The latest influx of U.S. retail giants such as Target setting up shop in Canada may be a competitive threat to Canadian retailers – but it could create new opportunities for Canada’s IT solution providers.
That was the conclusion reached by Canadian IT solution providers who took part in CDN’s Retail Without Boundaries executive roundtable in Toronto. The event was held the same day Target held surprise openings at its first three Canadian stores, located in the Ontario cities of Guelph, Fergus and Milton. (Target, which plans to have 124 stores in Canada by year’s end, wasn’t expected to open its first Canadian locations until April.)
Headlines have played up the coming battle pitting Canadian retailers like The Bay and Winners against U.S. giants now heading north such as Target, Nordstrom and J. Crew. But the newest wave of American retailers hitting Canada will raise the bar not only for Canadian retailers but for their Canadian IT solution providers as well, said roundtable guest Louis Le, marketing director at Gibraltar Solutions.
“It will force other Canadian retailers to revisit their own IT strategies,” Le said. That, he added, will create new opportunities for Canadian IT firms that cater to the retail industry here.
“There’s a huge opportunity (for Canadian IT companies) to help Canadian retailers” in the face of new U.S. competition, said Steve Kadolph, retail supply chain solution principal at SAP Retail Inc., which sponsored the event. “We have all this press and news about Target, Nordstrom and J. Crew coming into Canada. That, plus the new technologies emerging, presents new opportunities here.”
The arrival of both Target and Nordstrom in particular is “a wakeup call” for Canadian retailers about their investment in retail technologies and may spark them to spend on new technology to stay competitive, said roundtable participant David Toms, area V.P. and general manager for central and western regions at Metafore Technologies Inc.
One of the big data technologies now turning heads among retailers is predictive analytics, which moves beyond simply revealing who a brand’s shoppers are and what they buy. Instead, it crunches a dizzying array of data patterns to help retailers anticipate future retail trends, develop hit products and even predict what individual shoppers will buy next.
“The next venture (retailers) are looking at is all the ‘what if’ situations and how you predict and then react to all those uncertainties,” Kadolph said. “Five years ago, who would’ve predicted Target was coming here?”
Kadolph said three major Canadian retailers who are SAP clients use predictive analytics to try to understand the change in retail trends “from a consumer perspective – and it’s changing faster than ever before.”
This opening question sparked an enthusiastic discussion about predictive analytics as a tool to help retailers and their partners go beyond understanding shoppers to actually anticipate their future behaviour and thus predict upcoming retail trends. “We’ve really shifted from understanding analytics to anticipating analytics,” said Imran Syed, sales and marketing manager at BAASS Business Solutions Inc.
Casey Shea, business development manager at Keyora Inc., cited the example of U.S. apparel retailer Worth, which maintains a ‘virtual closet’ for every customer tracking all their previous purchases. When Worth releases new fashions, the system automatically searches each customer’s past history to suggest items from the new line that will fit in with the client’s existing outfits in terms of colour, style, etc.
Today’s retail data isn’t just predictive, however; it’s social, mobile and timely. Shea talked about how the younger demographic of shoppers in particular is driving this fast-paced data trend. Smartphones and tablets are allowing retailers to directly interact with younger consumers instantly. Macy’s has invested heavily in iPads for its stores so shoppers can ‘try on’ makeup or clothing virtually; and with their smartphones.
Mobile devices and social media are two of the biggest reasons that consumer trends are changing at lightning speed these days, roundtable attendees agreed.
“It’s about immediate gratification, especially among the younger consumers that are filling out the marketplace,” said Randy Bergeron, president of Unity Telecom.
Roundtable attendees gave examples of how today’s shoppers, especially in the ‘millennials’ demographic, tweet a product query and expect to get a response from a retailer instantly. They can also be fickle if their experience with a brand doesn’t meet their expectation, and then pan that brand all over social media before even leaving a store or Web site. It’s not enough to focus on the product and traditional customer service; now retailers have to pay constant attention to what’s being said about their company and brands – online and on social media – and react to that sentiment quickly.
Social media analytics solutions can play a role in managing this tricky virtual customer relationship scene by monitoring and measuring social sentiment towards companies and their brands on Twitter, Facebook and other sites.
Smartphones are the major mobile tool revolutionizing retail. Using their phones, buyers can pre-order coffee from Starbucks, receive a coupon offer or marketing message (based on their past purchase patterns) sent to their phone upon entering the coffee shop later, and pay for their brew with a tap of their handset.
Analytics, mobile devices and social media have shifted retailers’ focus from maintaining inventory to maintaining a great customer experience. “Ten years ago it was about how to improve warehouse efficiency. Now it’s about how can the warehouse improve the customer experience,” Kadolph said. Amazon is the leader in this trend, Kadolph said, adding that the U.S. retailer wants to have enough warehousing space to allow same day delivery within 50 per cent of the U.S. market in the next year. Home Depot’s acquisition of analytics startup BlackLocus in December “shows the value that retailers are putting on timely data,” said Trevor Marshall, vice-president of sales at Navantis. “They’re developing a (data) innovation arm.”
One caveat with all the personal and financial data that can be harvested and analyzed from shoppers is that it must be protected in terms of privacy and security, especially since a data breach (like the one that hit Best Buy back in 2011) can launch an avalanche of negative sentiment against a brand, noted Michael Brameld, senior account executive at The Herjavec Group. Another caveat with using analytics and big data for instant, targeted, mobile marketing is knowing when to draw the line between catering to consumer tastes and creating useful value opportunities for them versus bombarding them with an annoying stream of offers and marketing messages they’ll start to tune out.
“There’s a danger if the industry overwhelms the consumer too often that what is useful has become background (noise),” Bergeron said.
The roundtable had two tips for Canadian retailers grappling with how to invest in the newest technology: step back and assess what you already have in place and what you still need before you dive into too quickly, and investigate teaming up with partners (like Foursquare, for example, to add some social spice to your mobile marketing component) who can share some of the risk, responsibility and cost with you.
These technologies have made the in-store shopping experience just as important as the actual products, roundtable participants suggested. Apple has incorporated mobile and big data analytics technologies into its stores (from e-coupons to self-checkout on mobile devices), they noted, but it has also designed them with a coffee shop feel in mind so the ‘cool factor’ of Apple’s social and mobile branding extends to the atmosphere inside the store. A retailer’s in-store branding has to match its online, social and mobile branding, roundtable guests concluded.
Toms pointed out that big data puts bigger demands on traditional retailing technology such as POS and help desk systems, causing retailers to worry about how to maintain their existing legacy systems while also investing in new technologies. Marshall suggested retailers develop “a very robust social strategy,” embrace native mobile apps and form strategic partnerships with social media players like Foursquare, for example; Louis Le, marketing director at Gibraltar Systems, suggested retailers could work with their entire supply chain to share some analytics data (and therefore share some of the data-related risk, responsibility and cost) where appropriate; Syed said such collaborations on data could culminate in collaborative marketing: “We’ll be checking into an Audi dealership and an ad will pop up from TD Bank asking if you want a car loan. It’ll become a collaborative retail experience.”
