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November 6, 2007

The Dollar Dilemma: Simplifications, Omissions and Misinformation

In the case of the soaring Loonie and the resulting demand for lower prices, the consumer media has failed to ask the right questions. If you were to stop me in a mall or on the street and ask me if I'd like lower prices, the answer would be "Yes." Who, after all, wouldn't like lower prices. However, if you stop me on the street and ask me if I'd like lower prices at the expense of independent retailers going out of business; the country's manufacturing and exporting sectors being hit with more job losses; and a drop in the minimum wage so stores could eke out a small profit, I'd say "No." The entire Loonie Debate as presented in the media and by politicians is one of simplifications, omissions and misinformation.

One of the greatest omissions is the failure of the media to give a prominent voice to retailers and suppliers. They don't have any trouble running headlines comparing retailers to Scrooge. Rhoda Lipton of The Elora General Store pointed out that even great articles in the press arrive with negative headlines and photos. "Almost worse than political intervention is the negative press this event has brought upon us (anything to sell papers)," she wrote. In the interest of finding out where gift and tableware retailers and suppliers really stood in the Loonie Debate, I sent out a survey on The Dollar Dilemma to the magazine's email database. Here are the complete results:

1. Are you a retailer or supplier?

Retailer 62.3%

Supplier 37.7%

2. Have your customers asked you to reduce your prices to reflect the increase in the value of the Canadian dollar?

Yes 46.1%

No 53.9%

3. Have you reduced your prices in response to demand from consumers?

Yes 21.4%

No 78.6%

Comments
Download file

4. Have they singled out specific products when asking for a reduction?

No 69.4%
Yes 30.7%

Which products?
Download file

5. What are the benefits of a strong Canadian dollar for your business?

Comments
Download file

6. What are the pitfalls of a strong Canadian dollar for your business?

Comments
Download file

7. Should government intervene in any way in the market?

Yes 26.3%

No 73.7%

Comments
Download file

8. Other Comments
Download file

As you read through the comments, you'll see that more questions arise. For example: Should the government be reducing Federal import taxes and other duties that add to the costs of products in Canada? Should it be an issue in the next election, whenever that might be? Should manufacturers stop printing prices on products and let retailers set their own prices? Will the Loonie stay up? Or fall? Even analysts are divided on that one. Will Canadians decide it's more important to support Canadian businesses than to save a few bucks in Buffalo?

What do you think?

Posted by Lori Smith on November 6, 2007 7:07 PM | | Comments (0) | TrackBacks (0)

November 7, 2007

Retailers Rise Up

A recent email newsletter from the Retail Council of Canada carried an interesting item on how independent retailers in India are battling big retailers in their country. The article, "A Backlash for Big Retail in India" by Madhur Singh, appeared on time.com. In it Singh describes how "7,000 small shopkeepers, street vendors and traders [in Mumbai] shuttered their businesses... to march in protest against big national and international chain stores like Reliance Retail and Wal-Mart, who the shopowners say are threatening their livelihoods." Singh goes on to detail the pros and cons of the situation. But here are my questions for you: Would Canada's independent retailers benefit from having an association that would lobby for their rights? Are too many foreign-owned retailers coming into the Canadian marketplace? Would you march on your provincial legislature to save your business?

Posted by Lori Smith on November 7, 2007 10:17 PM | | Comments (0) | TrackBacks (0)

November 8, 2007

Dollar Soars, Exports and Manufacturing Decline: What Will Harper Do?

One evening a couple of weeks ago, Andrew Coyne (then a columnist at the National Post, now national editor of Maclean's) and other journalists from across the country appeared on The National with Peter Mansbridge. Among the topics this panel discussed was the raging furor over prices brought on by the rapidly rising value of the Loonie. At that time, Coyne said that he expected that the debate would soon shift to concern over the impact the dollar's increase in value was having on the manufacturing and export sectors. It's happened. The Globe and Mail's Rheal Seguin has just reported that Quebec premier Jean Charest is calling on Ottawa to hold a first minsters conference on the economy as soon as possible to deal with the dramatic rise of the Canadian dollar." In the article, Seguin reports that Charest's comments "followed a meeting Thursday between Prime Minsiter Stephen Harper and Ontario Premier Dalton McGuinty, who had publicly called on Mr. Harper to signal the Bank of Canada that interest rates must come down to make the rising Canadian dollar les attractive to foreign investors." Mr. McGuinty said his appeal "fell on mostly deaf ears." Why is that not a surprise?

Posted by Lori Smith on November 8, 2007 10:40 PM | | Comments (0) | TrackBacks (0)

November 9, 2007

How Green is Your Supply Chain?

In Wednesday's issue of The New York Times, Claudia H. Deutsch wrote about the fact that many companies, including retailers, are now "looking at their supply chain as the next frontier for combating climate change." ("For Suppliers, the Pressure Is On," November 7, 2007) She called it "Phase 3 of the greening of corporate America." Wisely this new interest in carbon footprint had been couched in the lingua franca of business, with the emphasis being on the efficiencies, particularly in terms of costs, of green operations.

Here in Canada, Danica has spearheaded a drive to a greener supply chain by switching to shipping exclusively with used boxes and challenging its industry competitors to follow its lead and employ more environmentally-conscious shipping practices. Have other companies in the industry taken up the challenge? Is it something that retailers are asking about?

Another piece of "green" news that landed on my desk today was the report in the Minneapolis-St. Paul Star Tribune ("Holiday Shoppers Hot for 'Green' Gifts" by Jackie Crosby) that "Minnesotans were embracing earth-friendly holiday giving." According to a survey conducted by Deloitte of Twin Cities-area shoppers, 20 percent "say they plan to purchase an eco-friendly product this holiday season." The survey's definition of eco-friendly included organic items, and goods that use less packaging, contain recycled materials, or incorporate energy conservation. Given the fact that the environment has been a top-of-mind concern for Canadians for the better part of the year, it will be interesting to see whether we have a green Christmas.

Posted by Lori Smith on November 9, 2007 6:59 PM | | Comments (0) | TrackBacks (0)

November 12, 2007

What Does the Soaring Loonie Really Mean? Does ANYONE Know?

Driving to work this morning, I listened to The Current on CBC Radio. The topic du jour was "one of the biggest news stories in recent memory"--the soaring Loonie. In the course of the hour, guest host Kevin Sylvester questioned guests from across the country on the impacts of the increase in value of our dollar. They covered a lot of territory, literally (what it means in Alberta and its effects on businesses in Quebec and Nova Scotia) and in terms of economics (how the dollar is tied to the price of oil; resource versus manufacturing sectors; the far-ranging impact of any further decline in the American dollar; etc.) Sylvester also talked to Michael Adams, author of Fire and Ice: The United States, Canada and the Myth of Converging Values and Unlikely Utopia: The Surprising Triumph of Canadian Pluralism, who addressed the issue of whether the rise of the Loonie hadn't provided Canada with a psychological boost--the chance to "kick a little sand in Uncle Sam's face for a change." In the course of the conversations, someone opined that the average person must be very confused about exactly what the soaring Loonie means. Sitting in rush hour traffic on the Gardiner, I thought, you've got that right.

The results of our Dollar Dilemma survey (see below) made one thing clear: consumers don't understand -- or don't care about -- the economics of the situation, and retailers and suppliers find this very frustrating. The media and politicians were both cited as having failed to explain the economic realities of the supply chain. They simply called for lower prices without bothering to speak about business principles such as purchasing power parity. With regard to this omission and in response to the question of whether government intervention was needed, Michael de la Place, St. Geneve, wrote the following:

"The market will do what it has to do. The strange thing is that purchasing power parity pegs the Canadian dollar at under $US 1.00. PPP, if you don't know, directly compares the value of work that it takes to purchase the same item in both countries. If government gets involved, it will be purely political, as when the Minister of Finance last week said he was going to meet with major retailers and tell them to lower their prices. My letter to the editor which was published in the Vancouver SUN read: 'So Finance Minister Jim Flaherty is instructing retailers to lower their prices because of the stronger Canadian dollar. Mr. Flaherty is apparently unaware that goods cost more in Canada because of much higher transportation costs due to Canada’s immense size, and much higher Federal Gas Taxes. Taxes that his department sets. He is apparently unaware that the Canadian government charges much higher duty rates than does the United States. Duty rates that his department sets. He is apparently unaware that minimum wages (set by government) are higher in many parts of Canada than in many parts of the USA He is apparently unaware that stores are selling goods that they bought months ago when the dollar was weaker. He is apparently unaware that the USA market is more than eleven times the size of the Canadian market. California by itself is bigger than Canada. He is apparently unaware that economies of scale are very powerful. Perhaps he missed that lecture in bookkeeper school. Given all these fundamentals, Mr. Flaherty seems to be catastrophically incompetent to be the minister in charge of finance."

I haven't noticed too many front page reports on those issues, and this whole thing makes me wonder if it's possible for a politician to get up and tell the truth: to admit that an issue is complex; that markets often take some time to work themselves out; and that through their policies and taxes, governments (federal, provincial, Liberal, Conservative, etc) are complicit in the situation. Is honesty too much to ask for?

Posted by Lori Smith on November 12, 2007 10:39 PM | | Comments (0) | TrackBacks (0)

November 13, 2007

Some Must-See TV: Wal*Mart Nation Premieres on CBC Newsworld

"Wal-Mart Nation," an hour-long documentary by filmmaker Andrew Munger, has its television premier tonight at 10:00 p.m. ET/PT on CBC Newsworld.

The documentary, which was shot over two and a half years, seeks to answer the question of "how the world's most successful, influential, and important corporation became the most hated." According to its press kit (easily available on the doc's web site, just click the link above), Wal-Mart Nation documents Munger's journey through the world of anti-Wal-Mart activism. "The journey took Munger and co-producer Gregory Bennett across North America, and across the Atlantic. From small town Arkansas to east end London, England, people have a real hate on for Wal-Mart. Even Miss America can't stand Wal-Mart. Munger wanted to find out why."

To achieve that end, Munger tells the stories of several anti-Wal-Mart activists. His "cast" includes: Carolyn Sapp, a former Miss America, who founded Wal-Mart Versus Women as a vehicle to publicize the largest civil rights class action suit in US history; Anna Liu, a 23-year old Chinese Canadian union activist determined to unionize Canadian Wal-Mart workers; Al Norman, the dean of anti-Wal-Mart activists; and environmentalist Ben Bennett, who played an integral part in Guelph, Ontario's 10-year battle to keep Wal-Mart out. Munger was also given unprecedented access to the Wal-Mart annual general meeting, and the brief clip I viewed (again on the Wal-Mart Nation web site) did include interviews with employees and pro-Wal-Mart activists.

I will readily admit an anti-Wal-Mart bias. It's the world's largest retailer, the second largest corporation and China's 7th largest trading partner. As such it's had a deleterious affect on independent retailing and the supply chain. In short, I think retail was better before Wal-Mart. I'll be watching tonight to see if there's anything in Wal-Mart Nation that might change my mind.

Posted by Lori Smith on November 13, 2007 4:32 PM | | Comments (0) | TrackBacks (0)

November 14, 2007

The Return of Small

This morning I received a release from the National Retail Federation, the U.S.'s retail trade association. The release presented the results of a five-year study conducted by market research firm SIRS, which showed that consumers are starting to favor smaller grocery stores over big boxes and supercenters. Here are a couple of quotes from the release:

According to the study, consumers now base their decisions on where to shop based on their emotional needs, which include the overall perception of the shopping experience like atmosphere, trust and customer service and whether or not a store is fun and enjoyable. In fact, 35 percent of consumers in 2007 stated they prefer an enjoyable experience over traditional, rational factors such as price and convenience, compared to 30 percent in 2002.

"The decline of the attractiveness of the big box stores, the aging of America, the growth in the importance of convenience, personalized service and the emotional consumer 'where to shop drivers' are causing a tipping point going in favor of smaller stores for the first time in over 20 years," said Chris Ohlinger, CEO of SIRS.

While the article does deal with grocery retailers, it will be interesting to see if this new consumer enthusiasm for smaller retail venues will spill over into other product categories. Canada has the oldest population in the Americas and one out of every seven Canadians is a senior citizen. Perhaps big retail and power centers are losing their appeal here as well. The SIRS research is profiled in the November issue of the NRF's STORES' magazine. I'm attaching a PDF of the article that accompanied the release. It's not about gifts and tablewares but it's still very interesting reading.

Download file

In addition, on last evening's edition of The Agenda, TVO's current affairs program, host Steve Paikin talked with Catherine Swift, the president of the Canadian Federation of Independent Business about what the high dollar means to the country's small businesses. Video of the show should be up on The Agenda's web site tomorrow (maybe later today) if you'd like to see the interview.

Posted by Lori Smith on November 14, 2007 12:19 PM | | Comments (0) | TrackBacks (0)

November 15, 2007

Celebrating Canada

I have just finished leafing through the most recent issue of Canadian House & Home. It is a celebration of Canada: the country's style, its style-makers, and the great products that are designed and made here. It was great to see a magazine devote an issue to recognizing the great talents and goods we have here.

Ironically, it comes at a time when a lot of the country's retailers haven't been feeling much love from Canadian consumers. And, in fact, many feel discouraged by the attitudes of shoppers here. Take this comment from our Dollar Dilemma survey:

"I think it's high time for Canadians to become smarter consumers, and quit selling out to the great USA. Do we really want to become another annex of the US? Our country has so much to offer, and we have always thrived on the entrepreneurial spirit here, which will fade quickly as long as we are willing to sell out to the cheapest bidder. I find it interesting that when the local clubs want support - either a cash donation, or a prize or gift certificate for their events -- they manage to find my shop, but when they want to spend their consumer dollar, the big boxes win. Frustrating."

It is frustrating. Here's the thing: a while ago, I was watching a documentary on China. In it a young woman explained that part of her motivation for working hard, at school and to build a business, was that it was not only good for her but good for China. I don't think I've ever heard anyone say anything like that here. It makes me wonder if for too many of us, myself included, Canada isn't simply a country of convenience: A safe place to build our lives without having to think about whether we're giving something back.

Posted by Lori Smith on November 15, 2007 5:40 PM | | Comments (0) | TrackBacks (0)

November 16, 2007

The Customer Service Paradox

In my editorial in the July/August 2008 issue, I wrote about attending a session called Customer Service & Sales: The "Closer" at the 2007 edition of STORES, the Retail Council of Canada's annual conference. The seminar was given by Kevin Graff, president of The Graff Retail Group. In my editorial, I forgot to include a telling anecdote from the seminar. At the beginning of his presentation, Graff asked the audience of retailers how many of them delivered great customer service? Hands shot up all over the room. Then he asked how many of them experienced good customer service in other stores? Only a few people raised their hands. The exercise got a good laugh from the audience. But the lesson is important: Is your customer service as great as you think it is?

Posted by Lori Smith on November 16, 2007 5:32 PM | | Comments (0) | TrackBacks (0)

November 19, 2007

Make the Most of Add-Ons

Today's edition of the National Retail Federation's e-newsletter carried an article on how little things--add-ons--can help retailers make big profits. The article, A Million Little Pieces" by Rachel Dodes, appeared in the Saturday edition of The Wall Street Journal. In it Dodes looks at how such pre-eminent retailers as Neiman Marcus, Victoria's Secret, Best Buy, FAO Schwarz, Urban Outfitters, Bloomingdale's, Coach and Saks Fifth Avenue are increasing their selections of add-on gift items and in doing so, upping the fun factor in their stores. Dodes writes:

Some retailers say they are emphasizing accessories to make the in-store experience more fun for shoppers at a time when online shopping and gift cards are on the rise.

Dodes also notes that "for many stores, accessories are a way to increase sales without taking a riskier route--discounting or holding sales before the holidays." She reports that at "Best Buy this year, the internal holiday mantra is 'Maximize the Gift'." You don't have to be a big retailer to do the same.

Posted by Lori Smith on November 19, 2007 2:28 PM | | Comments (0) | TrackBacks (0)

November 20, 2007

When Green Isn't Green

Several newscasts this morning reported on a new study released yesterday by TerraChoice Environmental Marketing. Called Six Sins of Greenwashing, the study found that of 1,018 common consumer products randomly surveyed, 99 percent were guilty of "greenwashing." Products tested ranged from "toothpaste to caulking to shampoo to printers."

Greenwashing is the term used to describe the practice of making false or misleading claims about a product's (or organization's, or action's) environmental worth. In the release TerraChoice's president, Scott McDougall, explained that the products surveyed made a total of 1,754 claims, and 99 percent committed at least one of the Six Sins of Greenwashing.

To help consumers, the company explains the Six Sins. However, they are also useful for retailers who are looking to up the green product quotient in their stores. TerraChoice's Six Sins of Greenwashing are:

1. Sin of the Hidden Trade-Off: e.g. "Energy-efficent" electronics that contain hazardous materials. Fifty-seven percent (998 products) of all environmental claims committed this Sin.

2. Sin of No Proof:: e.g. Shampoos claiming to be "certified organic," but with no verifiable certification. 454 products and 26 percent of environmental claims committed this Sin..

3. Sin of Vagueness: e.g. Products claiming to be 100 percent natural when many naturally-occuring substances are hazardous, like arsenic and formaldehyde. Seen in 196 products or 11 percent of environmental claims.

4. Sin of Irrelevance: e.g. Products claiming to be CFC-free, even though CFCs were banned 20 years ago. This Sin was seen in 78 products and 4 percent of environmental claims.

5. Sin of Fibbing: e.g. Products falsely claiming to be certified by an internationally recognized environmental standard like EcoLogo, Energy Star or Green Seal. Found in 10 products or less than 1 percent of environmental claims.

6. Sin of Lesser of Two Evils: e.g. Organic cigarettes or a hybrid-yet-efficient SUV. This occurred in 17 products or 1 percent of environmental claims.

Posted by Lori Smith on November 20, 2007 1:07 PM | | Comments (0) | TrackBacks (0)

November 23, 2007

In Defense of Retail

Reading the Business Section of The Toronto Star yesterday, I came across a short account of Retail Council of Canada president Diane Brisebois' appearance on Wednesday before the Commons finance committee.

The article ("Retail Council Head Defends Pricing"), which was written by Julie Beltrame for the Canadian Press, reported that Brisebois "defended retailers before the committee, saying they are doing all they can to lower prices and their their pricing structure is misunderstood." In addition, she pointed out that American manufacturers are not necessarily passing on the true value of the Canadian dollar to Canadian wholesalers and retailers because of the weakness of the U.S. dollar. Beltrame writes that Brisebois also "turned the table on the government, saying its tariff structure is a key reason prices in Canada are higher than in the United States."

Kudos to Brisebois for her defense of retail. Too bad the article appeared where few consumers would see it.

Posted by Lori Smith on November 23, 2007 4:15 PM | | Comments (0) | TrackBacks (0)

November 26, 2007

Cyber Shopping: The Next Generation

Today is Cyber Monday, "the official start of the online holiday shopping season." As a result, my inbox has been flooded with articles about online shopping from a variety of news sources. They haven't contained any surprises: Canadians are buying more online from U.S. retailers; eBay sales to Canadians are up; online sales are still a small percentage of overall retail sales (in Canada they account for 3 percent, says Jim Okamura, a senior partner in the Chicago office of the J.C. Williams Group, a Toronto-based retail consulting group, in an article in today's edition of The Toronto Star See "Virtual cross-border shopping" by Dana Flavelle); etc.

However, my interest in online shopping was piqued a few weeks ago by an article that appeared in the November 5th, 2007 edition of Canadian Business. It was called "As Seen on TV." In it, writer Zena Olijnyk reported on the growth of web sites that offer consumers the clothes, accessories, even household furnishings that appear on television shows such as Gossip Girl, Brothers & Sisters, The L Word, America's Next Top Model, Desperate Housewives, and more. She writes that these websites (.starbrand.tv, seenON.com and starstyle.com) "are developing a more subtle way for manufacturers and merchandisers to get their advertising message out." She also points out that there are "thousands upon thousands of products embedded in shows like Gossip Girl and America's Next Top Model." What really fascinated me was Olijnyk's description of two 15-year-old girls in Toronto watching an episode of Gossip Girl, using Facebook to discuss the fashions on the show, and then being able to click on a site and order the same ballet flats that one of the characters wore in that episode. Amazing. It's a perfect storm of celebrity obsession and consuming.

These kids are the computer generation. I have nieces and nephews who range in age from 17 to 6. The six-year-old's favorite subject in school is "computer." And for the others, communicating using MSN and Facebook and text messaging is as normal as breathing--and shopping.

Posted by Lori Smith on November 26, 2007 5:44 PM | | Comments (0) | TrackBacks (0)

November 27, 2007

8 to watch in '08

Today trendwatching.com released its list of the "8 trends to capitalize on in 2008." Based in Amsterdam, trendwatching.com watches consumers around the world and builds its forecasts on reports from 8,000+ spotters in 70 countries. Here are its 8 to watch in the coming year.

1. Status Spheres - "A variety of lifestyles, activities and persuasions, which can be mixed and matched by consumers looking for recognition from various crowds and scenes." Two examples: Online Sphere and Eco Sphere.
2. Premiumization of "everything and anything."
3. Snack Culture - This trend "embodies the phenomenon of products, services and experiences becoming more temporary and transient; products that are being deconstructed in easier to digest, easier to afford bits, making it possible to collect even more experiences…in an even shorter timeframe."
4. Online Oxygen- The company identifies this "connecting sphere" as a mega-trend. In 2008, the phone will introduce even more people to the online world.
5. Eco-Iconic "Eco-friendly goods and services sporting bold, iconic design and markers, that help their eco-conscious owners to visibly tout their eco-credentials to peers."
6. Brand Butlers- This trend embraces the idea of assisting your potential customers "in smart, relevant ways, making the most of your products and whatever it is your brand stands for."
7. MIY: Make It Yourself - The "participation sphere": digital creation - movies, blogs, music.
8. Crowd Mining - This is how the company sees "crowd-based business concepts evolving in 2008."

For complete explanations and examples of these trends visit www.trendwatching.com/briefing/. These trends may not apply to your business but it never hurts to look at consumers and the market in new ways.

Posted by Lori Smith on November 27, 2007 5:33 PM | | Comments (0) | TrackBacks (0)

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About November 2007

This page contains all entries posted to Editorial Blog in November 2007. They are listed from oldest to newest.

December 2007 is the next archive.

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