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DIG360 CMA Toronto Apr 09 Final

DIG360 CMA Toronto Apr 09 Final



David Ian Gray retail presentation at Canadian Marketing Association National Conference, 04/09 Toronto, Canada. ...

David Ian Gray retail presentation at Canadian Marketing Association National Conference, 04/09 Toronto, Canada.

Topic: Forces of Change in Canadian Retail.

Can be downloaded from www.dig360.ca



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    DIG360 CMA Toronto Apr 09 Final DIG360 CMA Toronto Apr 09 Final Presentation Transcript

    • Forces of Change in Canadian Retail David Ian Gray CMA National Conference - April 28, 2009
    • Change www.dig360.ca
    • Collage www.dig360.ca
    • Complex systems Shoppers Retail shape shapes retail shoppers www.dig360.ca
    • Retail Structure www.dig360.ca
    • Strategic evolution 1994 - 1996 2009 Strategy = Buying Season Strategy = LT Planning 5 Year commitments 3 Year commitments “We walk the floor” Data-driven Insular Help from outside Beginning of competitive Perpetual new boom competition Minimal technology Tech impacting all aspects “We know” “We need answers” Retail = formula New skill-sets Few tools Many affordable apps www.dig360.ca
    • Types of retail competitors Growth start- Mom & Pops ups & Chains (Self employed) concepts* The majority Fewer in Concentration number of Sales $ At risk (but continuously Catalysts for Greatest emerging) retail influence innovation Growth mode www.dig360.ca
    • Two retail worlds 2/3 Chain $ Sales Stores (3+ Stores) ! Large Retail has clout & influence ! Small Retail has entrepreneurship, flexibility, adaptability ! All Retail is part of the Larger System www.dig360.ca
    • 2/3 of retail = auto, food & drug Canada (1997 - 2007) Source: Statistics Canada (Trade Group) 25% 7% 34% www.dig360.ca
    • www.dig360.ca
    • Retail strengths and weakness ! Strong: on tactics and short-term strategy, adaptation to its ‘environment’ and adopting new tactics. ! Weak: true innovation, organizational change, long-term vision and strategy. www.dig360.ca
    • Rich brand experience = complexity www.dig360.ca
    • Canada is under-competed ! Just 11 of top global 250 are Canadian ! Only 7 of top global 20 are in Canada today ! Foreign retailers often choose Canada as warm-up for US ! Outperforming US past few years www.dig360.ca
    • Do not overlook small markets www.dig360.ca
    • Land economics drive location www.dig360.ca
    • Consumer Trends www.dig360.ca
    • Technology adoption !Shopper research & knowledge quot; Including global exposure !Transparency ! Ubiquity ! SM Saturation? www.dig360.ca
    • Instant gratification ! Point-and-click ! Drive-thrus ! 24/7 support ! Assisted self-service ! But self-serve only when ‘better’: quot; Self-check out can be a problem… www.dig360.ca
    • Health & Wellness !Driven by Boomers !Physical Health & ‘Looking Good’ !Younger Canadians concerned with healthy eating and exercise !Childhood obesity a looming issue www.dig360.ca 19
    • “Good & Evil” !Often a paradox in the same shopper. !Shoppers want green plus: ! Price Quality Convenience !Needed: Eco-products with Style & Design www.dig360.ca 20
    • Community !Cocooning never really happened !Social networks & media !Building community with your audiences… but also enabling them with each other www.dig360.ca 21
    • Immigrant impact more than demographics ! Parents bring values… and value ! Interested in Canadian brands and Canadian shopping … but who is showing the way? ! Children combine with brand interest and disposable income ! Influence the mainstream quot; T&T Supermarket www.dig360.ca
    • Status Redefined? !Growth of luxury retail quot; Younger, global !Abruptly ending in ‘08 !Coach Moving to ‘mid’ !“Trading up – Trading down” Meant corresponding growth in commodities (Costco) !Conspicuous consumption ‘frugal chic’ & green? www.dig360.ca 23
    • Retail Trends www.dig360.ca
    • Technology: Key #1 www.dig360.ca
    • Global Sourcing: Key#2 www.dig360.ca
    • Bricks & Mortar more critical than ever www.dig360.ca
    • Multichannel works ! Only 13% of Cdn. retailers sell over the web ! Canadian shoppers have tremendous access to physical retail ! Cross-channel influence is vital & expected ! Canadian chains have been giving up too much brand control on web www.dig360.ca
    • New competition a constant www.dig360.ca
    • Wal-Mart a force ! Its actions impact many ! Still room to expand ! Grocery, Supercentres ! Leadership on: Ethnic, CSR, Micro-mass ! But slow same-store sales in US remind: good retailers survive and thrive in Wal-Mart world www.dig360.ca
    • Death in the “middle” www.dig360.ca
    • Quebec-based retailers going global www.dig360.ca
    • Design is everything ! Aesthetics rose to fore in good times ! From product …to store ! Brand builder, storytelling device www.dig360.ca
    • Sustainability drivers ! Waste Reduction – cost savings ! Not green product sales quot; Health + kids excepted quot; Prices falling will help ! Labour Market key ! Risk management ! Brand differentiation www.dig360.ca 34
    • Fall 08: Sudden change www.dig360.ca
    • Economy = tide is changing !Long period of growth slowing even earlier !“Rocks” getting exposed !There will be a period of retail chaos www.dig360.ca
    • Home-related will fall hardest Canada (1997 - 2008) Source: Statistics Canada www.dig360.ca
    • Canadian Retail Sales % Change 1999-2008 Sales grew 50% on 1999 base. % change in dollar sales from prior year 6.4% !quot;quot;#$%&'(quot; )%**#'+&, 4.8% 3.2% Ave. 5% 1.6% 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 www.dig360.ca Source: Statistics Canada
    • Canadian Retail Sales % Change Decline begins in Nov. 10.0% % change from same month prior yr. 7.5% 5.0% 2.5% 0% -2.5% -5.0% !quot;quot;#-%&'(quot; )%**#!+&,.,&(/% -7.5% -10.0% Jan-08Feb-08Mar-08Apr-08May-08 Jun-08Jul-08Aug-082-Sep Oct-08Nov-08Dec-08Jan-09Feb-09 www.dig360.ca Source: Statistics Canada
    • www.dig360.ca
    • US Retailers on brink www.dig360.ca
    • Closing stores or slowed expansion ! The Home Depot ! Lowes ! Abercrombie ! Crate & Barrel? ! Implications for Canada www.dig360.ca
    • Riding the storm: 12-18 months www.dig360.ca
    • ! No growth ! Some winners www.dig360.ca
    • ! Landlords holding 2008 rates ! Tenants demanding reductions ! Crux = dark space www.dig360.ca
    • ! Credit crunch and sales declines ! Backruptcies +M&A ! Shakeup www.dig360.ca
    • ! Reduced ad budgets ! Creative approaches sought ! SM ‘hail mary’ www.dig360.ca
    • ! BOGO vs. 50% off ! Brand erosion long-term? www.dig360.ca
    • ! Green still on agenda ! Must help bottom line ! Catalyst to price curve www.dig360.ca
    • ! Major opportunities ! For those with good balance sheets www.dig360.ca
    • Future: Reinvention www.dig360.ca
    • Survivors will be strong 1. Community centres 2. A true hub of societal influence 3. Social Media integrates with retail 4. Learning organizations 5. Store as media channel www.dig360.ca
    • Sustainable Retail ! The next transformative catalyst ! Similar to Internet in 90’s www.dig360.ca
    • Lessons from Internet adoption Dial-up, bbs Publishing “Retail Dead” Alt. Channels Multi-Channel email “Yellow Page” New Economy DSL Web 2.0 Netscape Ecommerce Rich media Alt Platforms 1993 1998 2008 Disruptive or Transformative? www.dig360.ca
    • Thanks! For more information, Contact: David Ian Gray DIG360 Consulting Ltd. davidiangray@dig360.ca www.dig360.ca www.twitter.com/davidiangray
    • Extras www.dig360.ca
    • Co-creation? !Designers and retail !Wal-Mart and suppliers !Can we rethink the landlord – tenant relationship? www.dig360.ca
    • Three levels of true green www.dig360.ca
    • Green retail activities (Executive survey from DIG360 Retail Cares Study) More common Less common ! Reducing waste in operations +/or ! Supporting specific environmental reducing energy use. groups ! Conducting green building and ! Offering environmentally friendly design (such as LEED) products to consumers quot; Many mall-based / leased ! Mandating eco-friendly packaging premises ! Developing or designing green ! Using green power products ! After sales environmental product stewardship ! Incorporating green procurement of supplies and services. ! Public accountability reporting ! Participation in carbon offset programmes www.dig360.ca
    • Green retail drivers (Executive survey from DIG360 Retail Cares Study) More common Less common ! It’s simply ‘the right thing to ! Generating sales from “ethical” do’ –no real business case shoppers ! Reducing costs, saving money ! Responding to key product vendors’ demands ! Acts as a general brand differentiator in the marketplace ! Attracting investors ! Avoid being perceived to lag behind our peers in our category. ! Attracting and retaining employees ! Meeting regulations or legislation www.dig360.ca
    • Possible barriers… (from DIG360 Retail Cares Study) ! Customers not paying for it. ! Lack of human resources ! Budget restraints ! Lack of time ! We are doing much already; there are diminishing returns to our efforts. ! Customers not demanding it ! Difficult to make a business case www.dig360.ca
    • Historical power structure Manufacturers Information flow Retailers Few substitutes Stable competition Consumers Cost of entry: low for one Locations for chains www.dig360.ca
    • Changing power structure Consumers Information flows Retailers Emerging substitutes More competition Manufacturers Cost of entry: locations plus IT plus supply chain www.dig360.ca
    • Research & retail 1. Research has underserved retail, but improving 2. Retailers have undervalued research, but improving 3. Retail biased to execution over strategy 4. Retail can be research (if always testing, measuring) 5. Need specific solutions & contextual understanding 6. Rethink relationship: Participant-centric research & CRM 7. Engage the c-suite: its about learning 8. Understand the org chart: who will benefit and why? 9. Consider research a verb, not a noun. 10. The method to be used is the last thing to worry about. www.dig360.ca
    • Current DIG360 convergence Labour Market Retail Ethnicity Sustainability www.dig360.ca