Innovation

Podcast 14 Transcript: Retail: shortcomings & opportunities

Written by Ian Portsmouth

Ian: Welcome to the Business Coach Podcast, an advice-oriented series for Canadian entrepreneurs. I’m Ian Portsmouth, Editor of PROFIT Magazine and I’ll be your host as we tackle the hot issues and opportunities facing Canada’s small businesses.

We’ve developed this Podcast in cooperation with BMO Bank of Montreal. Over the course of this series, I’ll be drawing on experts in a number of fields including some BMO experts in order to provide the credible information and prescriptions you need to run your small business better.

In a recent survey of Canadian retailers conducted by PROFIT Magazine, half of the stores visited by our mystery shoppers failed to achieve at least a C grade for their customer service. In several cases, retail staff not only lost a potential sale that day but did things that would ensure the shopper would never return in the future. Thankfully, we also found a few retailers who deliver the kind of service that leads to higher sales and repeat business. One of our secret shoppers was Andrij Brygidyr, president of A&A Merchandising a provider of various services for retailers including merchandising, point of sale display design and secret shopping. Andrij joins us from his office in Toronto. Andrij, welcome to the Business Coach.

Andrij: Thanks. It’s a pleasure to be here.

Ian: So, Andrij, I think most Canadians feel that retail service has been in decline for some while now, what is your take on how retail service today in Canada stacks up to say a decade ago?

Andrij: Well, I think compared to a decade ago, things are much better. They’re better for a number of reasons. There is globalization, deregulation, free-trade and a population growth which has stimulated economies of scale and therefore, interest for retailers. So compared to ten years ago, we’ve never had more product selection, better pricing, very innovative promotions and probably more places to buy whatever you want to buy than ever before.

Ian: Has the quality of the actual retail clerk improved?

Andrij: I think not, I think not, but it almost doesn’t matter. The trend nowadays is that retail sales clerks play a much less important role than it did ten years ago. Today’s stores are self-served with interesting innovative merchandising programs that help the products sell themselves.

Ian: That’s a very good point. It is much more of a self-service environment out there. Still, what are some of the common mistakes that retailers in Canada are making these days?

Andrij: It is my observation that most retailers that do make mistakes are those that make mistakes in the areas of inconsistent positioning and service delivering. So if a retailer positions himself to be high end high quality and fails to deliver on a wide product selection or an interesting product selection with pricing inconsistent with their message, then consumers just typically become confused and the retailer typically does poorly.

Ian: And what are some of the other shortcomings of Canadian retailers in terms of, say, selection, décor, overall, shopping experience?

Andrij: Again, it comes down to comparison on a reasonable basis, high-density population like Toronto or Montreal, Vancouver, you find that the quality of product selection and pricing is better because there is economies of scale and there is retail interest to support the target markets. When we get out into smaller population areas which a lot of Canada is, you find that service just isn’t there mainly because there isn’t the infrastructure to support it.

Ian: Now, there is a popular perception in Canada that shopping in the United States is just far superior to shopping in Canada. Is this a really fair assessment?

Andrij: I think, again, it depends on population areas. In general, on an aggregate basis, the shopping experience in United States is probably better. Again, we have market dynamics playing a huge role, there is much more competition in the U.S., therefore retailers does have to be much sharper, have better pricing and more aggressive product selection. But when we get to Canada, and again, with major urban centres like Toronto, Montreal, Vancouver, Edmonton, Calgary, we find that the shopping experiences almost identical and in fact, maybe even better because some people say that only the best stuff that comes to Canada is the stuff from the United States, is the stuff that does well in both countries and all the other products that don’t make it here really weren’t worth making it here at all.

Ian: Now, it is interesting when you talk about the companies from the States that are coming up to Canada, they’re typically large well-known chains and most of the listeners of the Business Coach Podcasters are going to be the owners of independent retail outlets. So how do Canada’s independent retailers stack up against those big name brands?

Andrij: Typically, it is our experience that they don’t stack up very well. And the main reason is that they just don’t offer any difference in the marketing mix. They either have the same product price promotion in place opportunities as the big retailers and don’t follow a niche policy where economy of scale isn’t as much a factor. It’s really really tough for the small retailer to survive against the big box stores. If you imagine an electronics retailer, a small electronics retailer who sells PC’s? How is he going to differentiate himself from Future Shop or Best Buy or Staples? Can’t do it on price, has to do it on service but, you know, the big box stores provide just as good if not better service than the small independent retailer. So, all that is left in the armament of the small retailer is a niche strategy of bringing in innovative products that simply are not available any place else that serve a limited market and in an area that just isn’t serviced by big box stores. And that’s about the only thing that is left for them.

Ian: Does that mean that independent retailers in Canada are facing a rather bleak future?

Andrij: Certainly in some areas, it does. I would hate for example to open up a computer store today. I think it is just such a tough slog, because it is so difficult to be innovative when it comes to products which have become commoditized over the last couple of years. We find that with bookstores as well. I mean, we know Chapters Indigo is doing a fantastic job at retailing in general, in spite of our findings during the mystery shopping, they generally do a very very nice job and they have a great product, great selection, good pricing. It is tough, very tough for small booksellers to compete unless they have some very very specialized products that the big guys just don’t want to carry or can’t carry. So yes, they do face a bleak future unless they find a niche strategy that works in their area.

Ian: So, if our listeners are looking for some inspiration from some successful retailers out there, could you name a few of the retailers that you have a lot of respect for?

Andrij: From a big box stores point of view, I think Future Shop, Best Buy just do a fantastic job. I mean, we visit those stores all the time as we visit Staples and Walmart and these guys are just so consistent in their message. They have the perfect product price promotion place strategy that targets exactly the target audience and they do it consistently over and over again. I love those guys. I mean, I think your listeners will probably agree that if you are going to be buying electronics today, would you not, you would have to consider or at least visiting a Future Shop or Best Buy or Staples, at least for comparison purposes. And they’ve got that message out and they do a great great job. Now, so the message for the smaller retailers is look to the big box stores as models of which you need to find opportunities in. So, if a big box store is not offering a certain product at a right price, then you need to find that product to be able to compete, a different type of product to compete against those guys. And that’s a very simple message but a message that, I think, is in effect often difficult to implement because innovative product selection is not always available to small retailers.

Ian: Now, briefly Andrij, you are a follower of the global retail market place, what are some of the trends that you are seeing out there in retail merchandising that could soon hit Canada and have an impact on how we do retailing here?

Andrij: I think that more and more, what we’ve seen worldwide and I found this through my own teachings and my own research, is that suppliers have become much greater partners in the retail experience. Before it’s been vendors sell to stores, stores sell to customers. Now, it’s much more of a partnership between vendor and retailer to find a way to satisfy the needs of the target market. And that means that the vendors have come to the plate with innovative trading programs for staff, sales incentive programs for retail staff, they’ve implemented interesting merchandising display programs in store and have basically helped retailers do an in-store marketing program which is made it a much more appealing, interesting way of doing things. And we find that worldwide, I think the trend started in the United States, certainly, it’s all over Europe, in Canada of course and even in the form of Eastern Bloc Countries like Russia, Ukraine, Poland, places which were just a disaster when it came to retailing ten years ago, are now basically following that retail model of strong merchandising at the in-store level.

Ian: So, truly, it is becoming a global retail market place and it is becoming much more competitive?

Andrij: It is and we find now that service levels around the world are becoming comparable. I don’t really think that you will find again, in large urban centres, you will not find significant differences in the marketing mix, and as the service level. I think that you will find things fairly consistent around the world, depending of course on the population centres.

Ian: That’s great Andrij, thank you for joining the Business Coach.

Andrij: You’re welcome.

Ian: Andrij Brygidyr is President of A&A Merchandising in Toronto.

Thank you for listening to this episode of the Business Coach Podcast. I hope you’ve discovered a few insights that will help you grow your business and that you’ll download other episodes from BMO.com, profitguide.com or iTunes. I’d also appreciate your suggestions for future topics or how we can make this Podcast better so please drop us a line at feedback@bmo.com.

Until next time, I am Ian Portsmouth, Editor at the PROFIT Magazine, wishing you continued success.

Originally appeared on PROFITguide.com