Canada is going through some dramatic evolutions and revolutions in the world of retailing and in retail distribution. The changes are very evident every time I visit or drive by my local shopping mall, the Yorkdale Shopping Centre in Toronto.
The mall has gone through another major expansion. Microsoft and Apple have stores a few feet apart. The number of American chains (e.g. Victoria’s Secret, William Sonoma) continues to expand. Some high end chains (e.g. Holt Renfrew, Harry Rosen), that have been in the mall for decades, are in the process of major expansions. The upstairs food court has been totally transformed and upgraded. In addition to the old standbys, (e.g. Chinese, Thai, Greek food), one can now buy lobster grilled cheese sandwiches, high quality Indian food and a host of new treats at the mall.
So what is going on out there? There are a number of discernible trends taking place that will have a direct impact on freight transportation in Canada.
Mergers and Acquisitions
Loblaw’s is in the process of buying Shopper’s Drug Mart, Sobey’s has bought Canada Safeway and Hudson’s Bay Company is buying Saks Fifth Avenue. This will certainly lead to warehouse rationalization, the cross-selling of specific items (e.g. President’s Choice Products) in Shopper’s Drug Mart stores, carrier consolidation and a host of other transportation related changes.
The American Invasion
Target is just getting started in Canada. Nordstrom and Saks are coming. We now have our first Premium Outlet Mall in the Toronto area (e.g. Halton Hills). This mall, which is similar, but smaller than its American counterparts, contains Brooks Brothers, Coach and other name brand chains. Since these stores carry lower grade items and poor selling products, this will result in specific warehouse and transportation capabilities to meet the unique requirements of these new retail channels.
The E Commerce/Technology Revolution
The E Commerce movement has been under way for years. It is expected to continue to grow. Brian Tunick, Senior Specialty Retail Analyst, JP Morgan Chase, predicts that within five years, 25 percent of retail sales will come from online purchases. Urban Outfitters in the US has already reached that threshold. If this continues, that may reduce the retail footprint for the stores that are achieving success in this area but will increase the requirement for E Fulfillment/local delivery transportation.
At the local store level, consumers can use their iPad or the store’s iPad to search for items not in the store. Personnel in the stores can arrange for the free shipping to complete the sale.
There is also the influence of Social Media. According to William McComb, CEO of Fifth & Pacific, Pinterest is the top media platform in the retail sector followed by Instagram and Facebook. He cites the example of Lena Dunham, the American actress and filmmaker who was wearing a Kate Spade jumper and had a picture taken of her. She posted it on her Instagram page. She has 527,000 followers and received 24,000 “likes” immediately. This produced significant traction on the company’s website.
The Same-Day Delivery Phenomenon
Amazon and Wal-Mart are experimenting with this service in major US metropolitan areas. This initiative was discussed in a previous blog (http://www.dantranscon.com/index.php/blog/entry/the-next-big-retail-battleground--same-day-delivery) and it has huge potential. In Canada, four major retail brands and Canada Post are launching a same-day delivery service for online orders in the Toronto area. The Delivered Tonight e-commerce service is a pilot project with Best Buy, Future Shop, Indigo and Wal-Mart as the key players. If this movement takes off, it will dramatically impact the small and medium sized retail market, change the mix of warehouses and retail outlets and alter the nature of retail transportation.
To learn more about Retail Supply Chains: Future Trends for Retail and Consumer Packaged Goods End Users, come to the October 16 2013 Surface Transportation Summit (www.surfacetransportationsummit.com) taking place at the Mississauga Convention Centre, just outside of Toronto. Ian Gragtmans, Executive Vice President of Colliers International, a leading real estate firm, will be addressing this topic at a Retail track on Wednesday afternoon. Don’t miss it.