Canadian Retailer - The Technology & e-Commerce Issue - 17

DJB: Is there anything about today's
North American retail model that perhaps needs to change or be reevaluated
in order to continue capturing the affection and loyalty of today's consumer?

going on right now, much of which is being fueled
by home equity. They're pumping the breaks on
the real-estate market, ticking up interest rates.
As a result, the consumer will take pause. In
terms of the headlines, there will continue to be
fallout in the mid-tier. There have already been a
lot of casualties resulting in a number of retailers
going out of business over the last five years. But,
if we look at this purely from a brand standpoint,
does anyone miss those brands? Do consumers
wake up in the morning pining about the loss of
any of them and the fact that they aren't around
to shop at anymore? The answer in most cases
is no. Consumers don't miss those brands or
assortments. This is going to be the battle cry for
every retailer in 2018. They need to make sure
that the experience they're offering is worthy of
the consumer's affection and loyalty.

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DS: In many ways, it's actually quite
shocking that the economic model
for retail persists. The retailer goes to
wholesalers, buys in bulk, redistributes,
and then charges a marked-up price that's
sometimes 300 per cent more than what
it originally cost to make the product.
It's a model that stretches back hundreds
of years. Nothing has changed, either,
about the way those within the industry
measure their success. It's all about sales
per square-foot and comp store growth.
Similar to the economic model, this has
remained the measurement of success
for retailers since the 1800s. At some
juncture, retailers are going to stop and
realize that buying in bulk from vendors
while absorbing all of the cost, risk and
responsibility involved in pushing a
product to market is not the model that
the industry should be using to maintain
success and growth.
Vendors are the ones prospering from
the current retail economic model. They
are vertically integrated, selling behind
the backs of retailers, competing against
them for the same customer. Looking
ahead ten to fifteen years from now, or
sooner, there's going to be much more
vertically-integrated retail. There are very
few brands today that aren't already exploring the
direct to consumer opportunity, trying to figure
out how they can realize it without burning all
of their distribution bridges. As a result, there's
going to be an emergence of a different kind of
retailer-an experiential retailer that treats their
store as a media channel where brands pay for
the development of curated experiences for their
customers. And at the end of this evolution, no
longer will retailers be interested in buying skids
of product and keeping them in a warehouse
somewhere. Instead, they'll be the creators of
outstanding experiences that are built around
product-jaw-dropping experiences to represent
their own brand and the products of their vendor
partners. And, it's going to cost vendor brands. It's
going to be more like a media buy and will go a
long way toward shaping the future of retail.

THE TECHNOLOGY & E-COMMERCE ISSUE

| CANADIAN RETAILER | 17
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Table of Contents for the Digital Edition of Canadian Retailer - The Technology & e-Commerce Issue
