By Steve Rowen, Managing Partner
9/23/2008
For far too long, the assumption that retailers in Canada have the same needs and requirements to satisfy their customers as US-based retailers has permeated the retail ecosystem. We suspected that this tenet was false, but there is little data to show how Canadian retailers face differing and unique business challenges, how they create opportunities from those challenges, and what internal roadblocks they face. We also sought to uncover what technology enablers are perceived as having the most value to Canadian retailers, as well as how they are planning to implement new retail-focused technological advancements. For these very straightforward reasons, we launched our first-ever benchmark study of how Canadian retailers are going to market in 2009. The full report, sponsored by SAP Canada, will be available in early October, but we thought we’d share just a few of the many findings from the upcoming report.
For one, it appears that Canadian retailers are far more focused on shoring up the fundamental building block of the retail business: customer service. Employee turnover is a very real problem in Canada, with 97% of the overall pool identifying the ability to find and retain good employees as a “somewhat” or “very important” priority. In fact, 82% of respondents identified it is the top “very important” challenge they face in the current environment.
At the same time, a full 100% of Canadian respondents indicate that the ability to differentiate from competitors is a real challenge, with 55% identifying differentiation as a “very important” challenge, and that “item and price are no longer enough” to satisfy the customer. This is in stark contrast to what our US respondents told us in the recent RSR Customer Centric Merchandising Study. That study indicated that Winning US retailers feel that price is just as important to the customer as product selection. Seventy-five percent of Winners, in fact, identified price as a key differentiator, versus 27% of laggards. U.S. retailers told us they are heavily focused on getting their product assortment localized, and further, that price optimization technologies will serve as the lynch pin to gaining consumer loyalty. For U.S. retailers, only those selling basics (t-shirts, socks) felt that their stores were a “sea of sameness” (48%), that creating a differentiated store experience was becoming more difficult, and that new competition was appearing in new and unlikely places (34%) as a result of segment blurring (Hardware stores selling ubiquitous basic goods, for example.)
This begs the question: Are Canadian retailer less interested in product and price optimization for cultural reasons, or is this a case where the whole of Canada’s retailers are reacting similarly to US laggards?
The Difference with Winners Is…
As we see so frequently, Winners focus on different aspects of retail. It’s what sets them apart. Canadian Winners demonstrate this notion as well. The figure below shows that Winners are much more interested in improving employee productivity (62% versus laggards 55%), executing better in-store (60% versus laggards 55%), and interestingly enough, differentiating themselves from competitors via price (50% to laggards 36%).
