Retail Inspiration from the East — A Visit to Central World, Bangkok

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Look up Thailand and Shopping on Google, and you get 119 million results to look through. Look up Thailand alone and you get 880 million results. Why does shopping in Thailand make up 14% of its hits? Historically known for its cheap finds and bargain deals, the capital city of Bangkok has come a long way, impressing tourists and locals with more than just deals.

We visited CentralWorld in Bangkok, one of the world’s largest malls at 550,000 square meters. Upscale and well-presented retail make this a local favorite as well as a tourist hotspot for buying the most coveted brands and experiencing some exciting retail browsing.

As a way of engaging with customers during the holidays, Wall’s provides free ice cream in exchange for customers posting a photo of themselves with Snoopy.

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CentralWorld’s high-end department store, ZEN, is all about customer service.  From your regular gift vouchers to providing a bag drop for tourists to enable a comfortable shopping experience.

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ZEN’s displays for the holidays are unique and inspiring, giving consumers ideas for shopping and displaying products in fun and fashionable ways to make shopping an enjoyable experience.

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The children’s department shows you why it’s fun to be a kid! Instead of just the regular kid mannequins, ZEN features large toy mannequins as well.

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Stepping outside of ZEN department store and walking around CentralMall you will find many creative kiosks.  They are made out of glass so you can see every nook and cranny of their creativity and great displays.  Whether you want to put in a pop-up store or a kiosk or are a local vendor, this is how you do it so you get customers coming back each and every time they want to shop.

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Many shopping malls are finding ways to entertain their customers beyond shopping and CentralWorld is no exception.  The Rink provides daily activities for kids so parents are able to kick back with a coffee as they relax and watch.

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For those who like to enjoy a view of their next dream car as they dine, the BMW Diner caters to auto enthusiasts!

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CentralWorld is an example of the modern shopping centers that popping up all over Southeast Asia.  The creativity shown from retailing to dining to services gives shoppers an unparalleled high-end and inspiring experience to be enjoyed.

Will Nordstrom Have the Same Problems as Target?

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On the surface, Nordstrom’s and Target’s entries into Canada have a lot of similarities.  They announced they were coming the same year.  They are both brands that are unique in the marketplace and relatively well known among Canadians.  This is the first foray outside of the U.S. for them.  Both stores relied heavily on their head office staff and were determined to deliver their culture in their new home.  This is where the similarities end.

Target opted for a “big bang” launch into Canada.  Nordstrom has chosen a very measured roll out of stores.

Target renovated a large number of existing stores within a short time.  Nordstrom only opened their first store two years after announcing their intention to enter Canada.

SO WHO WAS RIGHT?

With Target’s announcement that they are pulling out of Canada, it appears that Nordstrom took the right approach.  To confirm whether this is true, we recently took a close look at the only Nordstrom store operating in Canada.  Located in Calgary, Canada’s oil capital, the store opened in September 2014.  There has been enough time since then for the operators to get any kinks worked out as well as to see whether they can sustain the excitement of their opening.  Here is what we found.

This is a store that shouts service.  From the front entrance to the friendly staff that seem to genuinely care that you are finding what you want.  Someone even said “Welcome to Nordstrom!”

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Key service message at front door – Nordstrom

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The sign lists all the various services Nordstrom offers

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Another service – a rest area to just sit and people watch

The store itself is well appointed and comfortable.  In fact, it looks better than a lot of American Nordstrom stores.

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The merchandise looks very fresh and although there was reduced merchandise (not surprising for January) the store was set to look great and give the Nordstrom shopper the option of high-end brands to more interesting little known brands.

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With a combination of great service, seasonally appropriate merchandise, and a great look, Nordstrom does not disappoint. They can even entice a jaded retail consultant to start looking for her size!

So will Nordstrom make it in Canada – if Canadians have anything to say about it, the answer is yes. The number of Nordstrom bags going out of the store on a Thursday morning in January proves that point. The only issue is, can they make money on these stores? While we see them getting the top line sales, whether they can make money with Canada’s higher cost structure, only time will tell.

Target…Totally Predictable!

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Target Retail Store

Target leaving Canada is no surprise. Their stores were a real flop right out of the gate. Since the chain first opened its doors in March 2013, there were all sorts of basic issues: supply chain and empty shelves, dropping a fashion flyer with no advertised items in the store, summer fashion posters still up in November, etc. Behind this was an organization that was siloed—with marketing, merchandising and operations clearly not communicating and totally out-of-sync.

What has always been an amazing situation is that this phenomenal U.S. chain couldn’t even get Retail 101 right in Canada: in the Target store closest to my neighbourhood, the front and forward merchandise areas were empty and the high-traffic fixtures around the escalators were devoted to dollar store items. Even more astounding was the situation when I went to purchase a pair of jeans on the second floor men’s wear department. I was told that there was “no fitting room and that I would have to go to the lower floor women’s wear department.” What? A men’s wear area without fitting rooms? OMG!

We all hoped for an up-beat, creative, contemporary offering. What we got was a mess.

Unfortunately, they won’t be missed—because they never ever really arrived.

Some key learnings from Target:

  • Get the basics right!
  • Don’t be arrogant!
  • Don’t switch your culture!
  • Be nimble—or else!
  • If you have great resources—use them!
  • Never underestimate a competitor!

2015 Retail Outlook…Time to Check Your Priorities!

Canadian retailers of all types will find an action packed year ahead of them. With an economic background consisting of many pluses and minuses, retailers need to be super-sensitive to “messages from consumers” and agile in their reactions. Here is what the advisors at J.C. Williams Group think retail management must look out for.

  • E-tail (with 82% of Canadians researching products online and 71% making a recent purchase – source: J.C. Williams Group Canadian E-tail Report) is now a formidable and growing force. Commodities like Electronics and Entertainment have penetration of over 30%—and even apparel has 18% of expenditures spent online! Any retailer not moving to cross-channel or omni-channel retail will be left behind.
  • Value retailers from Dollarama and Giant Tiger to Walmart and Costco in the price-driven sector, fast-fashion H&M and Zara (Index Group), and Best Buy/Future Shop will continue to steal market share. Consumers want clear choices. Retailers without a clear strategy will confuse shoppers and lose buying traffic.
  • On the opposite end of the scale, Canadians will have more alternatives at the top end. Not to be outdone, Harry Rosen and Holt Renfrew continue bold expansions and upgrades while new entries Nordstrom and Saks will offer new shopper experiences. The question for the industry is “Will all of this be over saturation within our small country?”
  • As Canada builds with urban density, shoppers will see many more stores in city cores – most in smaller formats like the recently announced IKEA “pick up store” of ±37,000 sq. ft. Driving this change is the high cost of retail real estate and the creation of the web-based “endless aisle” where expanded assortments are shown online rather than in-store.
  • What does seem clear is that the retail life cycle (innovation ⇒ rapid growth  ⇒ mass acceptance ⇒ maturity ⇒ decline) is getting shorter. Canadian retailers that are (a) caught in the middle either value-wise or fast-fashion wise, (b) not focused on a micro-segment, (c) not clearly and uniquely differentiated, and (d) not offering omni-channel shopping (with some minor exceptions) will face competitive headwinds.
  • Canada has many of the best retailers in the world! These creative, service-centred, agile, and entrepreneurial omni-channel businesses will prosper in our country of great opportunities.

Source: Senior Advisors at J.C. Williams Group Limited
Toronto, Montreal, Chicago, Washington

How to Generate $2,000 per Square Foot…Ten Steps to Success!

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On a recent trip to New York I ventured off Fifth Avenue, Madison Avenue, and Soho – to Brooklyn and the Atlantic Terminal Mall on Flatbush Avenue (not exactly the haute couture centre of the City).

There on the second floor was a Uniqlo store, opened in October 2013, which was nowhere near as “jazzy” as its Fifth Avenue or Soho older brothers’ (or sisters’) stores. But look beyond all the fancy Christmas stuff of the Manhattan store and you’ll observe a lean-mean-merchandising-machine! This store has to be pushing $2,000 per square foot. And here is why.

Lessons Learned from Uniqlo
#1 Choose a Solid Location with Strong Adjacent Tenants
Co-anchor tenants include Target (not a Canadian version!), Burlington Coat Factory, DSW, Victoria’s Secret, and 25 national specialty chains. These are located at a major transit junction in central Brooklyn, so lots of shopper traffic!

#2 Straight Forward Messages are Best
Shoppers are in a hurry, often confused or conflicted, and need simple choices. Make sure your “theme” messages are easy to comprehend and react to!

The entrance and store sign are open and inviting.
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The windows tell the “colour theme” story clearly. Shoppers “get it” in the blink of an eye.
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#3 The Front 10 Feet Pays the Rent!
The “front and forward” space productivity should be three to four times the rest of the store. You cannot generate sensational sales revenue with an artsy-fartsy display or minimal intensity. Good retailers know and practice this. They load up the front with best sellers.

Just look at Uniqlo’s displays with:
1. Sales associates beside each one
2. Bright, colourful product
3. In depth assortment
4. Fantastic prices on cashmere women’s and men’s sweaters! $59.90
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#4 Backup Feature Item In-depth
Part of Uniqlo’s success is single-focused promotional items featured in limited ranges (huge buying clout!). Winter jackets were in big demand at $59.90 and $29.90.
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#5 In-depth Merchandise Sends a “These Items are Important” Message
“If they have that much of this item – it must be important and popular” is what these walls convey.
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#6 End-aisles are Great for Add-on Sales of Smaller Accessories
Building high productivity is done using many different merchandising techniques. Every one has to be used!
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#7 Make the Store a Merchandising Machine with Lots of Impulse Items
Your store gets to $2,000 a square foot by using every space and idea.
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#8 What is Your Inventory per Square Foot?
All retailers should use this metric to analyse sales trends in departments and classifications. Uniqlo does not shy away from “using the cube” to showcase assortments and build productivity. All these pictured items have in-depth backup right on the fixture.
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#9 An Efficient Check-out is Essential
While Uniqlo had long lines at the service desk, they moved quickly.
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#10 Lots of Team Members
While almost hidden in the crush of shoppers, there were dozens of uniformed (all in black) staff continuously re-stocking and straightening inventory. This store was managed in an obviously organized and disciplined manner.

Uniqlo’s unique value position is re-enforced by the simplicity of its visual presentation, the commitment to inventory depth, and the efficiency of the shopping experience.

Mexx Brand About to Die in Its Omni-channel Sleep!

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News of the Dutch fashion brand, Mexx, filing for bankruptcy did not come as a surprise to us.

Earlier this year, while working on an international omni-channel strategy for a Canadian competitor of Mexx, we attempted to audit Mexx’s online strategy. At the time, we found that they had recently put their online business to bed.

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According to the company, they decided to close the website to build a better one that would provide its customers with a superior shopping experience—a wise move in a digitally driven world.

However, now that the company is bankrupt, it appears that not only their online business but also the brand has died, or is about to die in its sleep!

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On December 5, 2014, the day after Mexx filed for bankruptcy, we discovered the company’s website is no longer in a state of slumber, but it has not fully awaken. For instance, a banner that advertised a door crasher special for girls’ apparel was still on the homepage despite the fact that the offer had ended on December 1, 2014, which was four days ago!

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Online Sales Continue to Rise

An interesting shift is occurring in the retail world. For some retailers, online sales could potentially account for the majority of total sales in the near future. A new research report from UBS highlighted four companies that are expected to see a large portion of sales coming from e-commerce in the fourth quarter of 2014. These retailers include:

Retailer Estimated Online Sales (as a % of Total Sales)
American Eagle Outfitters 24%
Urban Outfitters 38%
Lululemon 22%
Abercrombie & Fitch 29%

It was not long ago when many had said apparel purchases would not be well-received online!

“Go Omni-channel or Go Home”

While e-commerce is clearly the way to go, successful retailers are not stopping at a spectacular website. They are embracing what it means to be an omni-channel retailer. An omni-channel retailer integrates all of their channels to engage customers with a consistent, seamless and superior experience and message, and/or to gain efficiencies, such as inventory efficiency.

J.C. Williams Group’s quarterly Canadian E-tail Report surveys Canadian consumers regarding their online purchasing habits. The message has consistently been “Go Omni-channel or Go Home!”

Retailers who have invested in an omni-channel strategy have seen both their online sales and enterprise value increase.

If you don’t have an omni-channel strategy, in its place is a gaping hole in your business. Your customers are probably going elsewhere while you are sleeping. It is time to wake up before your brand falls into an eternal omni-channel slumber.

Shoes: The New Retail Anchor

What woman doesn’t love shoes?

While always regarded as an “anchor” department in traditional department stores and some shopping centers, no one really capitalized on it dramatically.

That was until Shelfridges London flagship store devoted about one-half a floor to women’s shoes with dramatic feature displays and a full range of brands.

Now, The Dubai Mall (±6,000,000 sq. ft.) has created a new twist on “shoes as an anchor.” Featured in small boutique shops are “branch-shops” of all the brands and designer names elsewhere in this mall. They are all clustered in the mall’s “Level Shoe District.”

This grouping is a mix of formal small spaces, open displays in the mall, and mini designer flagships. Whatever can be thought of the Level Shoe District, it is exceptional. However, drawbacks include some “shops” without staff, others without back-up stock immediately available, and confusion if it is a shop or a display. As well, it is not featured prominently on their website.

One thing that is clearly proven in retail—classification dominance of a particular category is a powerful shopper draw. With this lineup (below), The Mall of Dubai’s Level Shoe District is unique!

Bally Berluti Car Shoe
Chanel Christian Louboutin Diesel
Dior Dolce & Gabbana Fendi
Fred Perry Geox Giuseppe Zanotti
Gucci Harry’s of London Kate Spade
Lacoste Le Coq Sportif Louis Vuitton
Marc by Marc Jacobs Miu Miu Onitsuka Tiger
Paul Smith Pierre Corthay Prada
Private Collection Puma Ralph Lauren
Repetto Roger Vivier Saint Laurent Paris
Sergio Rossi Stuart Weitzman Tods
Tory Burch Valentino Vogue Café
Sole Lounge by Margaret Dabbs Concept Store by The Zoo The Cobbler

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Alibaba’s Plan of Attack: 3 Keys to Success

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Jack Ma, the founder of Alibaba Group Holding Ltd., was quoted on several occasions saying “eBay is a shark in the ocean; we are a crocodile in the Yangtze River, if we fight in the ocean, we will lose, but if we fight in the river, we will win.”

In recent years, that crocodile has grown enormous in size and is no longer content with the Yangtze River. It is no secret that Alibaba wants a piece of the ocean; a piece of the North American market. Besides, what is there to fear? Sales from Alibaba’s two e-commerce platforms, Tmall and Taobao, have already surpassed the combined sales of eBay and Amazon.

Alibaba Group Holding Ltd. is an e-commerce business that offers B2B, retail and wholesale of goods, its line of business also includes an online payment system and a shopping search engine among other developing programs.

Unless you are an e-commerce aficionado, chances are, you have not heard of 11 Main. It is the shark that Alibaba has been breeding in captivity to hopefully one day share the ocean with eBay and Amazon. 11main.com is in its beta phase with approximately 1,000 merchants selling products from categories such as apparel and accessories, technology, sporting goods, toys, and entertainment.

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11main.com beta phase

More vendors and products are expected before the site is fully launched. It will be no easy task to break into the already crowded U.S. e-commerce space, but the Asian giant has done a few things that will certainly increase its chances at success.

1. Acknowledging the Cultural Difference

Any international expansion is not without its cultural difficulties. Target encountered numerous problems during its first year in Canada partly due to its inability to recognize the cultural differences between the U.S. and Canada.

Alibaba recognizes the significant cultural differences between China and the U.S., and it has taken a number of steps to learn from the locals in order to minimize potential culture-related hiccups.

Back in 2010, Alibaba made the strategic decision to acquire two U.S. companies, Vendio and Auctiva, to provide them with insights and expertise on the U.S. e-commerce market. The two companies later built 11main.com. Alibaba also recruited key e-commerce personnel from eBay, Gap, and Walmart to better understand the market.

2. Unique Products

In the face of a crowded market and fierce competition, Alibaba’s entry into the U.S. market will undoubtedly be an uphill battle. 11 Main plans to stand out in the crowd by offering product differentiation. Instead of bringing over vendors who are on Taobao and who are likely already selling on eBay or Amazon, 11 Main is picking vendors that offer unique and high quality products made in the U.S. The marketplace will sell products from categories such as apparel and accessories, technology, sporting goods, toys, and entertainment.

3. Service Differentiation

While the e-commerce platform can offer many things, one thing it seems to be missing is the personal relationships and the interactive experience that comes with in-store shopping. Alibaba plans to set itself apart by encouraging 11 Main shop owners to not only sell a product, but also their story, their passion, and their point-of-view in order to establish a firm brand identity and to build a one-to-one relationship with their customers. Alibaba is also building a key success feature―social media―into 11 Main by allowing customers to follow shops they like and feel a personal connection with.

This crocodile’s endless ambition for global dominance has led itself to its current path; however, the ever changing global marketplace will undoubtedly present more difficulties for this foreign creature. Will it survive and thrive? We’ll be sure to keep our eyes on them!

 

Nordstrom Lassos the Calgary Market

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First things first. The charity launch for the Alberta Children’s Hospital and Calgary’s United Way at Nordstrom Chinook Centre brought out the who’s who of Calgary society. The store was rocking with high heeled locals that one woman described as “utterly amazing” as she was able to meet her entire social circle. The food was delicious and kept coming all night. The wine and beer bar was the place to hang out with friends, and the photo booth allowed friends to camp it up.

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Second, Nordstrom pulled off a beautiful store. Their skill at creating a curated collection was in full force. The pairings of looks, outfits, and “must-have” styles was fully noted. A guest pointed out that she wanted the exact looks that were on the models and mannequins.

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The price points ranged from $18 for a t-shirt in the juniors section to $2,500 for a Herve Leger or Roberto Cavalli dress. Often the brands are inter mixed as part of creating that specific must-have look.

Third, the overall design of the store and layout matched the aesthetic. Beautiful local Canadian and international art work and exceptional rugs complemented the clothing to create the whole package.

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Another noticeable design feature is the mixture of heights, textures, and materiality that created depth and multiple eye levels to draw consumers through the store—an exceptional attention to detail that is a Nordstrom trademark.

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For all the wonderful details and things they got right there were stumbles:

  • There are missing brands. A woman remarked that she came specifically for certain make up brands and footwear but was a bit disappointed they weren’t available. (She was a very loyal Nordstrom shopper who will now shop at the Calgary store but will continue to shop for more unique brands in the USA.)
  • That same shopper was dismayed to find out her Nordstrom card would not work in Canada. One would have thought that this detail may have been ironed out before opening.
  • As stated, there were missing brands—and perhaps an over representation of some brands such as Burberry, Michael Kors, and Kate Spade. Chinook Centre carries many of the same brands in full line stores such as Tory Burch, Kiehl’s, Eileen Fisher, Michael Kors.
  • The service level was en point. The staff was in full force showcasing the Nordstrom charm. However, check-out required five attempts. Only the managers were sent to the USA for training, but the staff did receive an intensive three week in-store training.
  • Finally, the retailers at the mall entrance that leads to Nordstrom are not complementary. They include Fairweather, International Clothiers, and Watch It. OUCH!

In light of these bumps, shoppers noted that the store is a welcome addition to the Calgary retail scene and sure to be a success.

This store had just enough Calgary and Canadian charm. All in all, if not a home run then a triple. Watch out Holt Renfrew, HBC—and eventually Saks!

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Missing the Target

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As Canadian based retail advisors, we have been inundated by business writers on both sides of the Canadian/U.S. border asking about what is happening with Target’s foray into Canada and what they should do to fix their problems.

It is now over a year since the first stores opened and things should be getting better. To test this, we recently went to several of their newly built stores. On the Labor Day weekend, Target dropped a very attractive book in leading newspapers that features fashion, cosmetics, and home décor products with style and attractive prices. As well, on a weekly basis, they are very promotional for household basics in their flyers.

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Up to until now, as analysts of the retail sector, we have been very bullish on Targets ability to get on track in Canada. After our most recent visits, we question our assessment.

Our observations in Canada have been that the Target marketing machine is much better at generating demand for some of their cool products than their operations and merchandising groups are delivering on the promise. Our field trips confirm much of what we believe to be a significant challenge for Target’s new management.

Key observations were:

On the good side…

  • The two cosmetic lines featured in the fashion book were in stock and on end cappers which we suspect may be done by the supplier.

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  • There were plenty of staff in the store and the back store.
  • They had instructions to make customers laugh – at the cash desk.
  • Staff did know about the fashion book and said that the merchandise would be in soon – everyone was very helpful and pleasant.

On the not so good side…

  • There was very little recognition that by September most stores have much of their fall fashion story on the floor.
  • None of the fashion items for either men or women were in stock and featured on the main aisle.

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  • The store continues to have significant out of stock issues with empty shelves and fixtures.

  • Store shelves are not restocked, especially for promotional items, in spite of having plenty of staff on the floor and in the back store.
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Gain laundry detergent on sale for $9.99 as advertised in flyer

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Gain laundry detergent nearly out of stock

  • The in-store presentation is as bad or worse than Walmart – signs and merchandise on fixtures do not match with few coordinated packages on fixtures to encourage multiple purchases.
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Boots displayed in front of signage for “it” sandals

  • Store staff, when asked about promotional items that are not in stock on the floor, need to be prompted to offer a raincheck or check to see if they have replenishment stock in the back store. Some even advise us to visit a neighbouring store a few kilometers away in case this store may have the item in stock.
  • When store staff are convinced to check stock availability in the back store, the delay to get it into the hands of the waiting customer is extremely long.

Target Canada is missing on Retail 101 – have the merchandise in stock when the advertising drops. It begs that question – Who is responsible for in-store merchandising? Who is coordinating schedules for merchandise packages? How much longer will it take to get the supply chain fixed or at least functioning better? Does the senior management team spend enough time in the stores? Discipline comes from the top.

It is our contention that price is not Target’s biggest issue. The biggest challenge is to provide the fun merchandise at great prices that Canadian’s have seen in the U.S. and provide week to week value on consumables. The Target marketing machine keeps giving Canadians a glimpse of what could be, but how long will they disappoint at the store level before Canadians will just ignore the marketing.

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