Inside Logistics

Learning Curve: Managing retail relationships

The biggest change influencing retail sales is the fact that three in four Canadians are buying products online.


July 2, 2015
by Tracy Clayson

Tracy Clayson is managing partner, business development of Mississauga, Ontario-based In Transit Personnel.

Tracy Clayson is managing partner, business development of Mississauga, Ontario-based In Transit Personnel.

Today’s retailers face a great many challenges, but consumers’ lack of buying power is likely to cause the most searing pain. Still, while other Canadian economic trends such as low consumer confidence, higher personal debt and a weakening dollar indicate much of this pain could linger, there are a few steps retailers could take to quell the worst of it.

Consumer confidence (which is a reflection of employment and debt factors on Canadians’ spending habits) has dropped 0.6 percent from Q4 2014 to a disappointing 96 percent. Meanwhile, Canadian retail sales rose only 0.7 percent in March this year, partially due to a consumer price index increase of 1.2 percent.
The Canadian unemployment rate held steady at 6.8 percent, with an increase in employment of 0.8 percent in the last 12 months and 47,000 additional full time jobs gained in April.

Due to a weakening Canadian dollar, some analysts expect the added cost of imported goods will result in rising prices and threaten the likelihood of increased consumer spending. Current debt levels are also causing analysts to grow more concerned for Canadians’ financial stability, with households with incomes between $50,000 and $100,000 having between 37 and 38 percent debt levels. Household debt to disposable income has risen to an alarming 163.3 percent.

At least people are in a buying mood. If a modest increase in spending does happen, retailers will gain a bit of wiggle room to experiment with new (or at least different) ways to capture Canadian consumer dollars.

The biggest change influencing retailer sales is the fact that three in four Canadians are buying products online. As a result, the leading players are changing their ways.
Although Amazon remains the e-commerce titan, Walmart is gaining traction in online sales. Walmart sales were sluggish in traditional markets last year with a 0.6 percent decrease. In response, the world’s largest retailer recently embraced a digital/physical retail strategy and triggered a huge 22 percent increase in online sales and a total of 0.6 percent increase in overall sales.

With the purchase of some of the former Canadian Target stores’ real estate, Walmart is set to grow its grocery business too, which now represents 55 percent of its product mix. In the meantime, Amazon posted a 19.5 percent increase in overall sales, while also growing its grocery business. While it enters a faceoff with Amazon, Walmart will leverage its global 4500-store network to help distribute the goods purchased online.

This could be a wise move. After all, online stores can sometimes represent more than just a threat to brick-and-mortar-only retailers—they can be downright infuriating. This is never clearer than when a customer uses a retailer’s physical store to do a detailed in-person product check before simply going home to buy that same product from a different retailer online.

For this and a host of other reasons, every retailer should be highly invested in understanding the path to purchase. In other words, there is great value in obtaining customer contact and buying information, because these details offer data retailers can use to further assist and/or influence buyers.

Shoppers tell retailers what they want through their buying behaviour, and retailers can then market to them with this critical information in their back pockets. Then, they can combine and bundle complementary items or play around with options, models or the customer experience as necessary.

Online retailing inherently provides a way to get valuable information, when a retailer manages to collect and save it. Successful retailers make sure to leverage such information to extend their reach to larger consumer bases, by tracking patterns in buying choices and customer trends.

After all, it is never a bad idea to understand more about the way purchases are done or to learn how customers feel about, for example, prepay, mobile pay, loyalty cards and other methods of payment.

One of the most important things to offer when selling products online is a set of delivery options around such factors as time, location and packaging type. Flexibility on this front will allow you to meet many essential customer needs.

But some things never change. The continuation of the buyer/seller relationship hinges, as always, upon the ability of the retailer to engage, satisfy and re-engage and re-satisfy the customer.