Ethan Song runs an online retailer, but he isn’t afraid of the potential of online-shopping behemoth Amazon stepping up its interest in the Canadian market.
The CEO and co-founder of Montreal menswear start-up Frank + Oak said his company’s focus on delivering specialized service to young hip urban males all around the world means they’re not really under threat from the generalized everything-and-the-kitchen-sink approach of big online retailers here in Canada.
“Nowhere in our plan is there the bullet [point] ‘win in Canada,’” he said. “The better question is how we’re going to win over Korea or how we’re going to win with our market in Japan.”
Playing your own game
Yet Canadian Tire executive Linda Siksna says her company, with its established network of big-box hardware stores, isn’t living in fear of the online shopping giant either.
“You have to play your own game, don’t play anyone else’s,” she said. “I remember when Wal-Mart came to Canada with their ‘everyday low prices’ 20 years ago, but we kept our high-low approach and were successful.”
The Canadian retail sector is undergoing massive disruption as the rise of e-commerce, demographic trends, the shift to social media marketing, and many other factors have forced a rethink among retailers on how they do business.
The Montreal start-up and the 94-year-old hardware retailer have approached the changing marketplace from wildly different starting points, yet both companies now share a strategy that combines ecommerce and effective online services with brick-and-mortar retail outlets optimized by technology.
Song and Siksna shared the stage as part of the #RBCDisruptor panel discussion on June 16 in Toronto, talking about how the most important thing in retail in 2016 is the ability to respond to the customer.
Bringing new ideas to market
"We continue to aspire to be nimble," Siksna said, pointing to Frank + Oak’s ability to bring new ideas to market as a model for big retailers. For his part, Song credited the transformation Canadian Tire has undergone in terms of its in-store technology, which now includes tablets that can direct customers to the right location and help them choose the right products for their needs, such as windshield-wiper blades.
“If as start-ups we’re known for speed and these established players are moving faster than us, that makes us ask ‘How much faster can we go?’” he said.
The past few years of Canadian retail have seen the arrival and hasty exit of American chain Target and consolidation and cutbacks among Canadian Tire’s other rivals, including the takeover of Quebec-based Rona by Lowe’s.
Companies such as Sony and Mexx have pulled out of the market as well, though luxury retailers such as Saks and Nordstrom have set up shop.
Half of Canadians shop online, but the volumes are still low—roughly 5.3 per cent of total retail sales. That’s below the G20 average of 6 per cent and the United States at 7.1 per cent. At the same time, online shopping is accelerating in China, now accounting for 12.1 per cent of its total retail sales, excluding restaurants.
Siksna said retailers need to understand that their old idea of regional competition is breaking down. “As a Canadian customer, I can buy anything from anybody in the world and get it delivered when I want,” she said. The same lessons that guided Canadian Tire through Wal-Mart’s debut and now increasing competition from Amazon still hold, she said, and can apply to any company looking to serve its customers—even a bank.
“Know who your customer is,” she said. “And always play your game.”
A future of clicks and mortar
Canadian Tire has 487 of its own-brand stores from coast to coast, but it has still embraced ecommerce.
The company allows online shoppers to have products delivered to local stores, and is modernizing its traditional marketing tools with electronic forms of its Canadian Tire Money and upgrading to a new multimedia catalogue with an accompanying mobile app.
In store, the company has rolled out digital tools aimed at enhancing the customer experience such as an interactive patio builder, 3D holographic displays for product demonstrations and even a touchscreen search tool for golf products customized to individual preferences and skill levels.
Frank + Oak began in 2012 as an online-only service, shipping clothes to members through a monthly subscription. Yet the company has since expanded into retail space, opening more than a dozen stores in Canada and the United States. “Stores are still relevant,” Song said. “Apple wouldn’t be where they are without their store footprint.”
Frank + Oak recently announced a retooling of some of its retail spaces, aiming to keep people engaged beyond clothes shopping with a coffee counter, personalized shopping, and personal grooming and barber services. “I expect that we’ll have to basically redesign a store every two years,” he said. “The store is not just a measure of profitability per square footage. It’s a place to drive engagement with the customer rather than a pure transactional space.”
Siksna said Canadian Tire sees a future of “clicks and mortar,” where customers have a seamless experience between online and in-store shopping, and the company uses its retail footprint to keep its brand in mind for Canadians.
The same lessons that guided Canadian Tire through Wal-Mart’s debut and now increasing competition from Amazon still hold, she said, and can apply to any company looking to serve its customers—even a bank.
“Know who your customer is,” she said. “And always play your game.”