Recent Blog Posts

On April 14^th, sports clothing retailer West 49 announced “it anticipates a $3.5 million, non-cash write-down of goodwill associated with its Off The Wall banner in the fourth quarter for the fiscal year ended January 26, 2008.”  

This is shocking news for those aware of Off The Wall at the time of the original acquisition in May of 2005, and the strength and value of this once cool young women’s fashion chain.  Its also a lesson for those chains seeking growth by acquisition.

Fuelled by investor funding, what West 49 saw then was an age-target complement in women’s clothing to its more male-focused core banner, impeccable financials, solid competitive positioning against leading nationals in its BC markets, great private labels, and expertise in offshore sourcing.

"We are pleased to have Off the Wall and its president, Christian Toth, as part of the West 49 team," said Sam Baio, Chief Executive Officer, in a statement at that time. "This represents another tremendous growth opportunity, as Off the Wall serves market segments very similar to those of West 49."  Well… not so much. Demographics aren’t everything.    Its customers were not skaters.  They liked fashion, and were the girl-next-door version of the Aritzia shopper.

Furthermore, in eschewing the “people fit” and proper research and consumer insight in favour of past operating metrics and financials, West 49 missed the obvious.  The brilliance of Off The Wall was its culture, its core team, and its strong focus on fashion branding.  Sure, it happened to have a number of teen and tween customers, but it was much more than that. 

Too bad the new owners did not recognize the issues ahead of their decision.  Or too bad they did not choose to nurture its new company and learn about branding from it.  By the end of the 2006, the team at Off The Wall was gone.  And so was its mojo.

The cocktail discussions at the recent ICSC Whister Conference on retail real estate frequiently turned to the topic of 'green' malls and retail development.

After some tentative steps by some retail property leaders such as Ivanhoe Cambridge in 2007, it seems that the topic of sustainability is now firmly on the radar of much of this sector.  Predictably, much of the early initiatives concern green buildings and waste reduction. 

These are great starting points, but much as I have counseled for retailers, I would advise the landlord community to elevate the discussion to one of strategy, rather than tactics (see  www.dig360.ca/ItsNotEasySellingGreen).   This involves stepping back at a senior level and assessing what 'sustainability' means for this sector and for your company.  Integral is an assessment of outcomes, or impacts, you want to achieve and establishing a time frame. What would a fully sustainable (which includes profitable) shopping centre look like?  What principles and criteria would shape green choices over time?

Quickly, one will realize that there are several stakeholders critical to action in this area: the mall management staff, retailers (store level and head office decision-makers), outsourced support (e.g., janitorial), and shoppers themselves. 

Too often I hear from malls that their recycling initiatives, for example, would work wonderfully if only the tenants cared and did their part.  But these procedures are rarely developed with the tenants, rather they are imposed on them.  When I speak to retailers, I hear a similar complaint: "we'd love to do more, but our hands our tied by the mall and our lease".  I am currently exploring co-creation models of sustainability strategy involving key stakeholders to close these gaps.

One strategic idea that could have tremendous long-term impact is that of reinventing the landlord-tenant relationship.  Frustratingly, both camps have a sincere interest in doing more and doing better, but their relationship is too culturally focused on compliance with terms of a lease negotiated at a previous moment in time.  Complaince models discourage ongoing innovation and joint initiatives.  Yet sustainability is such a new area that it would be impossible today to anticipate in a 5-10 year lease what might be required in future.

Let the lease be the lease.  Landlords should take the leadership position to invite interested tenants and other stakeholders to the table in an atmosphere of trust to jointly explore a common strategic vision for sustainability in the shopping centre.  All will have goals, all will have fears. the focus should be on finding a common ground.  Those who are reluctant to take part can remain on the sidelines, with energy expended on those who are motivated.

An attractive outcome might be the creation of a new relationship that features a culture of ongoing joint effort to seek continuous sustainable improvements.  If successful to any degree, this ethic will without doubt spill over to many other ongoing operational improvements for mutual gains.  And that can only be good for everyone's business.

Some comments by David appear in "Storefront Survival", by Alison Appelbe, BC Business Magazine, January 2008.

www.bcbusinessmagazine.com/bcb/top-stories/2008/01/01/storefront-survival

(Note, this will take you out of this site with a pop-up).

“Wiarton Willie, Canada's most famous weather prognosticating rodent, failed to see his shadow when roused from his slumber Saturday morning in the small southern Ontario community.

“An early spring is also the prediction of Canada's other famous groundhog, Nova Scotia's Shubenacadie Sam. He emerged from his burrow at Shubenacadie Wildlife Park and failed to see his shadow.

“But Pennsylvania's Punxsutawney Phil disagreed. He saw his shadow when roused from his slumber by his handlers.”

- By Allison Jones, The Canadian Press, Feb 2 2008.

So, our Canadian groundhogs are anticipating an early spring this year – great news for all but ski shops.

Our lead prognosticating ground hog is Wiarton Willie.  In truth, the original Willie passed away in 1999 and his albino successor is Wee Willie.  Of course, the animal immortalized by Bill Murray in Pennsylvania is Punxsutawney Phil.  For those unaware of this important cultural event (some say stemming from the middle ages and the use of hedgehogs) the furry beasts are snatched from their burrows, handed a double espresso and are asked to sit still while we look for their shadows.  A shadow of course is a harbinger of another six weeks of winter; no shadow means a quick spring.

I have always maintained the source of data is as important as the data itself.  In this case, organizers cite a 90% success rate.  However, I have uncovered evidence that the accuracy of Willie’s predictions is closer to 37%.  I feel more focus group work with a range of groundhogs is warranted.

Regardless of the truth, retailers and malls continue to ignore my suggestion to rally their sales and shopper spirits in the midst of winter doldrums with a rousing annual Groundhog Day event each February 2^nd.   What better creative base for some timely promotions than a famous weather forecasting groundhog?

Happy Groundhog Day!

- David Ian Gray

This week I had the privilege of moderating the Retailer Podium at the always tremendous ICSC Whistler Conference.  Working with a line-up of ten outstanding retail executives and on the heels of a keynote by  ex-Canucks' GM Brian Burke, a full house was assured.

The diverse group of presenters all conveyed a sense of optimism and continued opportunities for store growth.

In this session, the ten retailers described their Canadian growth plans and real estate needs to a room full of leading developers, leasing agents and retail real estate pros.  

Some, such as Hallmark Canada and A&W were focused on refreshing the brand with new formats, while Best Buy Canada continues to rollout Best Buy stores (including new format sizes) with Future Shop in underserved areas. Hallmark in particular expressed a theme common to several presenters and certainly one gaining momentum across leading retail: the idea of building community.

Presentations by Great Clips (USA), Mavi Jeans (Turkey), and Michael Hill Jewellers (Australia) on their expansion plans reminded us how much global competition is still flowing into Canada – a relatively under-competed Western nation.  Mavi in particular illustrated how the US is no longer the only place to watch for emerging global challengers.

Yyoga and Pebble Creek Design are terrific entrepreneurial stories.  Small retail is not all mom-and-pop (although plenty of it is).  Most retail concepts begin small with a vision to grow. In fact, much innovation in retail comes from growth-oriented startups, able to create without cumbersome cultures and infrastructure. These two are no exception.  Yyoga, expanding now in the Lower Mainland of BC, is poised to consolidate the top yoga studios across Canada into a common brand.  Pebble Creek is delivering customizable furniture to shoppers in its 6 stores (most of which have opened in the past year).

Coast Capital Savings was the first financial institution to present in the long history of Retailers Podium.  They are embracing a philosophy of becoming truly ‘retail’ in its branches. Its new store format looks promising.  I hope they continue to force themselves out of the box, because "retail banking" generally tends to be an oxymoronic euphamism for "forcing our customers into our operations".

Finally, Franworks is a franchiser covering 4 food and beverage concepts growing from a base out of Calgary.  Original Joes is its restaurant brand and reinforces the tradition of strong dining concepts that have emerged from the West.

So for these ten businesses at least, retail expansion is alive and well.  However, discussions with attendees suggest there are a couple of emerging impediments retail store growth.  First, lending for development has shrunk considerably in the past few months, although many feel temporarily. 

Second, in many areas much of the low hanging fruit in terms of prime retail space has been grabbed, and more growth retailers are seeking the fewer remaining plum locations in given markets (particularly major markets).  Still, a number of impressive developments are coming on line in the next few years across the country.

“After testing and tweaking, David Ian Gray, Principal of DIG360 Consulting Ltd. officially launched the new business and the DIG360 website on January 29th, 2008.   This was the final stage of an intensive rebranding process utilizing input from clients and colleagues and the counsel and creative of Junxion Strategy.”

I am transforming Sixth Line Solutions into an exciting new service concept: DIG360. 

Building on the strong legacy created at Sixth Line of producing high-impact strategic studies of complex market challenges, I have developed a new model to further propel organizational learning, decision-making, and connections in times of change. This revolves around the theme of “continuously building relevance”.

DIG360 will continue to lever our strength in developing multi-faceted marketing research and business intelligence for clients. However, over the past five years I have come to invest much of my thinking around how information and insight can be better levered within an organization. We don’t need more research and information for it’s own sake – but we do need to become more knowledgeable about our ever-changing markets and to make better decisions.  Fact-based workshops, presentations and seminars are featured more prominently in recent projects.

And I have found the exchange of information can be a tremendous catalyst to engaging with your constituents – be they customers, prospective customers, staff, franchisees, investors and so on. Fostering engagement and improving experiences are hallmarks of the new service. This operates on two levels: helping our clients build community with their own stakeholders, while connecting clients with their peers and other experts. In short: I like making connections – full circle.

Finally, clients have expressed an interest in hearing more about my emerging ideas and perspectives on trends. In the past, this was limited to my magazine guest columns, some presentations, and occasions where meetings allowed for broader dialogue. In response, the new website is designed as an information rich blogsite. I will experiment over the next few months around frequency, structure and content. Your feedback is encouraged.

The clientele has transformed as well.  From my solid retail base, many clients now are outside the traditional retail definition; including, media companies, consumer web businesses, financial services and not-for-profits.  The common theme is that these organizations are seeking deeper relevance with their “customers” and understand that engagement and experience are crucial ingredients to success.

Sixth Line was ahead of its time on the need for strategy in Canadian retail, sustainable retailing, technology adoption in marketing research, gis applications for retail studies, emerging business intelligence models, and many more issues.  DIG360 will likewise serve as a symbol of leadership in new future-forward subjects. 

The goal for me is to spend more time fostering connections; helping organizations learn and adapt to become more relevant, while making stronger connections of their own.  I hope this resonates with you. 

Please let me know what you think of the site and what topics you would like to see covered in the blog. Click here to return to the dig360 home page.

On the heels of a very disappointing end to 2007 for retailers in the US, Canadian retailers are reporting mixed results from the past Holiday season.

The Canadian impact of the poor home market performance of many US-based competitors – A&F was down about 20% - remains to be seen; however, it is plausible that aggressive expansions across Canada may be scaled back to focus resources domestically. One mitigating factor for US retailers in Canada is that sales here are converted to US and so there will be a favourable exchange rate impact at year end.

Some like Best Buy and Forzani (Sport Mart, Sport Chek and a host of other banners) did very well indeed.   However, Reitmans reported that for the five weeks ended Jan. 5, same store sales decreased 4.5 per cent from the same period a year earlier. The challenge for those not selling ipods and Guitar Hero III is that even a consistent unit demand could be translating into sales declines as a result of early and persistent discounting. This year, the Canadian Dollar parity spurred many retailers to lower prices in advance of the normal Holiday period. Balancing this trend is the fact the savvy retailers are stocking new line items at regular price more quickly to take better advantage of gift card redemptions.