Big Box Retailers Should Think Small To Grow Sales
By admin | January 27, 2012
In the era of big box retailers, we have been provided with massive stores with a huge assortment of products and prices to fit almost every need. This strategy has proven to be successful for companies like Superstore and Walmart. But, there is a growing demand for something else. Consumers are looking for smaller!
Dollar stores have been capitalizing on their small store formats of low-priced items. These stores have proven to be very profitable ever since the recession hit and people started increasingly looking for low cost alternatives. Walmart was no longer the only lowest priced retailer in town.
Consumers like the convenience and consistency provided by familiar brand names on smaller, more targeted stores.
Some big retailers have started developing small test store formats. But can they do it successfully?
In 2011, fifteen Walmart Express stores opened up. These stores are approximately 15,000 square feet, whereas the typical Walmart Supercentre is 185,000 square feet. Target plans to launch four City Targets in 2012 and 2013, which will be half the size of regular stores. Best Buy, Staples and Office Depot are also looking at developing smaller format stores.
These smaller store formats will partly be successful depending on the efficiency in the back end. They can either use their supercentres as distribution centres or they can find cost effective ways to ship and shelve their products.
Retailers also have the option of developing smaller store formats within existing stores. Superstore has a spacious front lobby that could easily accommodate a section of low-priced, convenience items that consumers would not have to travel the entire store to find. This would help improve the price image of Superstore.
It would be nice if you could quickly run into Superstore on the way home from work and pick up some milk and eggs at the front. This would be a quick in and out providing the lower prices Superstore passes on to its customers.
Target has already developed “Dollar Spots” at the front of their stores. Michaels has also started to do the same.
The extreme value end of the market is being redefined as big retailers are starting to venture more and more into smaller formats. Local mom and pop stores, pharmacy chains and coupons and daily deal websites are all vying for position.
The downsizing trend seems to be here to stay, so lets keep an eye on possible smaller store formats and smaller stores within stores to see what consumers will be provided with in the future!
Topics: January 2012 | No Comments »
SINS Canadian Retail Index – Week Ending January 27, 2012
By admin | January 27, 2012
Topics: Uncategorized | No Comments »
SINS Canadian Retail Index – Week Ending January 20, 2012
By admin | January 22, 2012
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Target Canada: One Year Down, One To Go!
By admin | January 18, 2012
It has been twelve months since Target announced that it will come to Canada through the purchase of up to 220 Zellers leaseholds across Canada.
For us here at Sales Is Not Simple it has been a busy year of getting to know Target a whole lot better, deciphering and predicting their next moves as they gear up to enter the Canadian market; and working with the vendor community to share our insights and help them prepare to start discussions with Target Canada.
What have we learned?
1) Target is first and foremost a fashion retailer that will use this strength to draw traffic to their stores.
2) Food will be available at Target stores in Canada – but just how much food and when it will be introduced is still up in the air.
3) Tier 1 vendors with a US presence are playing a key role in the initial assortment / shelving of CPG categories in Canada, while smaller vendors have had little or no contact with Target to-date.
4) It will take 9-12 months to renovate each store and finding the skilled trades to renovate the stores to Target’s standard is tough in today’s labour market.
5) It is a good time to be a good merchant or store operator, with Target having a huge recruiting task in front of them. Target will look to build their Canadian ranks by enticing the best and brightest employees from their competitors.
But where do we go from here? We are still a long way from receiving the first purchase orders from Target and this will make the next twelve months relatively challenging for potential vendors.
To ensure success a vendor must:
1) Learn Target inside and out. This is “Sales 101” but knowing your customer in intimate detail is the first step to success.
2) Determine what role you want Target Canada to play in your overall business strategy in 2013 and 2016.
3) Assess impacts on existing customers volumes and the corresponding financial implications on your P&L.
4) Develop a transition plan for Zellers volume in 2012 and use the opportunity to shift volume towards more profitable / strategic accounts.
5) Determine the right structure for you to service Target, nominate your best and brightest to the roles and get them trained and “Targetized” ASAP.
2012 will be an exciting year as vendors adapt to the changes Target is bringing to their business and strategize the opportunities that lay ahead.
If you are still looking at Target as an opportunity for your business but you don’t know exactly where to start, consider joining our one day “Selling Target In Canada” workshop which will be held in Mississauga this Thursday, January 26th.
Link: http://www.salesisnotsimple.com/products-services/selling-target
Topics: January 2012 | No Comments »
SINS Canadian Retail Index – Week Ending January 13, 2012
By admin | January 16, 2012
Topics: January 2012 | No Comments »
Why CPG Companies Could Soon Be Competing With Loblaw For Good Marketers
By admin | January 12, 2012
You have probably already heard that the two largest CPG brands in Canada are 1) President’s Choice and 2) no name.
Of course, these two brands compete in almost every category in the supermarket giving them an advantage over one-category wonders such as Pepsi or Lays.
However, given that PC and “no name” are only available in about 30% of Canada’s supermarkets – their size is quite impressive.
Private labels have a history of being low-cost knock offs of national brands and they were not really considered a threat until the economic uncertainty of the past couple of years.
Now there is more evidence that the hard work of the Loblaw Brands teams is really paying off and shoppers are giving credit for their efforts in being unique and innovative.
A recent survey by Ipsos Reid of over 1000 Canadians put President’s Choice in the #7 spot of their Top 10 Brands. The only other CPG brand to make the list was Coca-Cola.
No doubt Loblaw’s efforts with Recipe To Riches ( www.recipetoriches.ca/ ) and the launch of PC Black Label (http://www.pc.ca/blacklabel/) played a role in getting PC into the Top 10.
Add to that the innovation that is launched behind the iconic “Insider’s Report” and President’s Choice seems to be firing on all cylinders.
The role of “no name” is equally important in the private brand portfolio at Loblaw. In addition to its redesigned packaging its current television campaign is completely aligned with the brand and is timed perfectly to build the price perception of Loblaw banners at a time of year when shoppers are pinching pennies after the holiday splurge.
In short, the Loblaw brands team is doing a fabulous job and is miles ahead of many private and national brands.
If I was working at a CPG company as a marketer on a brand that was trimming investment, running international creative and launching one or two new products a year – I’d have a straying eye for a job at Loblaw.
They spend money on media throughout the year, the brands are growing, there is lots of innovation and they are the biggest brands in the land.
Isn’t that every marketers dream?
Topics: January 2012 | No Comments »
SINS Canadian Retail Index – Week Ending January 6, 2012
By admin | January 8, 2012
Topics: January 2012 | No Comments »
Top 3 Bottom 3 Performing Stocks Of The Year
By admin | January 7, 2012
It has been interesting to watch the share prices in our SINS Index over the past year. The three best performing stocks of the year include Dollarama, Jean Coutu and Big Lots. The three worst performing stocks of the year are Indigo Books, Sears Canada and Staples. Highlights are listed below.
Dollarama takes this year’s top honour for best performing stock. It ended 2011 up a whopping 54.6% to settle at $44.50 per share. Sales during 2011 consistently increased. Not bad for a company who went public as recently as 2009. Dollarama grew quickly over the last few years as Canadians went searching for bargains during the economic downturn. The company was also successful at introducing various price points up to $2. The company, which begun in 1992, currently operates 690 locations across the country. It is Canada’s largest dollar store chain.
Our next top performer title went to Jean Coutu Group Inc. The company’s share price ended the year at $12.75, up 32.4%. Government drug reforms required generic drug prescription prices to be reduced. The company reduced these prices to 30% of brand name drugs. In spite of this, financial results in 2011 were better than expected. This was due to overall market growth and expansion in the store network. The company also signaled the exit as a big player in the US drug store business by selling a 10% interest in the Rite Aid Corporation, a leading US drugstore chain with over 4,700 stores.
The third top performer of the year was Big Lots. It’s share price ended the year up 24% to $37.76. This US based company operates 1,405 stores in 48 states. It is the nations largest broadline closeout retailer that offers extreme value retailing. Big Lots made its first foray into the international marketplace this year with the purchase of Calgary, Alberta based Liquidation World. Troubled Liquidation World had seen recent success by adopting the Big Lots business model, but it was too little too late as the company fell into a liquidity crunch and could not refresh inventory which hurt sales. Big Lots purchased 89 Liquidation World stores for $1.8 million.
Chapters Indigo closed out 2011 down 50.5%. During the year, the company launched a new loyalty program called plum rewards. It also launched the new Kobo eReader touch edition. Sales of Kobo skyrocketed during the year as the company continued to invest in Kobo and transition to become a lifestyle retailer. Then, in November, it was announced that Tokyo based Rakuten Inc. was going to acquire all outstanding Kobo shares. Chapters Indigo received US$140-$150 million proceeds from the sale. The company’s share price moderately recovered, but never recaptured the whole price decline seen during 2011.
Sears Canada’s share price ended the year down 45.5%. The company’s quarterly sales continuously declined throughout the year. New President & CEO Calvin McDonald stated that the company was not pleased with the results and had begun to implement new initiatives. A few highlights this year included the new shoppable iPad application for the Wishbook and a new Mastercard Paypass payment option for customers. After holiday sales slumped, Sears Corp. announced it would be closing up to 120 Kmart and Sears stores in the United States. Sears Canada stores were not on this closure list.
The last stock that was a worst performer this year was Staples Inc. It closed the year down 39%. Q1 sales and profits were weaker than expected as demand in Canada and Europe weakened and higher gas prices increased delivery costs leading to decreased sales. The company is exposed to foreign exchange risk and a highly competitive industry. The rest of the year was marked by lacklustre performance as the share price continued to decline.
Topics: January 2012 | No Comments »
Target Announces First Canadian Stores
By admin | January 5, 2012
Target Canada announced its first wave of 24 stores that will be opening in Ontario in early 2013.
It is not a surprise to see the first cluster of stores all located close to its Ontario based supply chain and head office.
These stores will benefit from short supply chain lead times and the close proximity of headquarters staff who can keep an eye on their first stores.
This likely means that these stores will also be the first Zellers stores to “go dark” so the expected 9-12 months of renovations can begin.
The store list includes:
- London Westmount, Westmount Shopping Centre
- Kawartha Lakes, Lindsay Square Mall
- Newmarket, Upper Canada Mall
- Milton, Milton Mall Shopping Centre
- Cambridge, Cambridge Centre
- Toronto, Centrepoint Mall
- Mississauga, Square One Shopping Centre
- Ajax, Durham Centre
- Orillia, Orillia Square Mall
- Brampton, Shoppers World Brampton
- London, Masonville Place
- Windsor, Devonshire Mall
- Toronto, Cloverdale Mall
- Toronto, Shoppers World Danforth
- Burlington, Burlington Mall
- Toronto, East York Town Centre
- Aurora, Aurora Shopping Centre
- Fergus, Gates of Fergus
- Hamilton, Centre Mall
- Guelph, Stone Road Mall
- Burlington, Millcroft Centre
- Waterdown, Flamborough Power Centre
- Whitby, Taunton Road Power Centre
- Brampton, Trinity Common
Topics: January 2012 | No Comments »
SINS Canadian Retail Index – Week Ending December 30, 2011
By admin | January 1, 2012
Topics: December 2011 | No Comments »
