A Year in Review – Recapping the top retail stories of 2015
We asked two of Canada’s top retail columnists — Hollie Shaw of the National Post and Marina Strauss of The Globe and Mail — what they thought were the biggest retail stories of 2015 and what those stories might tell us about the future of retail in Canada and North America. Here’s what they said:
What were the biggest retail stories of 2015?
Marina Strauss: By far the biggest retail story of 2015 was Target Canada filing for court protection from its creditors and closing all 133 of its stores. And the story didn’t stop there: the story was also about how Target Canada handled (often poorly, according to court documents) the unravelling of its operations and its dealings with its creditors. It will become a case study for business students in what not to do in setting up shop in a new country.
Hollie Shaw: There had been a fair amount of anticipation related to its arrival, and when it failed to execute in a manner that people associate with its U.S. stores, that was big news. When it went belly up, just the scale — the scale of the rollout and the scale of the pullout — made it a huge story.
I think there was an overconfidence on the part of American executives based on how much Canadians liked the brand and perhaps based on an idea that because Canada has the same population as California that it would just be like going into another State. Clearly there was not enough of an understanding of how this market works.
HS: There was a shift on the part of the big [grocery] players like Loblaw. Even as the discount segment was growing, as they moved to consolidate operations — from the year before you had Sobeys and Safeway, and the tie-up of Loblaw with Shoppers — we saw that play out in a fuller way. [For example,] food coming into more Shoppers Drug Mart locations, which was expected.
Also, a lot of the major food retailers [are leaving] a lot of the discounting to their discount banners and focusing more on their own food assortment. Loblaw is probably doing this the most because they have some stores with very large rolled out home-meal-replacement sections, but all brands are doing this to a degree. They’re going a little bit higher-end — having a complement of food that is for people who are in a hurry and might otherwise get takeout from a restaurant.
Online and mobile shopping
MS: [Another big retail story is] the continuing expansion of e-commerce, and especially Amazon.ca, and how online shopping is forcing both retailers and landlords to change their business model. It’s squeezing out some retailers, such as Future Shop, and forcing others to shrink the size of their stores.
What do these stories tell us about the future retail landscape of Canada and North America?
MS: The stories tell us that bricks-and-mortar retail is becoming tougher, that there are savvy foreign retailers coming to Canada. The future retail landscape will consist of more e-commerce players with a mix of physical stores and online shopping sites – but the physical stores that survive will have to be more compelling than ever.
HS: The driver of online and mobile sales is still a question mark in the industry. It’s something that’s been going on for years, but I think we’re seeing it play out in interesting ways. Retailers are scaling up — like Canadian Tire expanding its web operations but then not doing delivery because they think the cost model still isn’t there. When we look forward, I think that’s something that’s just going to continue: Retailers are throwing things against the wall to see what sticks when it comes to the internet.
What are the hottest emerging trends in the industry?
MS: The hottest emerging trends are e-commerce, including in the grocery sector; digitally friendly physical stores; and flagship stores as entertainment destinations. Other hot emerging trends are the bifurcation of retail into low-cost players and fast fashion players (Uniqlo of Japan is coming to Canada this year) on the one hand, and on the other hand, luxury players (Saks Fifth Avenue opens its first store in February in Canada), increasingly squeezing out retailers in the middle market.
HS: The internet is interesting in how people are receiving information now. I have a 12-year-old daughter who, even though we have Netflix and we still have regular cable, is not exposed to traditional advertising at all. Or if she is, it’s very little and all the information she is absorbing — particularly all of the brand information she is absorbing — is through social media, primarily Instagram and Snapchat.
You see news sources and brands on both of those social channels now. Brands are doing very interesting things in the social space to promote themselves. I think that’s something that retailers and CPG brands and beauty brands are all trying to negotiate because they’re trying to figure out how to appeal to consumers.
What role will design and technology (AR/VR, digital, etc.) play in this shifting landscape?
MS: Design and technology are becoming increasingly important in this shifting landscape. E-commerce is growing at a much faster rate than retail sales in total, which means e-commerce sites have to be designed better; and the stores that are left will have to be destination stores that lure shoppers with unusual and informative displays, including digital screens.
HS: There are a lot of bells and whistles at the retail level that allow people to engage with social media and brand messaging at the same time as they’re shopping. I think that if that enhances their experiences or causes them to buy more in the way that an end-cap display does — you know, that sort of visual cue — I think we’re going to see more of that. It’s a time that’s very heavy with experimentation, which is a good thing.
What do you think was the top retail story of 2015?