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Retail continues to lead the Canadian news this week, and not because Target is opening 17 more stores.

Lululemon announced a product defect in its signature black women's yoga pant will result in sizable hit to its sales this quarter.  The fabric is too sheer and is see-through in certain conditions. Investors have reacted with an initial 5% drop in share price and industry watchers are quick to question the ability of lululemon to scale. www.theglobeandmail.com/globe-investor/lululemons-material-warning-pants-shortage-threatens-profit/article9936310/

Being a very high profile, globally focused publicly traded company has its downsides. However, lululemon is making lemondade with its proactive, quality-first, customer-friendly handling of the situation.  See my thoughts by clicking the video raw CBC news feed found here:

www.cbc.ca/news/business/story/2013/03/19/business-lululemon-recall.html

So, at worst it plants a small seed of doubt in the loyal fan's mind about the ability to be 'right for me' as the chain grows and grows. Yet the best of this is a demonstration that it stands by quality, in a transparent and proactive manner (compared with recent food system recalls... this is just clothing, folks!).  And consumers are talking about a more risque version of the iconic pant.

If handled well, they will forgive, as lulu can use its 'credits' accumulated over years of running a values-based operation that places the customer (the guest) at the centre. However, this means making changes to mitigate the risk of this happening in future.

This does not mean the markets are pleased. This led to a $7M - $17M reduction in estimated short-term sales.  This seems excessive at the higher end. There have been some insinuations that the opportunity was taken to cushion some slowing of growth in other areas.  Longer term, there are concerns that supply challenges will continue to impact quality - a cornerstone to success to date.  There have been other, lesser quality hiccups.  While complex global supply brings inherent risk, quality checks must be in place to catch problems early.  www.theglobeandmail.com/globe-investor/lululemon-quality-in-question-as-shares-tumble/article9948948/

Mistakes are to be expected as part of the global growth curve. However, some hubris may be involved as well.  Lululemon has created a tight culture and internal brand in part by holding firm the idea "we do things differently here", the oft-quoted "lululemon way". Perhaps the time has come to be more eager to explore best practices from the outside world, particularly around quality, sourcing and logistics.

Finally, a particular mommy-blogger has suggested this is all a marketing tactic, to generate interest and PR.  This should be thoroughly discredited.  There are financial market legalities at play here, not to mention overall market trust.  They simply would not stage this.  I hope the media refrain from giving that angle any airtime.

What I do hope for is an inspired and cheeky humour campaign down the road, the kind for which lululemon has become known.  Once the dust settles of course.

Click here for the open letter from lululemon: www.lululemon.com/community/blog/

Shoppers have been telling pollsters that they intended to bump their spending this season, but the reality will be muted.

The best indicators, of course, are actual sales figures. Moneris is Canada's largest payment processor.  They share their data periodically through December.  This tells us Black Friday had an impact to kickoff Holiday shopping, but the 6% gains were not sustained through the month, which flattened out to 2% growth over the Nov 29- Dec 19 period last year.

Moneris: Canadian Black Friday Sales

Moneris: Canadian Retail Sales Nov 29- Dec 19

Keep in mind, as competition for shopper dollars continues to accelerate, this puts pressure on individual retailers to keep pace. 

We believe the new era of disciplined, budget-driven gift-giving has become mainstream, after a slow build since 2008.  This includes fewer items, agreements to set value limits or to even not exchange gifts amongst some friends is commonplace.

With the recent weather woes across the country, we expect the Pre-Christmas spending to be flat compared to 2011.  Lets see if Boxing Week can push retail performance with a strong finish.

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Addendum: 1.7% Oct. 2012 vs. Oct. 2011 retail trade in Canada (Stats Can) aligns with slow growth projection.  BC was down -1.1%.

www.statcan.gc.ca/daily-quotidien/121220/t121220a001-eng.htm

Because we were not flocking across on this day in the first place.

Make no mistake, this is smart marketing on the part of Canadian retail.  Led by the usual promotion-minded big boxes (such as Future Shop, The Brick, Sears, Toys R Us and so on), a "Black Friday" header gives a more exciting focus to what would be a normal run of Holiday Season deals.

However, our annual tracking survey of Canadians, in partnership with Vision Critical sheds some light on shopper response through 2011. 

This is still driven by American advertising or media stories covering the US phenomenon.

94% of us viewed, read or heard about Black Friday last year - it is on our radar.

- This is up from 78% in 2010.

- Note that 15% of Quebec residents had not heard nor seen promotions.

But only 2/3 (69%) feel sure they heard or saw Canadian based Black Friday promotions in 2011. Atlantic Canada led at 83%.

It does not take many cars at the border to cause long lineups and create an impression of an exodus Stateside.

Furthermore, no matter what we offer here, for the segment of Canadians who like to travel to shop, or love the "hunt", a Holiday shopping trip to the US is a tradition, coupled with a nice meal or two and possibly a night away. 

However, only 2% of residents travelled cross border specifically to shop for Black Friday last year, exactly the same as in 2010.

Another 10% shopped online or Catalog from US stores, for a total of 12% buying American deals.

- Ontario led with 17% shopping US online or stores.

15% Canadians shopped online or in-store in Canada for Black Friday promotions here (it was 6% in 2010).

11% shopped a store for a Black Friday deal.

- 4% through a Canadian website.

In Ontario 16% of residents shopped in store in Canada.

Perhaps because it is not yet rooted in our shopping psyche, or more likely because not all retail is on board and those that are promoting have deals that are not much different from what we normally see through the Holiday Season.

18 to 34 year old Canadians have higher awareness and are shopping more for Black Friday than older ages.

A few short years back, Best Buy was on the "best-of" preso list of many retail experts.  Now the same folks are predicting its early demise. This is the nature of the current fast-changing retail environment.

Much has been made of 'showrooming', Amazon and Apple all taking sales away from Best Buy and driving down margins.  However, it still has critical mass, a large number of healthy stores and a sizable shopping segment that (for now) still prefers shopping in-store.  There is hope and some space to work with.  But the current team seems too inwardly focused and caught up in its own tweaks and executive issues.

Best Buy needs a substantial rethinking of retail and its role.  It needs a new inspired vision, not just endless cost-cuts.  Going private would be a productive, supporting move to help lay the foundation for Best Buy 2.0.  But the question remains: is the founder and recent Chairman of the Board (ousted by the current Board) the right catalyst for substantive change?

Here is a good piece by Marina Strauss of the Globe & Mail:

www.theglobeandmail.com/globe-investor/best-buy-founder-makes-a-bold-bid/article4464732/

A great Canadian success!  Here is my take on CTV news:

www.ctvnews.ca/video

Vancouver's Robson Street is one of Canada's most visible high streets (along with Bloor in Toronto and Rue Ste. Catherine in Montreal).  In the late '90's it was really the only notable shopping street in town; now it vies with other emerging shopping districts. Yet in the public eye and for a number of global retailers it remains the place to be in Vancouver.

For this reason, vacancies and shifting rents attract much attention.  As rents rise, due mainly to the branding opportunities and adjacencies of this street, smaller retailers operating close to breakeven will leave.  As will those chains who are taking a renewed interest in their bottom lines.  Other, cheaper districts will attract. As those rents rise, hipster boutiques move on to create the next up-and-coming street.

Back to Robson, landlords and prospective tenants play a waiting game based on speculation around a couple of prime locations.  This has left some vacancies and some recent lowered lease signings (mid block).  But this is not a deathnell for Robson, it is a normal readjustment.  Apple arriving or a big name in the HMV site will start another wave of increases.

This ebb and flow is typical of street retailing anywhere.

For more....

www.vancouversun.com/business/commercial-real-estate/write+obit+Robson+Street+just/6913657/story.html

How a growth-oriented independent levers Robson to accelerate its brand:

www.vancouversun.com/business/Vancouver+independent+coffee+chain+strides+into+footsteps+giant/6932475/story.html

Have you evaluated "Pop-up" for your retail or consumer business? What about your social enterprise?  www2.macleans.ca/2012/05/10/pop-up-goes-the-shop/

Target launched a small pop-up store in Toronto today featuring a portion of the Canadian-born Jason-Wu line.  The store had long lines and moved most of its product.  And garnered tremendous national media coverage (so call this a "win" for buzz building).

CTV News Clip

Target is well-known to Canadians and many have shopped the stores on trips to the US.  Canada is a middle-class country with consumers who appreciate value.  It is also under-competed, particularly amongst mid-market department stores.  There is a great opportunity here for Target Canada as it rolls out full stores in 2013.   It will impact all retail below the luxury level, forcing grocery, department stores and specialty retailers to innovate, become more efficient, to differentiate. 

Most importantly, incumbents need to determine if there are competing on price (which is impossible without scale), unique product (or breadth), or customer experience.  In the latter positioning, a precursor is deep understanding of customer segmentsmost. It is here most Canadian retail must improve.

Bonnie Brooks, President and CEO of Canada's iconic department store The Bay, will be applying her turnaround success to storied Northeast US upscale department store Lord & Taylor.

The question in Canada is: how relevant is the department store model outside of a few downtown flagships?  The question in the US is: how to differentiate amidst numerous competitors and an ailing economy?

Here are some observations on Ms. Brooks in a recent Canadian Business magazine article: www.canadianbusiness.com/article/71119--the-bay-s-bonnie-brooks-leads-lord-taylor

The following is an interesting podcast from Terry O'Reilly's new show Under The Influence on branding and consumers (on CBC Radio).  Entitled, Men Are From Sears, Women are from Bloomingdales, the premise is that genders follow archetypical patterns when shopping. Specifically, it suggests some reasons for the 'truthy' observation that men hate shopping.

Give it a listen (after the short 'ad' for another show).

podcast.cbc.ca/mp3/podcasts/undertheinfluence_20120107_22955.mp3

We can agree men and women, broadly speaking, exhibit different patterns in communication, problem solving, decision-making and socialization. After years of studying shoppers in retail settings, I agree that men indeed are more likely to find shopping a chore. However, this is not 'black and white; I have a different 'take' on this. 

First, there are plenty of exceptions to this generalization; situations where men very much enjoy shopping (think Bass Pro) and where women cannot wait to get out of the store (think... Bass Pro). 

Second, and most important, I believe that there is a Catch-22 at play here.  Because retailers have long known that women are most often the ones who shop for the household, retail experiences have been tailored to them over the decades.  Because retail is so quick to adopt ideas seen in other stores, the standard practices in retail, all retail, have evolved from retailing to women. 

Today there are proportionately more men regularly shopping (people are single longer, female spouses have demanding careers splitting more household trips).  However, most shopping experiences are not designed for men, for their needs.  Men's clothing is perhaps the best example, especially with the predominace of unisex stores.  It is little wonder men do not enjoy the process.  There is a great opportunity to rethink how men shop, but in order to build more compelling experiences for them, rather than assume they will hate the shopping experience.

The podcast presents some insights that are quite compelling; such as, men are less deal-focused, price-compare less, and spend more on similar product than women. Or the difference in spending when men shop together and when women do likewise.  According to the research, men pick higher priced items at regular price, when other men are with them; it seems the purchase price relates to status and power. Women seek even better discounts in the presence of their female friends, as status is conveyed by deal-hunting expertise.

Men see staff as but another 'tool' or resource in store, a possible source of practical information ("where can I find this?").   Women, on the other hand, value the relationship with a staff person and trust more complex judgement ("does this look good on me?).  O'Reilly offers several examples of sales techniques to enhance the customer experience and encourage longer visits, higher spending.

One final note: in a global market place, it did strike me as highlighting a fairly "white" or Western set of shopping attidudes and behaviours. More and more our research processes must accomodate a broader mosaic of what is 'mainstream', even in domestic Western markets such as Canada, Germany or the United States.

However, it is a compelling piece in a great series on branding. Take a listen...

podcast.cbc.ca/mp3/podcasts/undertheinfluence_20120107_22955.mp3