Riding The Retail Resurgence!
The retail industry faces challenges even during boom times.
By Lorne Chase
Canadians are spending like crazy. With low interest rates and steady employment growth it’s no wonder people can’t stop shopping. The national savings rate has plunged from 4.7% at the turn of the decade to approximately 0.4%, a spending spree that has resulted in robust growth for the retail industry. In 2004, the last year statistics were gathered, the industry generated $347 billion in sales.
Even during a period of prosperity, though, the retail industry is facing several major challenges, both old and new. Like other industries it is coping with the increasing competition brought on by globalization. As the big guys get bigger and bigger, small and independent retailers are feeling the pinch.
So what can retailers do to compete? According to Kevin Graff, widely regarded as one of North America’s leading retail analysts and trainers, there are four key areas where companies can focus their efforts: pricing, product, convenience, and shopping experience.
“A retailer on Markham Main Street may not be able to compete against a large outlet when it comes to pricing,” notes Graff. “But they should be able to compete on the other three, either by offering a unique product, a convenient location or a personalized shopping experience that will bring customers back.”
Creating a positive shopping experience relies largely on sales staff, but a major challenge faced by retailers is attracting and retaining good employees. Although the retail industry is Canada’s second-largest employer, providing jobs for more than two million Canadians, it’s often portrayed as low-paying sales and cashier jobs.
While this may be true for certain sectors, it doesn’t apply to the entire industry. An entry-level position at a franchise fashion store, for instance, will pay considerably less than a similar position in the automotive retail sector. And with the advent of big box stores a management position in retail has become much more lucrative, says Graff, “It used to be that retail store managers could make maybe $30,000 to $35,000 a year based on sales volume. But with the larger volume generated by big box stores a manager now has the potential to make $50,000 to $60,000 a year.”
Still, the retail issue that irritates most shoppers is the scenario of the barely polite sales clerk that ignores you when you enter the store and, when you ask for help, seems perturbed that you interrupted their phone conversation. This is a complaint heard all too often and can only be addressed by the owner of the store.
Retailers can improve the performance of their staff by setting clearly defined goals and standards of behaviour, offering advanced training, rewards and recognition. In other words, it has to come from the top. As Graff points out, many independent retail owners are so wrapped up in the day-to-day details of running a business they themselves may overlook good customer service.
To help retail owners cope with staffing and other business issues, the Retail Council of Canada offers training through its Canadian Retail Institute. “We offer distance learning courses that retail owners can take themselves, or have their front-line sales staff and managers take,” says Peter Woolford, the Retail Council’s Vice-President of Policy Development and Research. “There is also a Bachelor’s degree course in retail being offered by Toronto’s Ryerson University.”
Retail Trend Spotting
According to Graff major trends currently changing the face of retail in Canada include:
• Partnering or co-branding. You go to your local Chapters bookstore and buy a coffee at the in-store Starbucks location.
• Vertical integration. Chain stores that manufacture their own products such as The Body Shoppe. These retailers have total control over the creation of their products and don’t rely on buying from suppliers.
• Private labelling. Loblaws exemplifies this concept with its President’s Choice brand of products.
• Time-based convenience. Being able to use your credit card to get gas, or get in a self check-out line at the grocery store.
Technology is another trend impacting the industry. “Most retailers are using IT to control their supply chain management,” notes Woolford. “Which means they’re getting smarter about how goods end up in their stores.” Effective supply chain management can help retailers avoid running out of products or not receiving shipments to coincide with advertised sales, which frustrates many customers.
A few years back the buzz in the retail industry was all about e-commerce, how it was going to pose a threat to actual bricks and mortar stores. Although shopping online has impacted sales of commodities such as CDs and books, “e-tailing” has yet to make significant in-roads into other sectors such as fashion or hardware.
Success in retail is measured in customer satisfaction. And inevitably that varies for each shopping experience. For example, when you shop at a Costco, you’re shopping on price and not customer service. In the hardware sector companies like Canadian Tire and Home Hardware are carving distinct niches in the marketplace. At Canadian Tire most of us don’t expect staff to know everything about the vast array of products; most of the time we just want to browse the miles of aisles to see what’s new. On the other hand, if you happen to be in the middle of fixing a broken sump pump and need a specific part or advice you’ll likely run into your nearest Home Hardware to talk with staff who are more knowledgeable.
An effective retail strategy and financial success relies on common business practices that include having a properly trained and motivated staff, clearly defined goals and policies (i.e. regarding refunds), and ongoing marketing initiatives. Of course, it also requires listening and responding to what your customers are saying.
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