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Trends in Retail to watch in 2014

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I have spent my entire career in the retail industry and worked for two Canadian retail icons that are no longer in business Eaton’s and Zellers.  Now Sears is going down a similar road by selling real estate back to big mall property managers so they can right size their store portfolio to compete in a market place with more US retailers entering into it.  The fashion mall owners love the strategy so they can lease back the same space to Nordstrom’s at a higher rent per square foot for a shorter time frame.

Eaton’s which owned 71% market share in Winnipeg at one time ignored the potential of the American retailers entering Canada and then crafted a strategy based on a couple of successful department stores in the US “Everyday Day Value Pricing” which the Canadian consumer did not understand or at least did not react to it. I remember doing my weekly competitive shop going down to The Bay and watching people line up  and actually fight over 50% off Royal Doulton china place setting as a Saturday morning special where you could of purchase the same thing in my Eaton’s store for $5 dollars less any time of the week. It was extremely frustrating.

Zellers spent the last nine years trying to be the Target of Canada.  Here again just positioning your store layout, space by commodity, similar aisle patterns, private label and store decor of a successful American retailer does not make the strategy sustainable.  When it was announced that Target was coming to Canada and Target purchased the lease holds for 1.8 million most senior executives were patting themselves on the back on a good job of strategic execution when in reality the purchase of the leases was to get critical mass necessary to launch their expansion into Canada.   The only person who did a good job of strategy execution was the owner of NRDC Capital that sold a struggling retail brand for 800 million more that they paid for the entire HBC group of companies.

Lowes and Target have just entered into a very competitive business environment and I am told are not meeting sales or profit plans. These are very successful American retailers that entered into a market place with little respect for the Canadian consumer or sales associates that could learn from the past, present and the future. Wal-mart and Home Depot learnt the hard way and adjusted their strategy.

Every time I have been involved in strategic development and execution there is always a couple things that are missing, how it is going to affect the customer, do you have enough trained people that understand the levers that need to be pulled to execute the strategy? When I grew up in this industry there were always two statements or rules posted in boardroom walls.

  1. Customer is always right.
  2. When the customer is wrong. Please refer to rule one

It appears as I read and talk to my retail network this is missing once again.

Retail in the past was a fairly simple business. Have the right product, at the right price, in the right depth and you would be successful.   The information age has provided a lot of information and systems that turns the average manager into an office hound trying to understand or memorize metrics that are important to senior executives and not interacting with the customer or training their associates to be customer obsessed which is the only winning strategy. When you take a look at a truly successful retailer like Apple they carry their product mix, branding though the entire selling process supported with excellent after sales service with great people. To be successful and different in the market place today you need the right people, at the right time, doing the right things.

There has been new developments in the retail sector in the branding of The Bay back to Hudson’s Bay, Nordstrom’s and Macys coming to Canada, condo-retailing and the never ending debate on how online retailing is affecting bricks and mortar stores. Based on my experience changing a name, having success with a particular strategy in the US, maximizing retail space and having product on line will never be enough to win in the Canadian market place.

The one thing I know for sure is if these initiatives are going to be successful you need to pay attention to the customer and develop people to understand every interaction with the customer which is the moment of truth. I have always lived by “If you not serving a customer you better be serving someone who is”.

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