McMurray is a well-balanced community with young families who have chosen and continue to choose to make this region home, says the economic development corporation. And the fastest growing segment of the population is in the 12-year-old and under age bracket.

The region has the highest spending power in Canada with an average household income of $211,748 and an average discretionary income of $112,416 (more than double the respective averages for Canada).

FORT MCMURRAY. PHOTO: WOOD BUFFALO ECONOMIC DEVELOPMENT CORPORATION

In the past, the region was land locked by crown-owned land. Today, it no longer suffers from a land shortage. In fact, two large land tracks have been released and serviced to accommodate up to 44,000 people and large-scale commercial development as Fort McMurray positions itself as being ready for future growth. In addition, 36 acres of highway commercial and 147 acres of commercial lands located near the airport are ready to accommodate new development.

Lisa Sweet, Director of Business and Investment Attraction for the Wood Buffalo Economic Development Corporation, said this means Fort McMurray is now able to accommodate growth in retail.

“We have space for retailers to locate, which was not the case a few years ago. We currently have active commercial developments and future developments coming online,” she said.

“We want to spread the message that Fort McMurray is open for business. Times have changed in that we have land available now and there are opportunities to locate. One of the reasons we don’t have the retail brands that we’d like to have is because in the past we didn’t have the land available or the development opportunity available for them.”

FORT MCMURRAY. PHOTO: WOOD BUFFALO ECONOMIC DEVELOPMENT CORPORATION

Downtown revitalization is also a priority in the Municipality’s 2018-2021 Strategic Plan. Two committees have been created; the Downtown Revitalization Advisory Committee and the Waterfront Advisory Committee to help advise Council on matters that affect the public, giving residents a chance to provide input to decision-makers in local government. These committees will make recommendations to Council on matters pertaining to downtown revitalization.

“Our downtown is ripe for revitalization,” said Weidlich.

The Municipality has also taken advantage of the economic slowdown and oversized its infrastructure (water/sewer/roads) over the past five years, in an effort to position itself to accommodate more than double its current population. Highway 63 has been twinned, making it much safer and quicker for delivery of goods. And an international airport also opened in 2014, accommodating over 600,000 passengers annually and the ability to accommodate air cargo.

CLICK FOR INTERACTIVE MAP OF FORT MCMURRAY

“One of the biggest questions that companies will ask us when they come here because Fort McMurray has been such a successful town is accessibility to labour. At a time, we were actually at maximum capacity for our labour force, many workers were living in work camps and it was tough to find labour because the industry was paying so well,” said Weidlich.

“In recent years this has changed because it’s easier for people to move to Fort McMurray. Housing prices have declined so now the average single-family dwelling is $530,000 which is not much more than say Edmonton or Calgary would offer. Condominium and rental prices have also significantly dropped such that housing is more affordable now. So that also means that retail labour can actually afford to live and work here and that also means that accessible labour now exists. When we were at a boom time it was tough for retailers to find reliable staff. That’s not the case today. Now retailers can find reliable staff.”

How Canadian Retailers Can Start Preparing for 2030

By
Retail Insider
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By Vala Afshar, Chief Digital Evangelist at Salesforce

There was a lot that didn’t exist 10 years ago — things we never would have foreseen. This includes the iPad, which wasn’t formally introduced until April of 2010, or Instagram, which launched in October of the same year.

Ten years ago also marked a unique moment in Canadian history, when Vancouver hosted the Olympic Games with a rousing and confident motto of “Own The Podium.”

Now that we’ve finished looking back at the 2010s, it’s time to look forward, and while forecasting is never easy, I’d suggest Canadian businesses be as well-prepared and as ambitious as its Olympians in harnessing the changes in technology to better serve their customers.

The inevitable trajectory of e-commerce

Even if they’re not thinking that far ahead, many companies are already laying the groundwork for a very different world in 2030. This includes retail stores, where a recent analysis showed the use of AI, mobile and social led to growth of 15 per cent in 2019 over 2018.

While a lot of activity still happens in physical stores, eMarketer is projecting e-commerce to make up 16.1 percent of retail sales this year. By 2030, Canadian retailers should expect more than 50 per cent of their sales transactions to come through digital challenges. If you aren’t focusing on e-commerce, now is the time to start.

More mobile than ever before

E-commerce is on the rise in part because it’s easier than ever for Canadian consumers to shop from wherever they are. Apple’s App Store is now 12 years old, and there are others, such as Google Play, which offer an incredible plethora of products and services via smartphone. By 2030, worldwide sales transactions from smartphone applications will drive 99 per cent of all digital traffic and 95 percent of all orders. If that sounds high, consider recent data which found mobile devices globally drove 73 per cent of all digital traffic and 55 per cent of all orders across Cyber Week 2019.

“Mobile” isn’t restricted to the smartphone, of course, or even the use of our fingers to make purchases. According to Statista, the rate of user penetration for wearables in Canada is already 8.3 percent and will continue to climb. Last year, the CBC noted the growing acceptance of smart speakers and other devices that use voice recognition and artificial intelligence (AI) to handle things like sales orders and transactions, further changing the nature of interfaces.

A decade that will be defined by AI

AI, of course, has been the subject of headlines across Canada and beyond — not all of it positive. Last year, however, Salesforce published a report called “Future Ready: Advancing Canadian Business in the Digital Economy”, which showed that while only 15 percent of businesses here use AI today, they expected a growth rate in AI adoption of 202 percent within the next three years.

By 2030, all businesses will use AI. What seems disruptive now will be more like electricity in business today. If you don’t have electricity, you’re left in the dark. When you use it to its potential, however, it allows you to do far more than keep the lights on.

Ten years from now, for example, we’ll look at many of the tools we describe as powered by AI as fairly simplistic, handling routine tasks and answering basic questions. Market research firm Gartner, on the other hand, suggests AI will soon be used to influence more than half of advertising and sales by being able to identify emotional reactions and strengthen loyalty. This prediction is backed up by recent Cyber Week data showing that 9 percent of digital orders during the 2019 holiday period were driven by AI applications.

The 10-year journey toward higher customer expectations begins

If you’re worried that technological automation will dehumanize the way we live and work, don’t be. While not every trend shows a “hockey stick” growth curve, the importance of the experience a company offers its customers is only increasing in time.

Last year, for example, research showed that 84 per cent of customers valued experience as equally important as the product; in 2018 it was 80 per cent. By 2030 that number will be 100 percent — not just because customers demand it, but because the technology is already here to support such experiences.

Speed, personalization at scale, and intelligent, proactive engagements are all made possible through AI, the Internet of Things and other innovations. Much like autonomous vehicles are transforming the relationships between a driver and a car, these tools are allowing employees to move from repetitive, manual and error-prone assignments to higher-value activities that anticipate the needs of customers and exceed their expectations.

Canada, and the entire world, will obviously look a lot different by 2030. All businesses have an equal opportunity to win, however — where we share the podium based on the way we make use of the technologies available to us.

Vala Afshar is an award-winning inventor and sought after expert in digital business transformation, digital marketing and emerging technologies like artificial intelligence and virtual reality. In his current role, Valacollaborates with C-suite executives, industry analysts and thought leaders from around the world on opportunities for digital change. His role combines a business perspective with the technologies for gathering, analyzing, and sharing data, and he has been named as the top influencer to CMOs on Twitter by Fortune Magazine. For more from Vala you can follow him on Twitter at https://twitter.com/ValaAfshar

Physical Stores, Multi-Channel and AI will be Critical to the Future of Retail in Canada

By
Retail Insider
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AMAZON GO STORE. PHOTO: WIKIPEDIA

In the 70s, the most popular holiday gifts were a Space Hopper and the Etch a Sketch. Now 50 years later, gift wrapped boxes under the tree contain iPhone XRs and Nintendo Switch Lites. It’s an accurate snapshot of how the technological evolution is continuing to grow every year – not just in the products themselves, but also in how we buy those products.

With the continued rise of ecommerce in the last decade, we’ve also seen a new demand for omnichannel shopping experiences and a rapid increase in smart in-store technology – retail elements which continue to evolve exponentially.

When it comes to commentating on ecommerce, talking about year-over-year growth is no longer a headline, it’s a given. There’s also no surprise in mentioning “online retail giants” followed closely by a reference to Amazon. In 2021, over 2.14 billion people worldwide are expected to buy goods and services online, up from 1.66 billion global digital buyers in 2016. There’s no denying that online retail is a stronghold, but brands are now faced with a new dilemma as online retail increases the field of competition.

ZVELLE BEGAN AS AN ONLINE STORE BUT HAS STARTED OPENING POP UPS TO BROADEN CONSUMER PATHS TO PURCHASE

Years ago, when the only avenue for convenient retail therapy was a trip to the local mall, shoppers were limited to specific store choices. Now with a wealth of retailers available online, consumers are given a wider choice to cherry pick brands based on want, price, and product – rather than just because it’s the closest store to home. Brands have to try a lot harder now to win over the hearts and loyalty of customers through targeted marketing and memorable customer experiences.

The greatest irony for online retail is that it is most effective when coupled with offline interactions. Eighty-five percent of 2,000 global consumers surveyed by the Chief Marketing Officer (CMO) Council, in partnership with Pitney Bowes, unearthed that a blend of both digital and physical channel experiences is the preferred way of interfacing with brands.

The consumer path to purchase is no longer linear – the shopping journey has many touch points, both online and offline. Omnichannel retail provides customers with a seamless shopping experience, whether they’re shopping online from a desktop or mobile device, or in a brick-and-mortar store – with a myriad of options, an omnichannel approach is a proven way to increase sales conversion.

As brands begin to understand the true value of having an offline footprint – they are able to leverage the creation of exceptional customer experiences to build consumer relationships that can help to bolster sales across all channels. Colorado coastal fashion brand, Fresh Produce have both an online and offline sales footprint – and have become experts at using one channel to help bolster the other. Customers can redeem discount codes when purchasing products in-store, which they can then use online for future buys. It’s an example of a simple system that can turn a one dimensional shopping experience into a full circle journey for consumers. The brand further extended their reach with a pop-up this past summer specifically targeting their customers in The Hamptons – creating a locally themed event with exclusive products.

Fresh Produce isn’t the only brand turning to pop-ups to help boost their customer experience and omnichannel potential. Pop-ups have been an offline go-to for brands who don’t have permanent stores, as well as for those who do, but want to try a new concept or explore a new geographical location. Personal real-world interactions with brands beyond the screen creates familiarity and trust, key factors in customer decision making.

CONCEPT SPACE FOR POP UPS AT YORKDALE SHOPPING CENTRE

All retail stores, both permanent and pop-up have to step up their game in 2020 and ensure they are meeting the technological demands of today’s customer. It is now considered a basic requirement to have digital display screens, e-receipts, in-store tablets to check stock availability (and if unavailable, the ability to order online with delivery to the store) – to other more complex technology like AI. The drive toward AI in retail environments in 2020 will be fierce for two specific reasons; personalisation and data collection. When shopping online, every click is monitored, allowing systems to better understand customers and make recommendations based on this. Brick-and-mortar retail environments are moving towards testing this same theory in different manners. AI can be applied in-store with things like the virtual changing room and it is also a touchpoint for retailers in collecting important data to help to make business decisions. At the moment, only 10% of businesses use AI but companies who want to lead the pack in 2020 will have to take the risk and explore this emerging trend.

Surprisingly, leading the way in terms of advancing how we shop in brick-and-mortar stores is Amazon. The online retailer opened its first Amazon Go store in December 2016 – and according to Bloomberg, they’re planning to open both larger supermarkets and smaller pop-up stores in 2020 using their Amazon Go technology to create shopping experiences without any checkout lines. Amazon’s stores use cameras and machine vision to track what customers pick up in the stores. Upon entering a Go store, customers scan an app on their smartphone and grab what they need from the shelves (all tracked by the cameras). Then, when exiting, they are automatically billed for their purchases. With the increase in smart phones, smart homes, and intelligence devices like Alexa slipping into people’s everyday lives, it’s no surprise that customers now have an expectation that their retail experiences should match the level of innovation they have in other areas of their lives. Brands mustn’t be afraid of change and take risks in trying out new technology in 2020 if they want to thrive in the coming months.

Linda Farha is founder of Toronto-based Zenergy Communications as well pop-up go, an online platform that helps pair retailers with available temporary retail spaces, which also features a curated pop-up match service that provides access to the ever-growing pipeline of pop-up seekers looking for space.

Louis Vuitton to Open Yorkdale Flagship

By
Craig Patterson
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LOUIS VUITTON BOUTIQUE AT HOLT RENFREW IN YORKDALE

LVMH-owned French luxury brand Louis Vuitton will open a flagship store at Toronto’s Yorkdale Shopping Centre in the summer of this year. It’s part of a larger investment by Vuitton which has opened two standalone stores over the past two years and is said to be looking to open at least one flagship store in a major Canadian city in the future.

The Yorkdale Louis Vuitton store will span more than 8,000 square feet on one level, and will be located in a prominent corner location in the mall near several other luxury brands. The store will carry the luxury brand’s assortment of bags and accessories as well as jewellery, footwear and ready-to-wear collections for both men and women. Given the base of affluent shoppers at Yorkdale, limited-edition items can be expected according to one source. The cost to construct the store’s facade, alone, is said to be over $1 million.

Louis Vuitton will locate across from Yorkdale’s Sephora and Zara stores, and will be next to Italian luxury brand Mr. and Mrs. Italy, and across from Ladurée. Other nearby retailers include Saint Laurent and Richemont Group’s clustering of jewellery and watch brands. The hall southward, toward the recently opened Furla store, will also be positioned to house luxury retailers, according to sources at Yorkdale’s landlord Oxford Properties.

CLICK IMAGE FOR INTERACTIVE YORKDALE MALL MAP

Yorkdale’s Louis Vuitton will replace several retailers that recently vacated or moved from within the shopping centre. That includes Tumi (which relocated nearby several months ago), Thomas Sabo (which will exit Canada), as well as Call it Spring and Indochino, both of which relocated in anticipation of Louis Vuitton’s new store.

LOUIS VUITTON AT HOLT RENFREW ON BLOOR ST, TORONTO. PHOTO: LOUIS VUITTON

For almost a decade, Louis Vuitton has operated a leased concession space at Yorkdale’s Holt Renfrew store. A source at Louis Vuitton said that the 4,000-square-foot concession at Holt Renfrew would remain open even after the standalone flagship opens, and that the Yorkdale Holt Renfrew concession is the top-selling Louis Vuitton store in Canada — outpacing sales of Vuitton’s two highly productive Vancouver storefronts, one of which is a ‘Maison’.

In anticipation of the flagship opening at Yorkdale, Louis Vuitton opened a year-long men’s pop-up store within Holt Renfrew in the mall. The space, featuring a metallic rainbow finish, is located at the front of the store that is known for its three-storey video screens flanking the entrance. The men’s pop-up will close when the new standalone flagship opens in several months time.

LOUIS VUITTON MEN’S POP UP IN HOLT RENFREW, YORKDALE. PHOTO: LOUIS VUITTON.

It’s not unprecedented for Louis Vuitton to operate two stores in a mall. In the United States, several upscale shopping centres feature standalone Louis Vuitton stores while at the same time operating a Vuitton concession within an upscale department store. They include names such as Neiman Marcus, Saks Fifth Avenue, Bloomingdale’s, and even a handful of Macy’s locations.

Louis Vuitton has been investing heavily in its Canadian operations over the past several years. That includes having opened two standalone stores in Alberta. In October of 2018, Louis Vuitton opened a standalone 4,500-square-foot store at Calgary’s CF Chinook Centre, while at the same time exiting its concession space within the Holt Renfrew store in downtown Calgary.

In Edmonton, Louis Vuitton opened a standalone 4,600-square-foot store at West Edmonton Mall in June of 2019 and shuttered its concession at the downtown Edmonton Holt Renfrew store earlier this month. Holt Renfrew closed on January 11th of this year partly because of Louis Vuitton’s plans to exit the store.

LOUIS VUITTON CF CHINOOK CENTRE STOREFRONT. PHOTO: COURTESY OF LOUIS VUITTON / PAUL WARCHOL
INTERIOR OF LOUIS VUITTON AT CF CHINOOK CENTRE. PHOTO: LOUIS VUITTON
INTERIOR OF LOUIS VUITTON AT CF CHINOOK CENTRE. PHOTO: LOUIS VUITTON

In other Canadian cities, Louis Vuitton is also making major investments. In Vancouver, where Louis Vuitton operates a 10,000-square-foot ‘Maison’ flagship at the Fairmont Hotel Vancouver, the brand has recently been expanding its presence within the nearby Holt Renfrew store. That includes expanding the Louis Vuitton men’s concession to house ready-to-wear clothing as well as footwear, bags and accessories, while a women’s ready-to-wear boutique was added on the third floor of Vancouver’s Holt Renfrew store. They’re a first of its kind in Canada. A Vuitton bag and accessory concession on the main level luxury hall at Holts is also quite large and is said to sell more bags than the standalone Vuitton flagship with a 730 Burrard Street address.

LOUIS VUITTON’S NEW STOREFRONT AT WEST EDMONTON MALL. PHOTO: LOUIS VUITTON
INTERIOR OF LOUIS VUITTON AT WEST EDMONTON MALL. PHOTO: LOUIS VUITTON

In Montreal, Louis Vuitton is building a new store at Holt Renfrew Ogilvy which will open in the next few weeks. The concession will be located in a corner space on the main floor of Holt Renfrew Ogilvy, facing both Ste-Catherine Street West as well as Rue de la Montagne. A Hermes boutique will open next to it with its own facade on Ste-Catherine Street. A unique Louis Vuitton pop-up at the soon-to-close Holt Renfrew store on Sherbrooke Street will close this spring after the new Sherbrooke Street Holt Renfrew Ogilvy storefront opens.

In Toronto, Louis Vuitton opened a 2,650-square-foot accessory concession on the main level of Holt Renfrew’s 50 Bloor Street West store in November of 2018, replacing a smaller location nearby within the flagship store. It was part of an overhaul of the main floor of Holts, which has become something of a luxury floor with several significant luxury boutiques operating within. Nearby at 150 Bloor Street West, Louis Vuitton operates an 18,000-square-foot ‘Maison’ which spans two levels and is one of the grandest Louis Vuitton stores we’ve seen.

In years past, Louis Vuitton operated a 2,500-square-foot boutique at the Cascade Plaza shopping centre in downtown Banff, Alberta. The boutique closed in May, 2011.

Sources say that Louis Vuitton has been in talks to open a 9,000-square-foot standalone boutique in a major Canadian city. We’ll follow up with further details when permitted to discuss it further.

Louis Vuitton is the latest luxury brand to expand its presence at Yorkdale. Longchamp relocated to a larger space in the mall earlier this month, and in December Ted Baker moved to a new space nearby — both spaces will be joined for a soon-to-be-announced luxury brand which is also owned by LVMH. Other luxury brands that have moved into Yorkdale over the past year include Bottega Veneta, Valentino and Balenciaga, while the mall’s Holt Renfrew store recently saw an expansion which include a new menswear department as well as large ‘world of’ concession spaces for Dior (3,800 square feet), Fendi (2,000 square feet) and Gucci, which opened a stunning 6,000-square-foot concession at Holts in the summer. Brunello Cucinelli recently opened at Holts and a Christian Louboutin boutique will as well.

Louis Vuitton is one of the world’s top-selling luxury brands, with sales well surpassing $10 billion annually. Top rivals include Chanel and Gucci, with Hermes also seeing billions of dollars a year in sales.

Mobile Klinik Makes Acquisition Amid Explosive Store Growth

By
Mario Toneguzzi
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PHOTO: MOBILE KLINIK

Mobile Klinik Professional Smartphone Repair, Canada’s largest and fastest growing while-you-wait smartphone and tablet repair, care, sales and services retailer, continues to expand its footprint across the country, doubling its size in the past year.

The recent acquisition of fonelab, a smartphone repair, sales and accessories chain with eight locations in Ontario, brought the Mobile Klinik portfolio to 80 locations.

“We have a clear vision to provide Canadians with much-needed, professional, trusted smartphone and tablet repair and care services, and fonelab is an excellent fit with that vision. Their skilled staff along with their desirable shopping mall locations will enhance our rapidly-growing business,” said Tim McGuire, CEO of Mobile Klinik. “This acquisition caps a wildly successful growth year: we started the year with 40 Mobile Klinik storefronts and just one year later, we’ve doubled our network to 80 stores. I’m already looking forward to this time next year, when we’ll have blown right by the 100-store mark.”

McGuire said fonelab brought to the fold eight of the best malls in Canada for the company, which began its operations in 2015.

“This was a company we both admired and coveted for a long time. They started a year or so earlier than we did so they were able to get into some malls before we were able to and we’ve wanted to be and need to be in all of those places,” he said.

“There’s a hundred companies out there that are trying to provide some form of smartphone repair and sales in Canada. This is the company most like us. They have all the same partnerships with the carriers, and with the insurance companies that do all the after care insurance for the carriers. Their stores look like ours. Their processes are like ours. Their people are trained like ours. You would have thought we were at least close cousins if not siblings. We just decided it was time to bring the whole family back into one big house and we’re delighted about the opportunity.

PHOTO: FONELAB

Real estate company Oberfeld Snowcap represents the retailer and is working with it on the expansion.

“Obviously we can offer a tremendous amount of operating scale potential of growth potential to their people. They weren’t going to be growing that business a long ways beyond the current eight stores. We’re at 80 and on our way to 200 and that creates potential for their technicians to move up and become store managers and if they want they can work in stores anywhere across the country not just in the GTA. It was a natural fit for us.”

All eight fonelab locations will be converted to the Mobile Klinik brand in the first quarter of 2020:

  • CF Fairview Mall, Toronto;

  • Conestoga Mall, Waterloo;

  • CF Fairview Park, Kitchener;

  • Scarborough Town Centre, Scarborough;

  • Oshawa Centre, Oshawa;

  • CF Lime Ridge, Hamilton;

  • Upper Canada Mall, Newmarket; and

  • CF Masonville Place, London.

“We’re just really excited about this being the next wave of growth to continue to push the business forward,” said McGuire.

“We’re planning to add another 30 to 40 stores in 2020. If you go back two and a half years ago, we had six stores.”

MOBILE KLINIK, SUNRIDGE MALL, CALGARY. PHOTO: MOBILE KLINIK

McGuire said the chain also has plans for international expansion beyond Canada.

“This is a race car that is lapping the others on the track and we’re going to keep it running,” he said, adding that the decision to go internationally will be made some time in 2020.

Mobile Klinik offers no-appointment-needed, trusted professional smartphone and tablet repair for almost all makes and models of devices. Its trained, expert technicians typically complete repairs in less than 60 minutes.

fonelab is an authorized repair service provider for Samsung, LG, and Huawei smartphones and tablets.

The Mobile Klinik chain has stores in major shopping malls, select Walmart stores, and other high-traffic retail locations across the country.

MOBILE KLINIK, LES PROMENADES GATINEAU. PHOTO: MOBILE KLINIK

McGuire said the company’s next wave of growth will be its own organic growth.

“There’s really nobody left to buy,” he said. “There are no groups of more than three or four stores that we would look at and say ‘hey that’s somebody a lot like us, we can figure out how to fold that into our plans’. I’m not going to rule out that there might be another small acquisition or two in the future but that’s not going to be a big driver of our growth.

“Those next 120 stores are probably 120 new builds. Our international opportunity will be different. My expectation is when we choose a market to go to we will likely do so by making an acquisition of a small to medium size company in that market and then grow it like gangbusters just like we have in Canada.”

McGuire said the company has seen growth as well in its accessories business which is its fastest growing business and he’s confident Mobile Klinik can triple that in the next year. Also, its used phone business is growing.

“We buy and sell more phones than any other retailer in Canada and we believe we have the potential to be Canada’s used phone superstore and that business is growing aggressively as well. We’re never going to lose our focus on repair but we’ve got a lot of upside in those other areas as well.

“Over time, you put all three of those pieces together we’re confident we can still double our sales per store over the next three years in addition to growing the store count. We’re nowhere near being mature even in the markets we’re in. There’s lots of market share to take away from small players, from independents, from mail in repair companies. When you combine that with the growth in our accessories and used phones businesses we can double our sales per store going forward.”

Canadian Retail Sales Growth Slows to a Crawl

By
Ed Strapagiel
-
IMAGE OF CF TORONTO EATON CENTRE. PHOTO: CADILLAC FAIRVIEW

By Ed Strapagiel

The latest data from Statistics Canada indicate that overall retail sales increased just 0.7% year-over-year for the 3 months ending November 2019. While an uptick was reported in the media for November alone, this was in comparison to the previous month, October 2019, which was particularly weak. For retail sales numbers, one month does not a trend make.

After 11 months of 2019, year-to-date overall Canadian retail sales were up just 1.5%, well below the approximate 3.5% pace needed to keep up with population growth and price inflation. It’s virtually certain that 2019 retail sales growth will end up at a 10 year low.

As the above chart shows, the underlying 12 month trend (green line) peaked two years ago in late 2017, and has been declining ever since. The shorter term 3 month trend (orange line) continues to underperform even that, indicating more weakness ahead.

Unusually low growth in the Food & Drug sector since mid 2019 is probably the most responsible for the recent deterioration of overall retail sales. The Automotive & Related sector has also been weak but steadily so. Store Merchandise is more or less holding its own but at a historically modest retail sales growth level.

Food & Drug

Retail sales growth in the Food & Drug sector is scraping rock bottom. Year-over-year sales were up a mere 0.4% for the 3 months ending November 2019, another historical low.

The 3 month trend (orange line in the chart above) has steadily deteriorated in the second half of the year. The underlying 12 month trend (green line) is also weakening as a result, and may end 2019 at about 1.8% or 1.9% gain.

Retail sales at grocery stores gained 1.0% for the 3 months ending November 2019. This was constrained by convenience stores where retail sales declined by a huge 7.3%.

At the same time, health and personal care stores failed to pick up the slack. Their sales were off 1.7% year-over-year for the period.

Store Merchandise

The Store Merchandise sector has been holding its head above water for most of 2019. The latest results however may be of concern, as retail sales were up just 1.1% for the 3 months ending November 2019. Year-to-date retail sales however were still up 2.1%, so there’s hope yet.

For about the last 8 months, the short term 3 month trend (orange line in the chart) has been fluctuating somewhat, both up and down. The offsetting pattern has meant that the underlying 12 month trend (green line) has been about flat, which is actually an improvement over the weakening evident in the other major retail sectors.

There are still some problem areas in Store Merchandise. Electronics & appliance stores’ retail sales were down a huge 12.3% for the 3 months ending November 2019. Shoe stores, home furnishings retailers, and sporting goods, hobby, book and music stores also reported declines, while clothing stores were up only 0.6%.

Miscellaneous store retailers had the highest sales gain of 9.9% for the 3 months ending November 2019. This is largely due to the addition of cannabis stores a year ago, an affect which will dampen down in the next few months.

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 come down hard since its glory days of 2017 to its current state of low to no growth in 2019. This is due to a “double whammy” of weak automobile sales and depressed gasoline prices.

Gasoline stations are the main problem for sector retail sales and for Canadian retail sales overall. Their sales were down 2.7% year-over-year for the 3 months ending November 2019, although this was not as bad as most of the preceding months. Without gas stations, overall Canadian retail sales growth would be up 2.2% year-to-date instead of 1.5%.

New car dealers’ retail sales gained a modest 1.8% for the 3 months ending November 2019. This offset the decline at gas stations, but it wasn’t enough to materially improve the performance of the Automotive & Related sector.

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.

Canadian E-Commerce Sales

StatsCan started providing e-commerce retail sales data in January 2016. While the amount of data is limited, some trends appear to be emerging. Here are some results.

Overall, e-commerce represented about 3.4% of Canadian retailers’ sales for the 12 months ending November 2019, including both pure play operators as well as the online operations of brick & mortar stores. Canadian consumers however also buy online from foreign websites which is not captured in these numbers.

Canadian e-commerce sales were up 15.9% year-over-year for the 3 months ending November 2019. This was much higher than for location based retail which gained just 0.7%.

Note that 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 November 2019, electronic shopping and mail-order houses had an estimated $13.8 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 October 2019, this group had an estimated $7.7 billion in e-commerce sales. With electronic shopping and mail-order houses, there’s a grand total of $21.4 billion in e-commerce sales by Canadian operators over the year. 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 85.7% of their sales are allocated to e-commerce. For (mostly) bricks & mortar retailers, it can be estimated that just 1.2% 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 64.2% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers’ share of e-commerce was 35.8%.

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

Monthly Update Notification

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

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.

Indochino Expands Retail Footprint with More Showroom Openings

By
Mario Toneguzzi
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exc-5e2db6f5a532c0516fd48f93

The recent showroom opening for custom apparel retailer Indochino in Toronto’s Scarborough Town Centre was a bit of a homecoming for the company’s President and CEO Drew Green.

He was born and raised in the community.

“I’ve been waiting for this moment since we planned our bold expansion strategy in 2015,” said Green, who has stayed close to the community over the years through friends and community involvement. “From West Hill to Agincourt, and all the amazing communities in between, Scarborough is rooted in cultural diversity, hard work and proud heritage.

“Bringing Indochino to my hometown is a real honour, and I’m excited and grateful for the people of Scarborough to be able to discover a better way to shop for great fitting suiting, outerwear, and casual wear — the custom way.

“It’s just a community that I’m really, really fond of and dedicated to and love. This is a special showroom for us. I think it’s going to really, really perform well.”

The Canadian brand, which offers a personalized shopping experience where customers design their own suits, shirts, pants, and coats, has opened in a 2,211-square-foot showroom which is the retailer’s fifth in the Greater Toronto Area.

“Toronto is one of our best markets both on a showroom comp basis but also on a market basis. The market grew over 30 per cent last year on a very big number and this is our first east GTA location. We’re excited about it,” added Green.

The retailer has 51 locations. Green said the company will end 2020 with at least 86 locations. All additional 35 locations will be in the United States.

In Canada, real estate company Oberfeld Snowcap represents Indochino in its site selection. Oberfeld Snowcap is also in the process of launching a US office.

“We’ve got a major partnership that we’re announcing that is a major part of that which I can’t really speak to yet,” said Green.

“We’re obviously a Canadian company and Canada does quite well for us. Toronto in particular as well as Vancouver. But there’s just so much opportunity for us in the U.S.”

Currently Indochino has 13 stores in Canada.

“What used to be a very niche part of the market, being custom apparel, has become increasingly mainstream. Our growth rate was phenomenal in 2019. 2020 is going to be probably our best year ever from a growth rate perspective and obviously on a very big number,” said Green, adding forecast growth could be another 40 per cent.

“Custom apparel has really come of age. The other thing that’s really been proven out and come of age is digitally native brands having success with a multi-channel view and execution. This business we’ve transformed from a niche brand to a North American and even global brand by really adopting an omnichannel strategy that’s differentiated.

“We’re a nine-figure revenue company and so that’s a big, big number.”

Green said high street locations represent about 40 per cent of the retailer’s business with 60 per cent in Tier One malls.

“What we haven’t done with the brand and I don’t see us doing is kind of going to Tier Two, Tier Three malls. We’re going to stay focused on quality versus quantity,” he said.

“Our model is so different than ‘traditional’ retail. The interesting things when we’ve tested and had the thesis about what a mall would do for us is it does provide us with a lot more walk-in traffic. What we’ve seen in the malls is a nice lift of this walk-in traffic and one of the reasons we continue to expand in the Tier One malls.”

Green said the retailer’s success has also come from its product expansion such as outerwear which was launched in September.

Retailers in Canada Powered by Lightspeed Grew more than 6 Times Faster than Industry Standard

By
Craig Patterson
-
PHOTO COURTESY OF LIGHTSPEED

Montreal-based point-of-sale and e-commerce software provider Lightspeed announced this week that its retail customers in Canada saw sales growth of more than six times the industry average last year. The revelation comes after Lightspeed compiled data from more than 3,000 Lightspeed retail locations as part of a year-end review following tremendous growth for Lightspeed itself after a successful IPO in 2019.

In Canada, retailers and other businesses utilizing Lightspeed’s platforms saw an average of 10.3% growth in year-over-year gross transaction volume between January and October of 2019 when compared to the same time period in 2018. That’s considerably higher than the industry average that Statistics Canada pegged, which was about 1.5% between 2018 and 2019. Growth insights were obtained as part of Lightspeed’s 2019 Year in Review.

It’s an impressive statistic at a time when retail is seeing a shift in Canada — international brands continue to enter the market while consumer shopping habits change. Lightspeed’s suite of products target independent retailers and restaurants and has expanded beyond the point-of-sale technology that Lightspeed became known for when the company was founded in Montreal in 2005.

LIGHTSPEED FOUNDER AND CEO DAX DASILVA. PHOTO COURTESY OF LIGHTSPEED

“The 2019 Retail Year in Review demonstrates how Lightspeed is helping retailers outperform their peers across a range of industries using our innovative cloud-based technology,” said Dax Dasilva, CEO and Founder of Lightspeed. “It also reveals the degree to which Lightspeed has become an indispensable tool for small and medium sized businesses in 2019 and showcases the strong prospects for retailers’ continued growth in 2020 as they remain agile and competitive in the evolving retail industry.”

Lightspeed’s cloud-based tools aim to create efficiencies for retailers with an expanding assortment of products aimed to help independent retailers function optimally. Mr. Dasilva explained in an interview how his company’s products assist retailers with data and analytics, inventory management and capital investment, seasonal trends, and store staffing. Lightspeed also launched a loyalty platform last year called Lightspeed Loyalty which helps retailers and small businesses engage with customers and keep them coming back.

“Given the growth seen with Lightspeed’s client base, the ‘retail apocalypse’ narrative isn’t accurate,” said Mr. Dasilva. “Retailers utilizing Lightspeed technology are seeing growth in all channels and our platforms are helping continue to drive success”.

PHOTO COURTESY OF LIGHTSPEED

Lightspeed’s cloud-based platforms are used by small and medium-sized businesses in more than 100 countries globally, and new businesses are adopting the technology quickly. As part of the 2019 Year in Review, Lightspeed surveyed about 10,000 US-based small and medium sized businesses using its platforms. Remarkably, US-based businesses powered by Lightspeed saw year-over-year growth of 13.8%, compared to an industry average of about 3% in the country.

In North America, sporting goods and health and beauty retailers utilizing Lightspeed’s products saw tremendous gains in particular. For sporting goods retailers, Lightspeed customers saw the number of transactions per merchant increase by over 22% in 2019, which is indicative of how service offerings are attracting new customers while retaining a loyal client base. Health and beauty retailers powered by Lightspeed platforms saw an overall sales increase last year of 24% over the year prior — the massive rise of beauty influencers is said to have been partly responsible for the strong growth.

Small and medium-sized businesses utilizing Lightspeed’s platforms often see growth exceeding 20%, and the continued growth thereafter in excess of 10% in Canada reflects the strength of Lightspeed’s suite of products, according to Mr. Dasilva. Businesses may start with Lightspeed’s powerful point-of-sale technology before adopting other platforms such as Lightspeed Analytics and Lightspeed Loyalty.

PHOTO COURTESY OF LIGHTSPEED

Lightspeed’s technologies also address the direct-to-consumer trend, which is taking hold in Canada and abroad. Now more than ever, brands are seeking to engage with consumers through dedicated physical stores as well as with online channels such as ecommerce and social media. 

“I spend a lot of time speaking with various small and medium-sized entrepreneurs around the world. Their feedback is that with today’s open dialogue between brands and customers, direct-to-consumer isn’t an anomaly anymore but a crucial element to a company’s success,” said Mr. Dasilva. He noted how brands can seamlessly present a blended in-store and online customer experience — physical stores have become brand experience centres, and the online and social media presence allows for an exchange both with local customers as well as with a global audience. “These important touchpoints work together to showcase products in new and captivating ways, tell stories, collect feedback and ultimately sell,” he said.

Lightspeed continues to grow its operations as well as its suite of products targeting small and medium sized businesses. The company, which launched a highly anticipated IPO last year on the TSX, has seen considerable gains in its share price while also seeing rapid adoption from retailers and restaurants globally. Lightspeed now employs more than 900 people in its 14 offices around the world and is poised for future growth as it secures more business clients and expands its offerings geared towards creating efficiencies.

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