An off-schedule podcast discussion with Lynda Murray, the Chief Marketing Officer at ShipperBee. Ms. Murray explains how ShipperBee transforms parcel delivery without changing consumer behaviour while improving or customers business results, customer experience and our environment.
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*This story has been updated since its publication date to reflect the confirmed store closures, including all Sportium stores and two SAIL locations.
Quebec-based sporting goods retailer SAIL Outdoors Inc., which operates SAIL and Sportium banners in Canada, filed for bankruptcy protection on Tuesday morning in an effort to restructure operations. The company has struggled financially after weeks of store shutdowns and prior to that, competition from expanding sports-focused retailers such as Decathlon, MEC, Sport Chek, and Sports Experts.
As part of the filing, it was announced Thursday of upcoming liquidation sales and store closures of all Sportium stores, along with two SAIL storefronts located in Vaughan ON and Etobicoke (Toronto). The stores will close after liquidation sales and the e-commerce websites (Sail.ca and Sportium.ca) will continue to operate. “The closure of six [Sportium] stores, which means the end of the Sportium banner, is a heartbreaking but necessary decision that will allow us to keep the most promising SAIL outlets,” said Norman Décarie, President and Chief Executive Officer of SAIL Outdoors Inc.
“For several years now, the retail industry has been undergoing a major transformation characterized, among other things, by an increase in online sales and heightened competition,” said Norman Décarie. “Unfortunately, the consequences of the pandemic, such as the closure of stores for two months, have added further pressure on our cash flow and financial health. This situation is forcing us to make major decisions to ensure the company’s sustainability.”
On Tuesday, the company filed for protection under the Bankruptcy and Insolvency Act. SAIL Outdoors Inc. said that this will allow it to obtain necessary support during the implementation of its restructuring plan. The company hopes to turn around its retail business and restore its financial health.
“This strategic decision is the best way to refocus and put our operations on a more solid footing. Our 100% e-commerce dedicated distribution centre, inaugurated last November, demonstrates our commitment to continue to innovate and evolve the company in line with the market and consumer needs,” said Mr. Décarie.
PHOTO: SAIL OUTDOORS
The company’s total debt exceeds $100 million according to filings, with annual sales for its operations of about $300 million.
SAIL operates 14 standalone large-box stores with eight of those locations in the province of Quebec and six in Ontario. The number will be reduced to 12 when two units shutter. Large-format sports retailer Sportium operates four stores in Quebec cities of Québec City, Saint-Hubert, Laval and Kirkland, all of which will be closing. The restructuring will affect approximately 500 employees and the company promised to offer options for transferring employees to other stores or to their distribution centre which supports their online sales fulfilment.
SAIL was founded in 1981 and its first Sportium superstore opened in 2015.
Retail Insider reported in August of 2018 that SAIL was investing $40 million into the company which saw three new stores, a new warehouse, and 300 employees hired. The company saw its footprint grow to well over 1-million square feet and plans for further expansion were in place.
Then came French sports retailer behemoth Decathlon, which is looking to open stores across Canada as part of a significant expansion. Decathlon, known for its highly experiential big-box stores that some refer to as being the “IKEA of sports stores”, opened its first Canadian store in suburban Montreal in the spring of 2018. Decathlon has since opened more stores in the Montreal and Quebec City markets as well as in southern Ontario. Brokerage and real estate consultancy Oberfeld Snowcap is said to be negotiating leases for more Decathlon locations across Canada.
PHOTOS: SAIL OUTDOORSPHOTOS: SAIL OUTDOORS
Vancouver-based MEC, formerly Mountain Equipment Coop, also expanded its operations across Canada. MEC carries many of the product categories that SAIL and Sportium carry. MEC, which itself has had financial struggles, operates stores in southern Ontario and in suburban Montreal and Quebec as well as across the country.
Sports Experts, a division of FGL sports umbrella which includes Sport Chek, has also been innovating with glossy new store concepts such as flagship stores that have been reported in Retail Insider. That includes an impressive 75,000-square-foot flagship store at Quartier DIX30 which opened in the fall of 2019 as well as a renovated downtown Montreal flagship. In Ontario, Sport Check operates many stores including several experiential flagships that span in excess of 70,000 square feet.
Inside sources say that we can expect more retailers in Canada to file for bankruptcy protection in the coming weeks and month following extended store shutdowns due to COVID-19. Consumer spending in many segments is expected to be sluggish in the months to come and as a result, retail sales for many will continue to suffer. While the sale of sporting goods may see a boost during the summer months, a lack of organized sports may put a further dent in sales at some sporting goods retailers for the foreseeable future.
Woman with protective gloves puts a medical mask on her face as a virus protection in a supermarket parking lot.
The COVID-19 pandemic is changing consumer behaviour and habits being formed today could easily stick for a long period of time.
A recent survey by Accenture, a leading global professional services company, providing a broad range of services in strategy and consulting, interactive, technology and operations, with digital capabilities across all of these services, found that 83 percent of Canadian consumers are limiting the number of times they shop, which has been the biggest change in shopping behaviour.
Kelly Askew, Managing Director, Accenture Strategy in Canada, said the report is indicating that consumer behaviour is changing in Canada in a number of different ways.
“People are saying they expect that those new behaviours are going to continue into the foreseeable future. We think that those behaviours may persist as long as a decade,” said Askew. “The crisis is causing consumers to consider the impact of their shopping choices more closely when it comes to things like health and the environment.
Social distance conceptual small business waiter serving customer in cafe
“The population at large has been highly trained and encouraged to follow social distancing norms. Additionally we’re seeing that people are starting to work from home. A large number of people who haven’t worked from home in the past are saying they will continue to do so after the restrictions are lifted when they never would have considered it before. Further, as the layout and configuration of stores has changed with one-way aisles, plexiglass shields between the customers and the cashiers, I’ve heard many people say that shopping isn’t as pleasant an experience as before.
“Now people are becoming far more purpose-driven in their trips and are getting used to getting in and getting out of the stores as quickly as possible. Some people have made it analogous to what happened to air travel after 9-11. That was quite a while ago and many of the behaviours that existed both driven by the consumer and driven by the providers remain.”
The Accenture survey also found in Canada:
92 percent of consumers are worried about the impact of COVID-19 on the health system;
90 percent are worried about the impact on the economy; and
Only 40 percent of consumers feel more connected to family, friends, neighbours, and the community on average – with the global average sitting at 54 percent.
Globally the survey found:
50 percent of consumers are shopping more health consciously;
45 percent said they are making more sustainable choices when shopping; and
67 percent said they are focusing more on limiting food waste.
Askew said the limiting of the number of times Canadian consumers shop is the biggest behavioral change that has been noticed.
“People are going less frequently to the grocery store while the pandemic is on. They’re getting used to stocking up and shopping for a longer period of time than they would have in the past,” he said.
“Clearly as we’ve looked across the categories I think it’s well-recognized that certain categories have done well in terms of where people are spending their money. Groceries, alcohol, health, and cleaning parts are all doing well. Apparel sales have dropped dramatically. So people aren’t buying clothes. I have some clients that operate outside of Canada and in Europe and what they’re seeing as they’re starting to re-open their stores is an immediate pent-up demand for things like apparel.
“But the question remains, will people just start to think very carefully about how they make purchases? As you look at industries like fashion, the point of view is that they were already past a tipping point in terms of sustainability. So the notion of disposable clothing and buying a different outfit for every occasion has certainly gone out of people’s minds.”
He said that consumers are learning, when the shops are closed, that they don’t in fact need to do the same volume of consumption. They don’t need to spend as much money on things that they may have been doing habitually in the past. People are starting to question those a little bit more.
Globally, the survey found that the pandemic is causing more people to shop for groceries online. In fact, one in five respondents who said their most-recent grocery purchase was done online were first-time online grocery shoppers — for older consumers, this was one in three. And while 32 percent of consumers’ current purchases of all products and services have been online, that figure is expected to rise to 37 percent going forward.
“People who may not have considered grocery shopping a desirable or viable option in the past are discovering that it works. We’re also seeing people telling us about a third of their historical purchases and services have been online. They’re expecting it’s going to rise to about 40 percent,” explained Askew. “That’s a pretty significant increase in such a short period of time.”
He said retailers need to be ready for a very rocky road ahead with talks of additional waves of COVID coming through as well as the ever-present threats of societal or geo-political disruptions.
“The conversations I’m having with my clients are around the need for agility, variability, and sustainability,” said Askew. “By that, agility means they need to get a little bit smaller so that they’re able to nimbly react and pivot when situations change. Variability means they need to be minimizing their fixed cost base. Big assets, large workforces that were static when stores were closed down became quite a liability. In fact, we’ve seen a number of retailers enter bankruptcy protection because they had such an overwhelming fixed cost base they could not cover when sales dropped to something approaching zero for many of them.
“We talk more about sustainability of a business model which is around discipline and making sure that in good times and in bad they have the same kind of discipline around having the most efficient operations as possible.”
He has been described as “the World’s #1 Small Business Guru” and best-selling author Michael Gerber has a mission to transform the state of entrepreneurship worldwide, particularly at this time when so many entrepreneurs have been hit hard by the COVID-19 pandemic.
Gerber, who is the author of the NY Times mega-bestseller, for two consecutive decades, “The E-Myth Revisited” and nine other worldwide best-selling E-Myth books concerning small business entrepreneurship, leadership, and management, is offering small business owners and retailers an opportunity to sign up for a year’s worth of education on his Radical U initiative for $10 (US) – 52 weeks of training, week after week – to discover the mindset of being a successful entrepreneur.
Radical U is an online trade school for individuals who wish to become true entrepreneurs.
MICHAEL GERBER
“If you look at statistics, you’ll see that last year close to 550,000 companies closed their doors. That’s not because of the virus. That’s because of the other virus. That other virus is called stupid,” said Gerber, the author of 29 books and more coming. “That’s because everybody who goes into business does it in exactly the opposite of the way they ought to have done it and as a result they fail, they fail, they fail, they fail. And it’s simply a condition that’s true on every place on the planet.
“The E-Myth addresses that problem and it successfully addressed it so much so that we have created literally an infinite number of successful small companies that have grown from small to tall to beyond belief following a process. I’ve said in E-Myth and every one of my books, the system is the solution. And effectively the E-Myth is the entrepreneurial myth. It essentially says that people who go into business aren’t the entrepreneurs everybody says they are but what I’ve come to call technicians suffering from an entrepreneurial seizure. So they create a job for themselves and now they’re working for a lunatic.”
Gerber, who is based in Carlsbad, California, said 90 per cent of those businesses will be out of business within 10 years. It’s so pervasive because the people who start companies aren’t really the people they need to be. They need to truly be entrepreneurs.
“In my books, I take the entrepreneur personality apart and identify four distinct personalities that are critical for any company to grow to scale,” he said. “And those four personalities I call the dreamer, the thinker, the storyteller and the leader.
“The dreamer has a dream. The thinker has a vision. The storyteller has a purpose. And the leader has a mission. And those aren’t just empty words. They literally mean something and it’s the understanding of what they mean the definition of a dream, of a vision, of a purpose and a mission and the part they play in the creation of a company to grow that is so critically misunderstood. That’s been our work for the past 43 years.”
Radical U is intended to help people learn how to awaken the spirit of entrepreneurship within them in order for them to design, build, launch and grow a company of one and turn it into a company of 1,000. The way to do that is through what Gerber has developed in an eight-fold path, the process that awakens the entrepreneur within.
“In the process of doing that, we believe we will transform economic development worldwide and we’ll transform economic development worldwide because we’ll transform entrepreneurial development worldwide and in the process of transforming entrepreneurial development worldwide we’ll transform the state of small business worldwide, which is our intention and has been our intention since the very beginning.”
The normal cost for a year of training at Radical U is $479.40 (US) and it’s a five-year curriculum.
Gerber said his message particularly in these days of COVID is not only important but life dependent for entrepreneurs.
“What’s very critical for everyone to understand is this is not simply a scheme. This is a system. This system has validated itself now over 43 years of application. We’ve created some of the greatest companies on the planet. A great company as an example is 1 800 Got Junk. A Canadian company which was founded based upon the E-Myth,” said Gerber.
“Entrepreneurs aren’t special folks. Entrepreneurship is not some mystical capability. You can learn how to do it.”
Exterior of Addition Elle Store - Photo by Addition Elle
Leading apparel retailer Reitmans is closing all its women’s Thyme Maternity and Addition Elle stores in the country over the summer as well as chopping its workforce by about 1,100 employees in its retail stores and about 300 employees at its head office in Montreal as part of its restructuring plan under the protection of the Companies’ Creditors Arrangement Act.
The stores scheduled for closure include 77 Addition Elle and 54 Thyme Maternity locations. The company said it is optimizing its retail footprint as it is building its future on its legacy in retail fashion with three premium brands: Reitmans, Penningtons, and RW & CO. These brands will continue to evolve in an omnichannel retail environment with a combined focus on e-commerce and a solid retail network of physical stores in Canada, added the company.
“The strategic decision to close two beloved Canadian fashion brands was not made lightly, but it is necessary to enable our business to move forward as a profitable organization. All of the efforts we put forth to turn these brands around were derailed by the COVID-19 pandemic and, unfortunately, we can no longer afford the required resources to bring them back to profitability,” said Stephen Reitman, President and Chief Executive Officer of Reitmans (Canada) Limited, in a statement.
PHOTO: REITMANS
“The impact on all of our employees is, by far, the most difficult and emotional part of this whole process. We are heartbroken to have to say goodbye to esteemed colleagues and we are truly grateful for their hard work and many contributions to our company over the years. With an enhanced product offering at Penningtons, where women can find aspirational and affordable head-to-toe fashion, we will do everything possible to make our Addition Elle community excited to continue to shop with us. We are committed to the plus-size market in Canada with both a size-inclusive offering at Reitmans, and dedicated expertise and service at Penningtons.
“As we forge ahead with these three flagship Canadian brands, our intention is to write the next chapter of our company’s history for a stronger and brighter future. We take this opportunity to thank our loyal Thyme Maternity and Addition Elle customers for their incredible support, and we look forward to welcoming them in our other stores for years to come.”
The company currently employs approximately 6,800 people and operates 576 stores consisting of 259 Reitmans, 106 Penningtons, 80 RW & CO., 77 Addition Elle, and 54 Thyme Maternity.
In the coming days and weeks, all physical stores of the company will continue to safely reopen based on governmental guidelines, including all 77 Addition Elle and 54 Thyme Maternity stores. For these two brands, the objective will be to liquidate the inventory in anticipation of their permanent closure, which is planned for July 18 for Thyme Maternity and August 15 for Addition Elle, said the retailer, adding that their respective e-commerce websites are expected to shut down on the same date as the closure of the physical stores.
PHOTO: THYME MATERNITY
"I think the consolidation of brands will help the company focus its operations and marketing in the short run and generate much-needed cash as they liquidate. They can become a leaner company by reducing cost and infrastructure,” said Bruce Winder, a retail analyst and President of Bruce Winder Retail.
“Having said that, I still see significant headwinds for the remaining brands based on changing consumer demographics, changing brand preferences and changing ways consumers buy apparel. I like how the firm has highlighted omni-channel as a way forward and look forward to more detailed plans. I feel sad for the employees who will lose their jobs in a brutal retail employment market."
“With 576 stores the impact of the closure of two of its divisions will be felt across the country. Reitmans has such a rich history in Canadian fashion retailing and has been an iconic brand catering to the affordable women’s apparel market for generations. Their sweet spot is the women’s plus-size market that is currently underserved in Canada,” said Kehoe, a veteran of more than 40 years in the industry and broker/owner of Fairfield Commercial Real Estate in Calgary.
“Their focus when they emerge from these troubling times will be clearly in this segment of women’s apparel with a strong e-commerce business along with their repositioned bricks and mortar stores.”
PHOTO: RW&CO
Katherine Chartrand, Director of Corporate Communications at Reitmans, said the company filed for protection under CCAA on May 19 as a necessary measure to ensure the continued success of the business.
“We believe that this decision, as difficult as it may be, remains the only option for moving the organization forward. In this context, we need to optimize our retail footprint, restructure our teams and make important changes to our business,” said Chartrand.
“Closing Addition Elle and Thyme Maternity, two of our beloved brands, is a heartbreaking but necessary decision. They are no longer profitable, and our efforts to turn these brands around were undermined by the COVID-19 pandemic and we can no longer afford the required investments and time to bring them back on the path to profitability.
“We will build our future on Reitmans, Penningtons and RW & CO., successful brands with strong and distinctive positioning that will continue to evolve in an omnichannel retail environment with a combined focus on e-commerce and a solid retail network of physical stores in Canada.”
Chartrand said the company implemented promising strategies in fiscal 2020 that were starting to show positive results in the first quarter of fiscal 2021.
“Unfortunately, all the efforts we put forth to turn these brands around were undermined by the COVID-19 pandemic. The impact of this crisis and the pressure it has put on our cash flows leave us no other choice,” she said.
PHOTO: PENNINGTONS
“For Addition Elle to become profitable, it would have required investments and time that we can no longer afford because of COVID-19. The Thyme Maternity team has done such remarkable work over the years that the brand achieved a market share of over 50 per cent. However, due to the market size and increasing online competition, we have been struggling to make this business profitable. The COVID-19 pandemic was the final straw.
“As for Reitmans, Penningtons, and RW & CO., we will unfortunately have to close some underperforming stores within the rest of our network in the coming weeks and months. This is a part of the restructuring process, but it is too early to confirm the location of these stores. Rest assured our intention is to maintain a solid retail footprint in Canada for these three flagship brands.”
Chartrand said it is difficult to speculate on how consumers will react to the reopening of retail stores in the industry.
“Although, we do expect the COVID-19 pandemic to have an impact on store traffic for the months to come,” she said.
French women’s fashion brand ba&sh is expanding into Canada this spring/summer with the opening of two standalone stores in Toronto and Montreal. The brand could open more standalone storefronts after entering the Canadian market last fall in partnership with several multi-brand retailers.
The Toronto ba&sh retail space, which is the first corporately owned standalone unit in Canada, opened in mid-March for only two days before shutting down because of the COVID-19 pandemic. The 1,300-square-foot store reopened last week in a retail space at the base of the Hazelton Hotel at 118 Yorkville Avenue. A Louis Black jewellery store once occupied the space and most recently, the retail space housed pop-ups including a goop MRKT for several months as well as a pop-up for a home furnishings brand called Desperato.
The ba&sh store opening comes at an unprecedented time. The store now includes enhanced sanitization as well as virtual appointments, curbside pick-up, and ‘consignment’ where consumers can have pieces sent to their home to try on before making a purchase.
In July or August in Montreal, ba&sh will open its second location at 4932 Sherbrooke Street West in Montreal’s Westmount area. The boutique will be located among other upscale brands in the affluent community which is home to some of the wealthiest people in Montreal.
PHOTOS: BA&SH
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A company representative said that a dedicated Canadian ecommerce site will be launched later this year.
Prior to the COVID-19 shutdowns, more standalone Canadian locations were said to be on the way as ba&sh aimed to grow its Canadian presence with a network of stores. One might anticipate that the Vancouver market could be in line for a store if the previous expansion plans continue.
Jeff Berkowitz of Aurora Realty Consultants represents ba&sh in Canada and negotiated the Toronto and Montreal lease deals on behalf of the retailer. First Capital Realty owns the Hazelton Hotel, as well as much of the retail space on Yorkville Avenue.
Last fall, ba&sh opened a pop-up space at the Yorkville Village shopping centre in Toronto in a partnership with local retailer TNT. It remained open until the new 118 Yorkville Avenue store opened to the public briefly in March. Last fall, as well, ba&sh partnered with the Hudson’s Bay Company to open ba&sh shop-in-stores inside Hudson’s Bay locations in Toronto, Montreal and Vancouver. Holt Renfrew also carries the ba&sh line at its stores in Canada currently.
Two best friends, Barbara Boccara and Sharon Krief , founded ba&sh in Paris in 2003. The name ‘ba&sh’ is a hybrid of their first names, utilizing the first two letters of their names with an ampersand in between. The brand is said to be a hybrid of “rock and roll and bohemia” with a focus on feminine clothing that is also comfortable. Collections include ready-to-wear, bags, accessories and footwear. The price-point is in the ‘contemporary’ range with dresses generally in the $400-$1,000 range, blouses costing in excess of $300, bags priced over $500, and shoes priced into the hundreds of dollars depending on style.
Following a significant investment by LVMH, ba&sh has had the funding and backing to expand its operations internationally which will see ba&sh become a true global brand. In the United States, ba&sh opened a US headquarters about two years ago and the company currently operates 10 stores in the country. Department stores in the US carrying ba&sh include Nordstrom, Bloomingdale’s and Neiman Marcus. ba&sh also has stores in countries globally as well as wholesale distribution in various multi-brand retailers.
The first draft for this article was written in early 2020 in anticipation of the two store openings. At the time, we had noted that a high number of international brands were looking to enter the Canadian market by opening stores in 2020 and 2021. The COVID-19 pandemic has created an unexpected situation where many brands have pulled back on expansion plans as consumer spending patterns shift. Over the past three years, more than 110 international brands have entered Canada by opening stores. We calculated that in 2017, a record-breaking 50+ brands entered Canada by opening stores and in both 2018 and 2019, about 30 international brands opened their first Canadian locations and many of them have plans to further open locations as they expand into new markets.
We’ll continue to monitor store openings in Canada — even though COVID-19 has proven challenging for many brands, some will still be opening stores in Canada regardless. We’ll also follow up on ba&sh’s expansion plans in Canada after the company opens its new store in Westmount in either July or August of this year.
The global Suitsupply men’s fashion brand is looking at expanding its footprint in Canada as it moves on with the reopening of its locations during the COVID-19 pandemic.
Fokke de Jong, Founder and CEO, said the company has 150 stores worldwide.
“In most countries where we’re active in, we still have a lot of room to grow. We expect when we have the corona bump behind us we’re going to expand business a little further,” said de Jong.
“We are about getting people a perfect fit from everything basically that has a jacket on. We do suiting. We do jackets. We do the more elegant part of men’s fashion. And we’re making a product that’s a high-end, luxurious product, best Italian fabrics, best way of making it. We’ve been around now for almost 20 years and we’re successful all around the world because we’re doing that with a high amount of expertise but also are able to offer this level of product for an attainable price point,” said de Jong.
“I think we were the first almost direct to consumer omnichannel brand and we’ve been successful with that strategy for a long time now. We combine high-end product, high-end materials, but also high-end service. We believe in stores. Everybody is talking about online but we’ve been opening stores even last year and we’ll continue to do so because that’s where the heart of our brand is where we have people in our stores who are highly-trained, they know everything about suits, everything about styling and customers will go out and find them.”
Most of the Suitsupply stores are more of a destination with interesting places such as rooftops of buildings and mansions.
Because the retailer is a global company, it has seen the whole scenario of COVID play out already in February when China closed and reopened. So the company has been closing and reopening now for some time.
“What’s been really important for us as a brand is obviously when you reopen there’s all kinds of safety measures and precautions that we have to put in place and we’ve been learning to work with over the last months,” said de Jong.
PHOTO: SUITSUPPLY
“What is important there is when you reopen in a country people of course want to go out, they want to feel safe, but they also want to have an enjoyable experience. They’re craving to shop again, to go out again. So you don’t want to walk into a store that suddenly feels like you’re walking into an operating room where they’re doing an open heart surgery. So to do it in a way that feels not invasive is something we learned to do with all the cleaning protocols that we do. We go above and beyond. We clean all the fitting rooms after every visit, we steam all the clothes that have been tried on, we clean all the regular touch surfaces in set intervals.
“But we also have to get close to customers which is the most important thing because we’re about fitting customers, measuring them, and it’s pretty hard to pin somebody’s hems at a six-foot distance. It doesn’t work. We developed beautiful looking glass, shopping screens, that have holes in them, they actually look nice. We can measure them up in a very safe manner. It doesn’t feel intrusive. It feels like a natural part of the whole shopping experience and it’s something customers like.”
Experience has taught de Jong when countries reopen again the first few weeks are always a little slow. People have to venture outside again and sometimes people remain a little anxious about going back to normal.
“But after a few weeks, and we’ve seen it now in Europe, we’ve seen it in China, life gets back to sort of normal. It’s not like the world is going to be completely different after this is all over. People are wanting to go out again. They’re going to interact in some way or form. So it’s not as bad as people sometimes think. There’s a pretty normal world out there and we’ve seen it happen and come back in all the countries we’ve reopened,” added de Jong.
Smiling shopkeeper serving a customer while wearing a mask, coronavirus pandemic concept
The “hero pay” is quietly fading away in grocery stores and food distribution centers. In fact, the American-based Kroger chain, among others, even asked employees to return the extra money they received but has since backed off. Quite the reversal from 10 weeks ago. It appears higher salaries in grocery stores were short-lived. It is not overly surprising, given the high-volume, low-margin nature of the business, but it will likely create a rift between employees and companies.
American retailers like Target, Walmart, Whole Foods, Costco, Sprouts, and Kroger implemented “hero pay” early on during the pandemic. In Canada, Sobeys, Quebec-based Metro, Vancouver-based Save-On Foods, and Loblaws did the same thing. Sobeys is giving its workers “hero pay” of $50 for every employee, and $2 an hour for staff working more than 20 hours a week. Loblaws is giving all its staff an additional $2 an hour.
Most of these programs, however, will likely end in May or June. Some grocers like Sobeys have announced that they plan to reassess the program at some point. Calgary Co-op announced it was eliminating its COVID-19 wage stipend program for front-line employees on May 30. More than a dozen grocers in the United States have announced that they will not be renewing their pledge to workers either. The idea of offering some sort of danger pay to front-line workers in the food industry is clearly losing steam. Chances are these stipends will not survive the summer, and perhaps not even the possible second COVID-19 wave.
The economics of pay increases at retail are always weak, especially in food retailing. With such low margins, these stipends were offered simply to keep enough staff around and not have operations affected by higher absenteeism rates. It worked for a while, but COVID-19 fears are slowly fading away. But so is the need to incentivize employees to show up for work. The COVID-19 fear factor is diminishing. The money will instead be spent on PPEs and other protective shields, which are likely to remain in place for a while. This seems to be where things are going. Disappointing for employees, but not surprising.
The average salary in a Canadian grocery store is less than $30,000 or $15 per hour. An employee would start at around $13 an hour. The highest paid employees could earn almost $50,000 a year, tops. The “hero pay” represents a 10% to 15% increase in pay. Given that the average grocery store in Canada would employ about 80 full-time employees and that payroll represents roughly 30% of costs to operate, the “hero pay” essentially made the average store almost unprofitable.
At the beginning of the pandemic, sales came out of nowhere, so salaries were not an issue. Now, numbers just do not make sense for the initiative to remain sustainable. The only way to make it work, of course, is to increase food prices. Food inflation could push food prices higher for a while, but there may not be enough room for higher wages. Grocers also need to think about e-commerce as we maneuver thought the COVID era. That will bring its own load of extra costs as well.
COVID-19 made us realize that many whose jobs are too important to shut down are the ones making the least money. And many are public-facing jobs with higher risks of contracting diseases. Mostly women, students, seniors, people who often need a second job occupy these positions. For the first time ever, grocery clerks and front-line workers in food distribution were considered heroes and were praised constantly. Higher wages over time would have redefined many of these roles and would have allowed grocers to attract a different crop of talent, not just those simply looking for a job.
Also, the idea of labelling it “hero” pay was never going to end well. As businesses gets back to normal, grocers must get their expenses, including pay, back to normal as well. But normal will not be the same coming out of COVID-19. The grocery landscape will probably change, with fewer stores and fewer SKUs due to higher distribution costs. Grocers could potentially afford to pay employees more to support a different business model, one focused on analytics and omni channels.
To support bold ambitions, hiring talent can only make sense, and that always comes at a cost. Ending stipends in grocery stores may be a missed opportunity. Let’s hope this does not happen across the sector.
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.
Mastermind Toys has been focused during the COVID-19 crisis on accelerating its strategy which includes rolling out several new offerings for customers as well as enhancing its social media and digital presence.
There are currently 69 stores across Canada in every province with the exception of Quebec. The first store was opened in 1984 in Toronto.
“When I came in January, one of the big things that lent itself to my expertise was doing a digital transformation. We had grown pretty rapidly over the last two to five years. We went from 12 stores to 69 stores and we feel that’s a really good number in Canada right now. We’re happy with the customers we’re serving that way. But what we recognize even pre-COVID is that our digital experiences were actually lagging our competitors and our industry,” said Sarah Jordan, CEO of Mastermind Toys.
SARAH JORDAN
“So when I came in January, even pre-COVID, of course we were going to look at our footprint and make decisions either opportunistically on where we could add a select few but really our focus was to turn our attention to digital. And it was really about how do we up our game on a host of experiences that rely on our website. As you can appreciate with COVID, we’ve actually seen an ability to accelerate some of that agenda.
“We’ve introduced curbside which is a service we did not have before and we’ve also upped our game in terms of our website and we’ve experienced triple-digit growth over that time, over COVID. But that is where we still believe that we can make better experiences.”
Jordan said a key pillar of Mastermind’s success is that it truly believes it is customer obsessed and it tries to keep the customer and its employee experience at the core of everything it does.
“When we think about our in-store experience, we really think about providing delight and wonder around every corner. So we love to be the experts on age and stage and we actually curate our toys based on our model that we call why kids play which is based on for each age and stage how do the kids develop their body, mind and expression. We really believe in providing a great experience when you come in the store, but we also deeply believe in being the best toy curators,” said Jordan.
“So you won’t find everything in our store. We tend to try and balance imagination and development. We’re often called the educational toy store and it’s really for us about helping parents, grandparents, kids, kids at heart, play. We deeply believe that play is critical and central to kids’ lives. So that makes us a bit different from a toy store perspective.”
One of the other initiatives that sets the store apart is its Mastermind wrapping paper which is a free service in its stores as well as loot bag assembly.
“Everyone who touches a customer at Mastermind really takes pride in that. One of the things we’ve noticed even with COVID is what our customer service agents do. And we don’t just help someone navigate the website, they also are experts in helping them navigate to play pattern for either their own kid or for the gift recipient. And actually through COVID we’ve been able to assist five times the number of customers that we would traditionally do at this time because we’ve extended our hours as we’ve rolled out different service offerings because we couldn’t do that while our stores were closed,” said Jordan.
Those stores closed in mid-March. Today, 65 stores have reopened.
Jordan said the company has tried to reimagine its website as much as it could at this time to create boutiques to help customers navigate to the most relevant items they are looking for.
“Parents have now been tasked with homeschooling and they’re also about to be tasked with summer camps. So while we haven’t revolutionized our website we did believe that we could help our customers navigate them better by helping them find puzzle boutiques, or games, and help them get to those hard-to-get items quickly,” she said. “And with that we’ve also used our social channels to make sure people know where to find those items or what items might be helpful in helping them solve those problems.
“So we’ve really taken our authority on play seriously where we’ve noticed the categories that matter. We’ve been trying to highlight what those are. We’ve been trying to get ahead of what parents need whether it’s sidewalk chalk for their driveways, puzzles for their new family bonding, outdoor activities for their driveways or their backyards, we’ve really tried to make our website more navigable. We’ve also extended our customer service hours to be more friendly coast to coast and also for extended weekend coverage.”
Jordan said Mastermind will continue with curbside pickup which is completely contactless.
“We have launched curbside with the intention that it is an experience that will be valuable to our customers. So while we were rolling it out we tried to make sure that our signage in our windows were permanent. We tried to make playful emails along the journey that’s true to our brand. We’re trying to stay a little bit whimsical but on brand,” said Jordan.
Also, as the retailer’s doors have opened to foot traffic, it has had to alter the experience in the store. It has taken the guidance of the province’s safety and health measures. But Mastermind has also created signage that caters to families and kids.
“We want our customers including our littlest customers to feel comfortable when they come into our stores. We’ve tried to create signage whether it’s on the door or even on the floor that reminds customers, little ones, big ones, what social distancing means. One of the positive pieces of feedback we’ve heard from customers is how grateful they are on how we’re describing to our little customers, to the kids, what social distancing means,” explained Jordan.
For customers visiting a physical store, a concierge at the door will assist them and also remind people to respect that it’s a low touch environment. No demonstrations will take place in the store. Customers will also be helped to navigate to the right spots in the store.
The retailer also started daily readings online by well-known personalities. There are virtual birthday parties. A Lego master taught kids how to build Lego.
“For us right now, it’s about making sure that we deeply understand what our customers are going through. While we offer them new experiences, ways that they can choose their own adventures, curbside, online, in-store, it’s also really important that we’re helping them through this time,” Jordan said, adding that it is rolling out a program to help parents set up summer camps at their homes.
“We really want to make sure that our customers appreciate that we’re here for them and that we understand that they want to shop in new and different ways and that they’re also trying to engage their children in new and different ways. We’ve really tried to keep kids in mind during this time and help parents solve those problems.”
