Retail Insider the magazine Issue four

ISSUE FOUR

Data privacy in the digital age Understanding evolving and disparate data privacy laws critical to ensuring the integrity and success of retailers in an age of digitization >> page 12

International Retailer Entrants

The State of the Canadian Consumer

adidas: Setting the Stage for Future Success

An exclusive list of international brands entering Canada in 2022 pg. 18

Analyzing current consumer sentiment both globally and here at home pg. 26

Renowned footwear brand introducing unique new store concepts pg. 30

UPFRONT // PUBLISHER’S DESK

Retail Insider the magazine celebrating first full year of production Happy New Year, and welcome to the fourth issue of Retail Insider the magazine - the final installment of the publication that rounds out our first full year of production. It’s been an exciting venture to this point and one that I hope has helped to add positively to the retail industry narrative and find possible solutions to challenges faced by the industry.

In this jam-packed issue, you’ll learn about such topics as loss prevention and data privacy, insights into the current state of the Canadian consumer, ways to communicate with them in the digital age, and much more. And, we’d like to thank adidas for working with us on a brand profile about its expanding innovative retail operations in Canada.

In this special issue, I have also authored a study on the international brands that entered the Canadian market over the course of 2022, comparing the numbers to previous years. As the founder of Retail Insider, I’ve been tracking which brands came into Canada by opening stores since 2014. Without giving away the entire content of the study in the pages that follow, I can say that Canada continues to remain a target for international brands looking to open stores, and we expect to continue to see this momentum into 2023. Brands opening stores is also an indication of the continued importance of direct-to-consumer brick-and-mortar retail to the industry.

the entire Retail Insider team who have worked so hard to put together this amazing issue. And, special thanks also goes out to the extensive contribution and assistance of Dustin Fuhs, who is Editor-in-Chief of news publication Retail Insider.

As we head deeper into 2023, the team at Retail Insider the magazine is open to work with new expert contributors to help bolster content within future issues of the publication, as well as continuing to develop partnerships with new sponsors and advertisers as we grow this arm of the business.

Sincerely,

Craig Patterson Publisher craig@retail-insider.com

I would like to thank the contributors for this issue, as well as Editor-in-Chief, Sean Tarry, and

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IN THIS ISSUE //

Issue four 12

12 // Data Privacy Data privacy in the digital age In the throes of digitization, much about the world around us has changed, not least of which the ways we communicate and share information with one another. For retailers, this new environment is presenting challenges concerning data governance and a host of disparate international laws to consider.

18 // Industry Analysis International retailers

that entered the Canadian market in 2022

An array of international brands offering a breadth of products and experiences continue to enter the country, further bolstering Canada’s diverse retail landscape and contributing toward the vibrant and ever-growing market.

18 30 // Brand Profile adidas: Setting the stage for

future success

The renowned footwear retailer is steadily introducing dynamic new store concepts across the country with a focus on enhancing the experience that it offers while continuing to strengthen customer relationships.

36 // Retail Operations Direct-to-consumer

26 // The Canadian Consumer The current state

of the Canadian consumer

brands intensifying focus on the customer by opening physical retail locations

Increased levels of anxiety among Canadian consumers concerning their current and future financial standing is significantly impacting sentiment and retailer engagement.

As the cost to acquire customers via digital means continues to increase, many direct-toconsumer brands are evolving their strategies to include brick-and-mortar locations.

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MASTHEAD //

Departments 03

Publisher’s Desk

06

Insider Insights

PUBLISHER Craig Patterson

08

Main Street Matters

ASSOCIATE PUBLISHER Dustin Fuhs

10

The Digital Curve

41

Advertisers and Sponsors

EDITOR-IN-CHIEF Sean Tarry GRAPHIC DESIGN GBC Design CONTRIBUTORS Andrea Bourgeois, Shelby Hautala, David Nagy, Craig Patterson, Ritchie Po, Mario Toneguzzi HEAD OF SALES AND SPONSORSHIP Darryl Julott darryl@retail-insider.com _________________________________ _______ EDITORIAL OFFICE 100 Bloor Street West, Toronto, ON, M5S 3L3 Retail Insider the magazine is published four times each year by Retail Insider Media Ltd. therimagazine.com

30 therimagazine.com | 5

UPFRONT // INSIDER INSIGHTS

Connected TV advertising According to a recent report developed by Insider Intelligence titled Canada Trends to Watch for 2023, the time of the connected TV (CTV) has arrived. Its an audience within the country that's been steadily growing over recent years, representing significant opportunities for businesses to capitalize on the promise of ad-supported video-on-demand (AVOD). Internet streaming providers YouTube and Netflix lead the way with respect to AVOD as platforms, with many others making the option available to advertisers.

$1 BILLION

4.1 MILLION

Projected CTV ad spend in Canada throughout 2023.

Estimated number of Canadian households with CTVs.

25%

Estimated percentage of total ad spend represented by CTV in 2023.

+5-7% Food price increases The recently published Canada's Food Price Report 2023 - developed cooperatively by Dalhousie University, the University of British Columbia, University of Guelph and the University of Saskatchewan - reveals that sustained food price increases will continue to squeeze the wallet of the average Canadian family.

Among other things, the report predicts that the average family in the country will incur an annual food expenditure of up to $16,288.41, a significant increase of up to $1065.60 over last year.

Confidence impacting behaviour Deloitte's Global State of the Consumer Tracker indicates that waning confidence among Canadian consumers is contributing to a shift toward cost-saving shopping measures.

44%

of survey respondents say that they dedicate a lot of time toward planning their grocery shopping trips.

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30%

say that they regularly shop at several stores in order to find deals and maximize their budgets.

Enhancing the customer experience Responses to a recent survey conducted by McKinsey regarding the state of customer care reveal that organizations everywhere are beginning to place increasing emphasis on improving the service that they provide customers.

#1

Respondents reveal that improving the customer experience is their organizations’ number one priority.

34%

are attempting to improve their organizational culture in order to attract top talent.

Privacy policies The Office of the Privacy Commissioner of Canada's Survey of Canadian businesses on privacy-related issues reveals that there is still work to be done in order for Canadian businesses to safeguard their customers' data privacy.

59%

of Canadian businesses reported to have a privacy policy in place.

84% of companies with a privacy policy that explains in plain language the purpose for which their company collects, uses, and discloses customers’ personal information.

70%

of respondents working for companies that have a privacy policy said their company makes its privacy information easily accessible to customers.

Retail digitization 61% According to a report developed and released

by Adyen, digital transformation within Canada represents a trillion dollar opportunity for the retail industry, and a chance to engage the integrated consumer like never before.

of Canadian consumers believe retailers used technology well to make products available during the pandemic.

36%

prefer retailers who use previous shopping behaviour to provide personalized suggestions and a tailored experience.

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UPFRONT // MAIN STREET MATTERS

Understanding evolving consumer sentiment and behaviour Courage, creativity and persistence will be critical in ensuring continued growth and success for small businesses in 2023 // By Andreea Bourgeois, Director of Economics, Canadian Federation of Independent Business

With the new year now in full swing, many businesses are planning for 2023. Retailers are already looking into ordering stock for the late spring and summer months. They have many hardto-answer questions. Will consumer behaviour involve more window shopping than in-store spending due to high inflation? Will show-rooming continue? Will store hours remain limited due to staff shortages?

The changes in consumer behaviour since the pandemic have resulted in a significant impact on retail optimism which is, even now, very low over the short-term and lagging behind all sectors. CFIB’s November Business Barometer® results indicated that the three-month retail optimism was at 36.6 per cent, which was just about the same level during January 2022 when many restrictions were still in place.

All businesses are affected by the high inflation, higher input costs, increased fuel and energy costs and higher wages. While some businesses can claim input tax credits or pass through these additional expenses, those in consumer-facing industries, such as retail, have little room left but to increase prices. Higher prices, in turn, can deter some customers, which mean lower revenues.

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We’ve been hearing from our members about just how tough it is for them to do business. It’s been a “good year but I’m very concerned about sales for the next year,” one business owner commented in a recent CFIB survey.

“Everything is going up, but if we raise prices, we get less business. If we don’t raise prices, we don’t know if we will make it,” said another.

Insufficient domestic demand While most businesses indicate that the main inhibitor preventing sales and production is the shortage of skilled workers, retailers report weak domestic demand as the top limitation.

When the economy was halted due to the pandemic, the domestic demand has almost vanished for many products but food and other necessities. The lifting of restrictions overheated the economy, like lifting a dam too fast which can create the exact flooding it meant to prevent.

When the Bank of Canada started to increase interest rates in early 2022 to tame inflation, the demand started to slow down, but at various

paces. The interest rate hikes that followed has significantly tampered the demand for many products. CFIB’s November Business Barometer® shows that insufficient domestic demand has been limiting business growth for a quarter (25%) of small businesses across Canada, but it has impacted retailers more as indicated by 40 per cent of them.

creates revenues for businesses in their community and creates job opportunities close to home.

Keeping clientele and attracting new clients It’s time they reinvent products and services to adapt to consumer needs. The creativity shown during the pandemic with curbside pick-up and online auctions will also serve them well now.

With rising costs across the board, the purchasing power of the Canadian consumer has stalled.

Heading into the shopping holiday season, the retail sector had one of the lowest optimism levels over the short- and long-term. While the former might be in part due to seasonality as business owners project themselves past the holiday season, the latter is a level not seen for that sector since the 2020 recession.

In addition, retailers should re-evaluate which payment methods they accept from customers.

While some were already offering incentives for cash payments, from now on, they can also charge an extra fee on certain credit card transactions to help offset their credit card processing fees. Learn more at cfib.ca/surcharging.

With a new year upon us, we hope retail owners will continue to show courage to try new things, creativity to expand their markets, and persistence in keeping their stores open.

What’s next?

As we head deeper into 2023, what can Canadian consumers do to satisfy their needs but also support small Canadian retailers?

------Andreea Bourgeois is the Director of Economics at the Canadian Federation of Independent Business (CFIB), Canada’s largest association of small and medium-sized businesses with 95,000 members across every industry and region, 22,000 of whom are operating in retail.

They should look for local first. For products that one can find made or sold locally, they can skip the online order and purchase it in-person. The consumer gains by seeing the product directly and avoiding shipping delays. Buying local also Sector Comparison Short-term Index m/m % var

Long-term Index

m/m % var S

S 69.2 Info., recr.

68.9

-2.3 In

54.3

Health

56.7

-1.8 H

Prof. serv.

53.4

Prof. serv.

59.2

2.9 P

Transp.

53.0

Transp.

57.4

-0.8 T

Pers. serv.

51.5

Pers. serv.

59.4

-0.8 P

Wholes.

47.7

Wholes.

56.6

0.6 W

Manuf.

47.4

Manuf.

52.7

-0.2 M

Hospit.

43.2

Hospit.

47.6

-4.1 H

Constr.

41.6

Constr.

44.8

-3.2 C

Nat res.

41.4

Nat res.

45.0

-2.8 N

Agric.

37.0

Agric.

42.6

-1.3 A

Retail

36.5

Retail

43.6

-0.1 R

35.6 Fin., insur.

42.0

Info., recr.

0.5 I

Health

0.6 H 2.8 P

0.1 T -3.7 P

-4.8 W 0.6 M -2.9 H -5.1 C

-6.4 N -4.9 A -3.4 R

Fin., insur.

-7.5 F

80 © Canadian Federation of Independent Business

60

40

20

0

0

-2.8 F 20

40

60

80 November 2022

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UPFRONT // THE DIGITAL CURVE

Digital communications to ensure customer success Leveraging digital tools to emulate the hospitality industry and execute incredible customer service experiences // By David Nagy, Founder, eCommerce Canada

With complete transparency, I’m no expert in the field of customer experience or hospitality. But, I’m plugged in enough to know there’s no substitute for a high quality, memorable experience.

In retail, how we define quality is invariably a complex combination of price, selection and efficiency - all important elements of the customer journey - because it’s not often readily apparent what an individual “values” the most. This becomes even more complicated when we try to deliver brand experiences with consistency across many selling channels.

Customer experience fundamentals

of that. But, before any business can get into the tools at their disposal, it’s important to start by building a foundation for customer success.

Hospitality tips When I’m working on this type of project, I find it helps to be myopic and personify the issue.

What would I want my experience to be? On the subject of customer success, I find this so much harder to visualize, so I’m taking cues from the industry where I’ve had many of my best customer experiences - the hospitality industry.

Consistently exceeding customer expectations when there are so many touchpoints to consider is as much of an art as it is a science. But we’re also at risk of forgetting the fundamentals of customer experience today due to our reliance on digital tools. As a small example, we have the technology to send an email with your first name in the subject line, but we don’t acknowledge that this is the third time you’ve visited the store this week to look at that blouse.

During a recent trip to Chicago, I had several such experiences. Chicago is a real hospitality town - with outstanding dining, hotels and venues to support. Since the topic of customer success has been a focus for me of late, I was very conscious of my own experiences and the subtleties of customer experience that hospitality experts use to thrill their guests.

I’m currently going through my own process to design a roadmap for exceptional customer experience with my company and it’s undeniable that digital communications tools will be a huge part

The first thing that strikes me - and the lowest hanging fruit - is acknowledgement. When we check in at a hotel or arrive at a restaurant reservation, we expect to be greeted but, this happens

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Acknowledgement

all too seldom in retail. The basic consideration of recognizing your presence and (likely) interest in spending money at the establishment is easy to achieve, but rarely executed. When was the last time a website welcomed you and made you feel comfortable, or asked you if you’ve visited there before, or if there’s anything special that needs to be looked after on this visit? Even in luxury stores, we’ve taken a fast-food approach, jamming a menu and our biggest discounts in front of customers before asking them how their day is.

Establishing trust Digital tools give us the ability to know if someone has visited our website or storefront before.

When properly integrated, CRM systems give us immediate access to customer attributes like names, addresses and the products they prefer.

The data is at our fingertips, but we’ve become accustomed to dropping pleasantries before trust is established and uniqueness is acknowledged.

Once you’re seated, almost any restaurant will provide you with a server to help you understand the menu and take care of any preferences or allergies you may have. We introduce them by name and, in a few short minutes, establish rapport with someone, reducing friction and decision fatigue. It’s the equivalent of a guide or a concierge and something that a clerk, helpdesk, interactive FAQ or Live Chat agent could be armed and ready to support, backed by all of your history and personal preferences we’ve gathered in our corporate databases.

But alas, customer success agents are quickly becoming Chatbots - the hospitality industry’s equivalent of couch-surfing websites with selfcheck-in. You browse, you research, you read reviews and ultimately, you do your own buying and hope for the best. Heck, you even have to carry your own bags. It can sure save money, but it’s never going to feel like a concierge experience.

What about when it’s time to settle the bill?

There are ample digital tools to help us improve

customer experience. There are tools to offer us dessert (upsells), tools to help us share our experience (social sharing and email), tools to help us after we leave the restaurant (post purchase email series) and even tools to make sure we come back again (loyalty). There are so many opportunities to use digital tools to maximize the end-to-end customer experience, but so little thoughtfulness is put in to crafting it.

I think it may be time to adapt the “slow food movement” to retail and take an approach that involves mindfulness and purpose when we think about customer success.

Mindfulness and purpose Give the hospitality industry some consideration when you think about your customers’ journey and see if it matches your own expectations.

I think it may be time to adapt the “slow food movement” to retail and take an approach that involves mindfulness and purpose when we think about customer success. We want the customer to feel welcome and accepted. But we shouldn’t want them to over order. We should hope they spend more time with us, rather than converting in under three minutes and racing out the door.

We should use data to understand what makes each of them unique and how their different preferences drive their decisions. All of the tools to do this have been created. Now we just need to start using them. therimagazine.com | 11

FEATURE // DATA PRIVACY

Data privacy in the digital age In the throes of digitization, much about the world around us has changed, not least of which the ways we communicate and share information.

For retailers, this new environment is presenting challenges concerning data governance and a host of disparate laws to consider // By Ritchie Po

image courtesy of Andrey Toikachev

12 | Retail Insider the magazine | Issue four

I

n August 2022, the French cosmetics retailer Sephora was levied a $1.2 million penalty by the Attorney General of California. This penalty is the first, and therefore the most high-profile to date, under the California Consumer Protection Act (CCPA). The penalty is actually part of a settlement that Sephora made with the Attorney General’s office that included corrective steps Sephora must complete in order to comply with the CCPA. The penalty was levied because Sephora failed to disclose to its customers that they were selling consumers’ personal information to third parties, did not have a process that would have allowed consumers to opt out of the sale of their personal information, and failed to cure these discrepancies within the 30-day period permitted by CCPA to cure any defects with respect to privacy protection.

It should be noted that the term “sale” is unique in CCPA (and its successor, the California Privacy Rights Act, or CPRA) in that it does not actually denote a financial transaction for the disclosure of personal data. Rather, a “sale” under the California law is any disclosure of personal information to a third party as long as there is value. This includes but is not limited to any personal data that Sephora disclosed to service providers, web analytics, third-party cookies, or any other processing of personal information.

Retailers face considerable challenges in mitigating loss prevention today, but data privacy protection is not always considered in that conversation. The Sephora penalty is actually a prime example where prevention would have mitigated large losses to the corporation, because it crystalizes how data privacy protection is not simply an academic due diligence exercise. In Sephora’s case, the financial losses include not only the penalty, but also the cost of retaining consultants and legal counsel to represent them before the Attorney General, hours spent by technicians to retroactively operationalize legislative requirements, public embarrassment and a drop in the

public perception of the brand, and credit rating monitoring for affected customers, all of which is not just absorbed by Sephora, but also by their parent company, LVMH. These challenges also apply to retailers of all sizes, not just the larger global brands. At the time of this writing, no class action or similar lawsuits claiming invasion of privacy have been filed against Sephora, a fate which befell Tim Horton’s when it was found that their app was over-collecting personal information scraped from customer mobile devices.

So how does a company operating in multiple jurisdictions handle the ever-growing complexities of cross-border data privacy challenges in the digital age?

Retailer responsibility Generally, under all Canadian laws, retailers collecting customer personal data are responsible for it as the custodian. This is binding even (and especially) when a retailer discloses the data to their vendors. This principle can be found at all levels of Canadian privacy laws, such as the Federal PIPEDA, British Columbia’s PIPA, and Quebec’s Law 25, amongst others. The responsibility falls upon the custodian to be accountable for the personal data that even their service providers collect and process on their behalf. For instance, a large retailer using a credit card service provider is responsible for the personal data the third-party vendor processes to complete sales transactions.

The challenge of custodianship is also present in other jurisdictions. For instance, Europe’s General Data Protection Regulation (GDPR) assigns different responsibilities to entities depending upon their role as either a “controller” or as a “processor” of personal data. An entity is deemed to be a controller if they determine the means of personal data processing, whereas a processor takes instruction from a controller in their capacity as a service provider or third-party vendor. To complicate things further, GDPR states that an entity can be both a controller and a processor if they have streamlined all their therimagazine.com | 13

operations. In addition, two separate companies can be deemed joint controllers. The obligation to process personal data is not to be taken lightly, as fines under EU’s GDPR can reach up to €25 million in the event of non-compliance or a data breach. The largest fine ever levied under GDPR occurred in 2021, when the Luxembourgian data privacy regulator fined Amazon Europe a staggering €746,000,000 penalty for non-compliance with GDPR. Due diligence The Canadian Federal Privacy Commissioner has a guide called “Getting Accountability Right with a Privacy Management Program”, which outlines the privacy policies and procedures an entity must have in order to ensure ongoing privacy protection. This guide applies to the private sector and includes steps such as appointing a privacy officer to manage the program, establishing privacy controls, assessing and revising those controls on an ongoing basis, and being able to demonstrate compliance to the regulator and to the public. However, one cannot simply parrot or cut-and-paste principles from a guidance document and pass it off as their own without backing it up with a complete suite of documents.

A complete privacy due diligence program includes extrernal and internal policies that outline the way a retailer intends to collect, use, disclose and store customer personal data.

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Governance A complete privacy due diligence program includes external and internal policies that outline the way a retailer intends to collect, use, disclose, and store customer personal data. It is not enough to have a policy on a website, because the retailer must also train their staff on how to handle personal information. Additionally, a privacy program must also include ongoing training materials, a dedicated privacy breach response protocol (as a supplement to an IT security incident response protocol), privacy impact assessments completed for high-risk data processing activities, and consent forms that must be customized whenever data processing involving personal information requires consent under applicable law.

If a retailer does not have enough work to justify a full-time employee as a privacy officer, the role may be combined with someone internally (such as a CIO, CISO, IT manager, or legal counsel), or it may be outsourced. European law firms and consultancies do robust business with Data Protection Officers (DPO) as outsourced services. And, retailers in the Americas have begun retaining similar DPOs as external consultants.

Legal While a DPO or privacy officer has custody of the privacy management program, their work should be done in concert with the buy-in and support of legal counsel, as privacy practices may have to be supported and confirmed in legal documents. For instance, when retaining an external service provider to whom personal data is being disclosed, a DPO would recommend that dedicated privacy protection clauses be included in the master service agreement. If a DPO is not a lawyer, then they must rely upon legal counsel to draft the relevant clauses and ensure they can be enforceable upon the vendor. European retailers would use the Standard Contractual Clauses that are required under the EU’s General Data Protection Regulation, but it is up to legal counsel to determine which set of SCCs apply, and advise

Photo by Suebsiri

the retailer on the legal risks of using these contracts.

Additionally, privacy protection clauses may also require vendors to not only mitigate privacy breaches that occur on their end while supporting a retailer, but also to report and respond to the retailer of those issues and support them when (not if) a privacy breach occurs. The advantage of having legal work with a retailer’s DPO is to enforce these requirements in the event that a vendor refuses to cooperate in the wake of a data breach.

Furthermore, DPOs can work with legal counsel to determine the risk of storing personal data out-of-country. For instance, EU-based retailers may not be concerned with storing their customer data in Canada, as our privacy protection laws are deemed by the European Commission to be adequate, but they may take issue with storing such information in the United States due to the

latter’s sweeping government abilities concerning surveillance and means by which it can compel the production of personal information under both the Patriot Act and the Freedom Act. Even choosing an American-based cloud service provider that hosts the cloud in Canada may pose issues, if that hosting provider is compelled to produce personal data to government upon production of a court order or search warrant.

Legal counsel can also ensure that retailers have sufficient cyber-liability coverage, as this type of insurance is often not covered under a commercial general liability insurance policy.

Operational challenges Once a privacy program is in place, with a complete document suite, and it’s been reviewed with your privacy officer and legal counsel, you have to put everything into operations. What are some of the challenges of operationalizing abstract due diligence and legal requirements?

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Surveillance

Fulfilment

If your brick-and-mortar store has cameras for security reasons, you must account for the data collected through surveillance. While safety and security of staff and customers is paramount, a retailer is still collecting personal information through the form of images, movement, and likeness of everyone in and within the immediate vicinity of the store. However, a retailer remains the custodian of the personal data and must ensure that the collection, use, disclosure, and storage of that footage aligns with applicable privacy laws. Retailers often outsource this to an external security company to handle, and need to confirm that the service provider does not use the footage for purposes unrelated to security surveillance.

If your warehouse is fulfilling the order and it is not in the store, you must ensure that those staffers have the personal data required to package the goods. However, fulfilment does not need the entire customer profile or data in order to do so.

Fulfilment would need the order number, details of the merchandise, and possibly the name of the customer. However, ask yourself if fulfilment needs to see the payment information or contact information for that customer. This may be easier to separate for a larger retailer, but it is not always possible for a small business if the salesclerk takes the order, fulfils it, and also delivers the merchandise, as there is no division of labour.

This means developing a deep understanding of the reasons staff at the security firm need to access the footage and how long that footage is kept. Retailers must also advise customers if they are being filmed, which is often conveyed in signs that say “Smile! You’re on camera!”

It is not enough to simply post a privacy policy. As retailers become increasingly global, they must answer the question: which law and which privacy policy applies to what we do?

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Payment processing Your payment processor collects customer credit card information, but you will need to ensure that the personal data collected by that processor is absolutely required, and that you are apprised of the processor’s retention schedule. However, complicating the issue of storage is the fact that privacy laws often require the personal data to be destroyed one year after its use has been exhausted, but payment card industry (PCI) standards require a longer retention period. Furthermore, your privacy officer must align and reconcile these differing retention schedules. Since payment card processors are frequent targets for hackers, any disclosure or selling of customer personal data must be absolutely necessary.

Delivery When using private courier (as opposed to the postal service) or their own in-house couriers, retailers must ensure that they provide sufficient information to the delivery company to effect delivery. While this includes name, address, and contact information to reach the recipient, retailers must also be mindful of any other personal data the courier may be collecting. This may include video recordings of couriers as they drive,

reports of issues, and proof of identification upon delivery. In the Philippines, for instance, it is legal and even necessary for couriers to take photographs of the person(s) receiving a package to confirm acceptance and delivery, to combat otherwise rampant fraud and theft of packages by fraudsters. Big box retailers often have cameras pointed at drivers, thereby recording not just their movements and activities, but they may also capture background footage of others who happen to be in the vicinity. Constant surveillance permitted in one jurisdiction may not be permitted in another, and the same privacy practices cannot be applied or legally used in a uniform manner.

Website issues It is not enough to simply post a privacy policy.

As retailers become increasingly global, they must answer the question: which law and which privacy policy applies to what we do? The answer may be found by applying the following steps.

Jurisdiction-specific notices California requires “Do Not Sell My Personal Information” notices. Europe’s GDPR requires that data subjects (customers’) rights be posted.

Canadian Federal and Provincial laws differ on these requirements, and some look like CCPA and CPRA, while others look like GDPR. Therefore, the challenge for retailers is often to have policies that meet the legal requirements for the jurisdiction where they operate, or where their customers are located. For instance, GDPR applies if an entity is doing “large scale” data processing, which will depend upon customer base size, and CCPA/CPRA apply if even one customer is based in California, thereby triggering the legal requirement to post the correct notices.

Cookie Notices Although Canadian privacy laws do not require retailers to post cookie notices, an increasingly

Geographical data privacy considerations: 1. Where is your vendor located?

2. What are the laws in that country with respect to processing personal data?

3. E.g. EU laws (GDPR) are actually stricter than Canadian or U.S. laws. Are you prepared to comply with GDPR in addition to Canadian legislation?

4. Does the government in that jurisdiction have sweeping powers to order the production of data?

large number of Canadian entities are proactively conforming to more stringent legal requirements for cookie notices. These include recitations on the types of cookies being collected from a customer’s device. Additionally, a retailer must also account for the types of personal data that is being disclosed to the analytics or hosting site to ensure that they are not over-collecting personal information. These might include IP addresses, browser sessions, web beacons, and other metadata when a consumer visits a retailer’s online shop.

------Kobalt.io is an IT security management services provider comprised of an experienced team of cybersecurity professionals and developers who bring the monitoring capabilities of enterprise-class security teams to smaller organizations, helping them identify challenges in current approaches and seek out innovative ways to address them. for more information about the ways in which Kobalt.io can help your business, contact Ritchie Po, Privacy Lead, at ritchie.po@ kobalt.io therimagazine.com | 17

FEATURE // INDUSTRY ANALYSIS

Image courtesy of Psycho Bunny

Image courtesy of Emporio Armani

International retailers that entered Canada in 2022 An array of brands offering a breadth of products and experiences continue to enter the country, further bolstering Canada’s diverse retail landscape >> By Craig Patterson

Image courtesy of Thule

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R

etail Insider has been tracking international brands entering the Canadian market by opening stores since 2014. The list for 2022 is a robust one, all things considered, given that Canada is coming out of a pandemic situation which significantly disrupted retail leasing. Things are coming back on track with us counting 21 international brands that had opened first-to-market standalone stores in Canada in 2022.

The numbers for 2022 were the same as in 2021 when Retail Insider tallied 21 international brands that opened first-to-market stores in the country.

That was up significantly from 2020 when there were only 13 new entrants, the lowest number since Retail Insider began keeping track about eight years ago.

In the years that Retail Insider published the international entrants lists prior to 2020, the number of first-to-market retailers had ranged from 20 to over 50 international retailers that entered the country over a 12-month period. In 2019, for instance, we reported that 30 retailers had entered the country by opening stores, which was about the same number as in 2018. In 2017, a record-breaking 50+ international brands entered the Canadian market by opening stores (and quite a few have since closed).

In 2016, Retail Insider wrote a special edition piece for Retail Council of Canada’s publication Canadian Retailer, where we counted 21 international retailers that had come to Canada by opening stores that year. In 2015 we reported that 28 retailers had opened their first freestanding locations in Canada that year. And, in 2014, we counted 20 international brands that entered Canada by opening stores.

In 2022, the Toronto market was once again home to the overwhelming majority of new entrants with 14 of 21 first-to-Canada retailers launching in the Greater Toronto Area (GTA). In terms of location nodes, Toronto’s Yorkdale Shopping Centre saw a total of seven new first-to-Canada retailers, Toronto’s Bloor-Yorkville saw three firsts in terms of retailer openings last year, while CF Toronto Eaton Centre saw two. Yorkdale has consistently launched

more first-to-Canada retail locations than anywhere else, and in 2022, about 33 per cent of all of the new openings for Canada were in that one mall.

Our breakdown of geography in terms of the first-to-Canada retailers is as follows: Toronto/GTA: 13 Vancouver: 4 Edmonton: 2 Montreal: 1 St. Catharines: 1 The following is Retail Insider’s count of the international brands that entered Canada in 2022 by opening standalone stores. The list is chronological from the earliest to the most recent openings.

Thule (Park Royal, West Vancouver, B.C.): Swedish designer/manufacturer of roof racks/carriers, Thule, opened its first retail location in Canada at the Park Royal Shopping Centre in West Vancouver in January of 2022. The 2,000 square foot space gives visitors the opportunity to explore the entire breadth of Thule’s active lifestyle portfolio and aims to build awareness of newer categories. Retail Insider reported that Vancouver-based retailer Rack Attack was opening the store in a retail space with an expected December opening date extended into January.

Maison Kitsuné (Gastown, Vancouver, B.C.): Paris-based fashion and music brand Maison Kitsuné opened its first Canadian location in January of 2022 at 157-159 Water Street in Vancouver’s Gastown area. Included is a fashion store featuring a range of branded clothing for men and women as well as a separate adjacent café space branded Café Kitsuné. It’s not known if more locations will open in Canada at this time.

Carlo’s Bakery (Port Credit, Mississauga, ON): U.S.-based Carlo’s Bakery, made popular by the TLC hit TV show ‘Cake Boss’, opened its first standalone Canadian location in the Port Credit

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area of Mississauga in January 2022. It joins numerous Carlo’s Bakery vending machines that can be found in shopping centres in Canada. A second standalone bakery recently opened on Bellair Street in Toronto’s Yorkville area, and more are expected to come.

Marc Jacobs (Yorkdale Shopping Centre, Toronto, ON): New York City-based fashion brand Marc Jacobs opened its first Canadian store in early 2022 at Toronto’s Yorkdale Shopping Centre. A second opened at Square One in Mississauga, and more are expected according to staff in the store.

The new Marc Jacobs stores carry some women’s ready-to-wear as well as bags and accessories. Marc Jacobs was founded by the designer of the same name in 1984 and the brand is now owned by LVMH. Ebeano Supermarket (St. Catharines, ON): St. Catharines, Ontario became home to the first Canadian location for Nigeria-based grocery chain Prince Ebeano Supermarket in early 2022. The chain carries a range of food, spices, sauces, fruits and vegetable from Asia, Europe, Africa and South America. It’s not known yet if more locations will open in Canada.

Benkei Hime (CF Toronto Eaton Centre, Toronto, ON): The unique Asian Benkei Hime fashion and bubble tea concept store opened its first North American location in March of 2022 at CF Toronto Eaton Centre in Toronto. A second location opened in the summer at CF Markville Mall in Markham, and the retailer is looking at the Ottawa and Vancouver markets to open more locations.

The popular youth-culture concept features trendy clothes and Instagram-worthy beverages as well as a range of unique items in an environment that is colourful and kitchy.

GANNI (Yorkdale Shopping Centre, Toronto, ON): Danish women’s fashion brand GANNI opened its first Canadian storefront at Toronto’s Yorkdale Shopping Centre in April of 2022, after launching a wholesale presence at Hudson’s Bay and Holt 20 | Retail Insider the magazine | Issue four

Renfrew. The standalone Yorkdale GANNI storefront features a range of women’s clothing, bags and accessories in a pastel-coloured retail space in Yorkdale’s newest luxury wing. More stores are expected, and Jeff Berkowitz of Aurora Realty Consultants is handling leasing negotiations on behalf of the retailer.

Lafayette 148 (Bloor-Yorkville, Toronto, ON): Upscale women’s fashion brand Lafayette 148 opened its first standalone Canadian storefront at 130 Bloor Street West in Toronto in June of 2022.

Prior to the opening, the brand was carried only at Nordstrom and Saks Fifth Avenue. Prices can be steep for the brand’s quality clothing, footwear, and bags. It’s not known whether or not more stores will open in Canada as Lafayette 148 declined requests for interviews.

Vilebrequin (Westmount/Montreal, QC): French luxury swimwear brand Vilebrequin opened its first standalone Canadian storefront in May of 2022 at 4912 Sherbrooke Street West in the affluent Westmount area of Montreal. The store carries a range of swim styles for men, women, boys and girls as well as ready-to-wear, accessories and beach day essentials. The Westmount storefront is owned by franchisee Cheryl Glense, who has been a staple in Montreal and Westmount fashion for decades.

No other Canadian locations are said to be planned at this time.

Allbirds (Kitsilano, Vancouver, B.C.): Sustainability-focused San Francisco-based footwear brand Allbirds opened its first Canadian storefront at 2256 West 4th Avenue in Vancouver’s Kitsilano area in June of 2022, followed by the opening of a location in August at Toronto’s Yorkdale Shopping Centre. Included within the store is a range of Allbirds’ sustainably-sourced footwear, including original styles and the company’s newest design, the Tree Flyer. Apparel, socks and underwear are also available in the store. Co-founder Tim Brown said in an interview in the summer that he’s not sure whether or not Allbirds will open more Canadian stores.

Image courtesy of Allbirds

Emporio Armani (Yorkdale Shopping Centre, Toronto, ON): Italian luxury brand Giorgio Armani’s sub-brand, Emporio Armani, opened its first Canadian storefront in July of 2022 at Toronto’s Yorkdale Shopping Centre. The impressive retail space houses a collection of men’s and women’s lines, including Emporio Armani ready-to-wear, accessories, and small leather goods as well as watches, jewellery and sunglasses. Ceilings in the store are clad with wood, and wooden panels continue onto the walls and alternate with wallpaper-covered sections that provide a backdrop for the display of the products within the space. It’s not yet known whether or not more Emporio Armani stores will open in Canada — and technically this isn’t the first time that the brand has had stores here. Holt Renfrew operated standalone stores for Emporio Armani on Bloor Street in Toronto in the 1990s and into the early 2000s.

IT’SUGAR (West Edmonton Mall, Edmonton, AB): U.S.-based candy concept IT’SUGAR opened its first Canadian location in August of 2022 at West Edmonton Mall in Edmonton. The flashy and kitchy retail space houses an expansive assortment of candies. IT’SUGAR has become one of the largest retailers of its kind in the world, with its website stating that it’s “known for their absurd sugar innovations that celebrate lighthearted rebellion”. CEO and founder Jeff Rubin says that several more Canadian locations will be opening in major markets across the country with Toronto being an important target for multiple store locations.

Psycho Bunny (CF Toronto Eaton Centre, Toronto, ON): Men’s fashion brand Psycho Bunny opened its first Canadian store in August of 2022 at CF Toronto Eaton Centre in downtown Toronto. That was followed by full-priced stores at CF Carrefour

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Image courtesy of Fendi

Laval near Montreal and a flagship at Toronto’s Yorkdale Shopping Centre, as well as an outlet store at Toronto Premium Outlets. The edgy fashion brand was founded in 2005 in New York City.

Interestingly, the brand’s headquarters was recently relocated to Montreal, essentially making it a Canadian brand even though it was founded in the U.S.. Jeff Berkowitz of Aurora Realty Consultants is handling leasing negotiations for Psycho Bunny in Canada.

Offline by Aerie (West Edmonton Mall, Edmonton, AB): U.S.-based fashion brand Aerie launched its Offline by Aerie concept stores in Canada in September 2022 with a first location at West Edmonton Mall in Edmonton. A second location opened shortly thereafter at Toronto’s Yorkdale Shopping Centre with a number more expected to open in the near future. The brand focuses on athleisure and comfort clothing and will compete with retailers already in the market - Offline launched 22 | Retail Insider the magazine | Issue four

in the US in 2020. The female-focused brand sells on a range of products including leggings, sports bras, tops, workout dresses, skirts, hats, bags, water bottles, headbands, socks and some footwear.

Fabrics used in designs are said to be soft as well as sustainable.

Fendi (Yorkdale Shopping Centre, Toronto, ON): Italian luxury brand Fendi opened its first standalone Canadian storefront in September of 2022 at Toronto’s Yorkdale Shopping Centre. Fendi already had a retail presence in Canada through concessions at Holt Renfrew including boutique spaces in Vancouver, Toronto and Montreal. The standalone Yorkdale Fendi is said to be a two-year pop-up that will eventually relocate to a new space in the mall, and other standalone Canadian locations are expected given that Fendi is no longer permitted to sell fur items in its Holt Renfrew concessions.

DWSV Realty negotiated the Yorkdale lease on behalf of Fendi.

Alo Yoga (Bloor-Yorkville, Toronto, ON): U.S.based athleisure brand Alo Yoga opened its first Canadian location at 60 Bloor Street West in Toronto’s Bloor-Yorkville area in September of 2022. A second location opened in the winter at Toronto’s Yorkdale Shopping Centre, and another is expected for West Edmonton Mall in Edmonton in 2023. Stores feature a range of branded products including clothing and accessories for men and women. Prices are similar and even a bit higher than competitor Lululemon.

ACNE Studios (Yorkdale Shopping Centre, Toronto, ON): Edgy Swedish fashion brand ACNE Studios opened its first Canadian storefront in the fall of 2022 at Toronto’s Yorkdale Shopping Centre.

The unique retail space, featuring a pastel interior, unusual furniture and a short wide entryway, carries a range of pricey fashions for both women and men as well as accessories and footwear. The store is located in the mall’s newest luxury wing.

Hilary Kellar Parsons of Aurora Realty Consultants negotiated the lease deal for the Yorkdale location on behalf of ACNE Studios.

Diptique (Yorkdale Shopping Centre, Toronto, ON): Upscale French fragrance and candle brand Diptique opened its first standalone Canadian storefront in September 2022 at Toronto’s Yorkdale Shopping Centre. The boutique is in the mall’s new luxury wing and carries a range of pricey fragrances, candles, home items, and skincare. More Canadian locations are expected with Jeff Berkowitz of Aurora Realty Consultants handling leasing on behalf of the retailer.

Atelier Munro (Bloor-Yorkville, Toronto, ON): Amsterdam-based custom suit brand Atelier Munro opened its first standalone Canadian location at 19 Hazelton Avenue in Toronto in October of 2022.

The impressive three-level space features a range of custom apparel options for men as well as some ready-to-wear, footwear, and also included is an entertainment component on the third floor. More locations will be opening in Canada including Calgary and Vancouver and likely other markets

Images courtesy of (top to bottom): Atelier Munro, VinFast, and Diptique.

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including Winnipeg, Ottawa and Montreal where Harry Rosen currently has storers - prior to stepping out on its own, Atelier Munro entered Canada through Harry Rosen, recently exiting to do its own thing.

2022 at the McArthurGlen Outlets beside Vancouver International Airport. Despite his death in 2019, the Karl Lagerfeld brand lives on with a fashion line that includes the recently opened storefront.

VinFast (Yorkdale Shopping Centre, Toronto, ON): Vietnamese electric automaker VinFast opened its first retail showroom in Canada at Toronto’s Yorkdale Shopping Centre in November. Several opened soon after as VinFast attempts to rapidly gain market share by reaching consumers in physical spaces. VinFast’s electric SUVs are on display in the new spaces, including the VF 8 and VF 9. VinFast says that its showrooms are a way to connect with consumers while building confidence in the brand. Tailored customer service and education are part of the experience. About 40 Canadian showrooms are expected as part of the rapid expansion.

Aside from the retailers mentioned, Retail Insider also reported on several first-to-Canada food and beverage concepts that entered Canada in 2022.

Karl Lagerfeld (McArthurGlen Outlets, Vancouver, B.C.): A brand with an iconic name opened a standalone Canadian storefront in December of

Retail Insider will continue to track international retailers entering Canada in 2023. It’s not yet known what’s expected in terms of overall numbers as we exit the pandemic and potentially into a recession. And while we’re not yet sure what 2023 will bring, we’re expecting a flurry of leasing activity and announcements in 2024 with the completion of the Oakridge Centre redevelopment in Vancouver and Royalmount in Montreal. In the coming years, both may see first-to-Canada retailers open stores there, mirroring the importance of Yorkdale as a launch destination over the past decade.

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FEATURE // THE CANADIAN CONSUMER

The state of the Canadian consumer

Increased anxiety concerning current and future financial standing impacting Canadian consumer sentiment // By Sean Tarry

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T

Image courtesy of rattanakun

here’s no denying the fact that circumstances over the past few years have culminated in a bit of a helter skelter period for the retail industry, posing impacts that have been felt across entire organizations, inhibiting retailers’ ability to effectively source and transport product, limiting the experiences they offer their customers, and blighting operational efficiencies at just about all points in between. From supply chain disruptions to a distinct shortage of required talent, there is a range of concerns that retailers need to address. However, what’s perhaps more worrisome with respect to the future health and success of retail operations, and the continued growth of the country’s retail industry, is the current state of the Canadian consumer and the trajectory of their collective sentiment.

And, according to Ryan Robinson, Consumer Research Leader at Deloitte, it’s a trajectory that’s being driven predominantly by anxiety among consumers related to financial uncertainty.

“It’s an understatement to suggest that Canadian consumers are worried about their forward financial capacity,” he asserts. “Looking back two-anda-half years ago, the primary drivers of anxiety among consumers across the country were health therimagazine.com | 27

concerns related to the pandemic and the financial fallout that would occur. Until recently, these two concerns had been trending fairly closely in the Canadian context. Today, it seems concerns around the pandemic are on the decline. However, those related to the consumers’ financial capacity on a go forward basis have not been alleviated, threatening the extent to which they can stay engaged with the Canadian retail market.”

Behavioural shifts Robinson goes on to explain that there are a number of pressures being placed on today’s consumer as a result of the current pervading inflationary period, pointing to data generated within Deloitte’s State of the Consumer Tracker as evidence. According to the Tracker, the average Canadian is currently spending significantly more on housing costs on a year-over-year basis. This, in combination with inflation that’s comprehensive in its scope, says Robinson, is causing consumers across the country to rethink and reassess their purchasing decisions, resulting in ramifications for some categories and verticals within the industry.

“When you consider the fact that wage growth has not kept pace with the inflationary market that we

“...the inflationary pressures being felt

by Canadians are so broad-based, impacting just about every aspect of their lives, the results on sentiment are profound."

- Ryan Robinson, Deloitte

28 | Retail Insider the magazine | Issue four

find ourselves in, as well as the fact that the inflationary pressures being felt by Canadians are so broad-based, impacting just about every aspect of their lives, the results on sentiment are profound,” he says. “It’s starting to result in some tough decisions being made by consumers that are showing up in shifts in their spending and the share of wallet that different aspects of their life represent. And, because the percentage that housing represents continues to increase, consumers are starting to compensate by pulling back on spending related to things like electronics, home furnishings and clothing.”

Waning confidence Data provided by the Deloitte State of the Consumer Tracker are generated through monthly global surveys that began back in April 2020, with the intention of presenting a current, consistent and comprehensive pulse of consumers all over the world, while also developing a better understanding of the ways in which people everywhere are navigating through the challenges they face.

Current Canadian highlights indicate that over half (52%) of Canadians are concerned about the amount of money they have saved. And, 4 in 10 believe their financial situation has deteriorated in the last year, with only 31 per cent expecting their financial situations to improve over the course of the next 12 months. This sentiment cascades into planned discretionary spending, which amounts to just 21 per cent for the average Canadian.

Despite this data, which reflects a significant and worrying amount of concern related to the strength of the overall economy, sentiment among Canadians ranks somewhere near the middle of the pack of countries surveyed worldwide. However, Robinson is quick to recognize regional extenuating circumstances elsewhere that are perhaps masking just how dire sentiment among Canadian consumers actually is.

“If you look at the data around global consumer sentiment, consumers in Canada are found right in

the middle of the survey responses with respect to nearly every question asked about current and future spending,” he explains. “And it might not seem so bad if it weren’t for the fact that this data is all relative. Countries like Germany, Poland, Belgium, Netherlands, Denmark and others have all experienced ranging impacts connected to the war in the Ukraine, skewing their responses when it comes to their current levels of anxiety and optimism concerning their financial future. As a result of some of these recent developments overseas, Canada’s positioning probably appears better than it should.”

customer-base to keep their brand and services top-of-mind. And, as part of this communication, they’ve got to be providing the right information to their consumers, emphasizing a value proposition while helping them plan and make better decisions.

It’s an incredibly challenging time when it comes to capturing and retaining the loyalty of today’s consumer. Providing meaningful customer experiences and engagement that makes the lives of consumers easier and more convenient could prove to go a long way toward building greater trust and confidence in the brand.”

Focus on meaningful engagement

Informing the future

Deloitte’s Consumer Tracker data also reveals a handful of interconnected and equally impactful trends with respect to spending intentions. As a result of recent pressures, anxiety among consumers in Canada related to their own personal finances continues to rise and are reflected in some of their top concerns, which include their ability to make upcoming payments (18%) as well as the amount of credit card debt that they’re currently carrying (22%). They are concerns that are resulting in a significant curtailing of the movement of big-ticket items, with 48 per cent of Canadian consumers planning to delay large purchases. All told, says Robinson, the data suggests that a continued softening of the industry is expected over the near-term, adding that it’s a situation that creates a landscape that’s extremely restrictive for retailers that are looking to stand out among their competitors.

The critical nature of the data that’s generated through the Deloitte State of the Consumer Tracker global surveys is not lost on Robinson. He refers to it as “an incredibly important tool” that retailers and others can leverage in order to gain a more holistic and accurate perspective of current sentiment, as well as to help inform prognostications concerning the future and aid in strategy and planning. And, although current highlights from the data don’t form a very flattering illustration of the current retail market and the consumer sentiment surrounding it, Deloitte’s Robinson says that it arms retailers with a much better understanding of the dynamic trends occurring in the consumer landscape.

“Under these current conditions, it’s becoming increasingly difficult, particularly for mass-market retailers, to differentiate themselves based on factors other than price,” he says. “As a result, it’s becoming challenging for them to deepen relationships with their customers and build value into their products and services in order to keep consumers engaged with their brands. What retailers need to do going forward in order to overcome these challenges is make sure that they take every available opportunity to communicate with their

“There are some things going forward that we can’t ignore, including macroeconomic pressures that are impacting consumer spending behaviour.

However, what this data helps us identify earlier are some of the impacts that have still yet to be determined or felt within the market. Factors like the successive increases to interest rates that have recently taken place may bear a significant influence on spending going forward, further impacting the consumers’ share of wallet and how they allocate their money going forward. The sooner retailers can account for these trends and potential impacts, the better prepared they can be to address the challenges and realize opportunities for further growth and success.” therimagazine.com | 29

FEATURE // BRAND PROFILE

adidas: setting the future success

Renowned footwe with focus on custo

30 | Retail Insider the magazine | Issue four

T

he volatility and topsy-turvy world that the retail landscape has experienced over the course of the past two years or so, since the onset of the global pandemic, has forced retailers to adapt, to pivot, in order to meet the challenges of the current environment. Those that have remained stagnant have watched the retail world fly by them.

Those that have embraced change have thrived and set the stage for future success. Retailer adidas has been one of those successful companies that has made changes to the way it does its business as well as introducing a number of different concepts for the marketplace.

All imagery courtesy of adidas

stage for

ear retailer introducing dynamic store concepts omer experience // By Mario Toneguzzi

“Honestly, over the last few years, we have seen a significant change in consumer behaviour,” says Lesley Hawkins, VP Retail at adidas. “Today’s consumer has so much choice. They’ve got their smartphone in their pocket or in their hand at all times. They have the means to buy any product from anywhere at any time, literally in seconds.

We’ve seen a shift in consumer demand. They’re demanding convenience and speed. They expect brands to entertain and entice them to buy products and they honestly want to feel emotionally connected, linked to the brand.”

Hawkins says adidas sees its retail stores as the physical and emotional connection between its consumers and the brand where it offers differentiated products, services and experiences within the consumer’s chosen channel.

“What we do with our retail concepts is continually reshape and redefine them in order to provide differentiated experiences across the different channels,” she says. “So as the consumers change so do our retail concepts.”

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Halo store Currently, adidas has 33 locations in Canada. The brand’s flagship is the Halo store, which is the store at the CF Toronto Eaton Centre. It is what inspires the retailer’s consumers with the best-in-class brand standards with a premium offer.

like they’re part of the family. A lot of the work that the store team is doing right now at Toronto Eaton Centre is about engaging with our community.

Currently in Canada we have the one Halo store and we are looking to expand into the Vancouver market in the coming years, with more details to come as we finalize that space.”

“Our Halo store is a destination for brand launches, all of our immersive campaigns, events and consumer creation spaces,” explains Hawkins. “In terms of services, our Halo stores offer premium, personalized service with an opportunity for the consumer to bring their own creativity to light with our product. We have digital innovations and state-of-the-art tech which really helps enhance a seamless consumer experience. The consumer has access to our entire Canadian range through a real omnichannel lens so they can be in-store and browsing online to buy complementary product.”

The Halo store has a premium merchandising assortment with retail exclusive products as well as hyped collaborations and early access to new collections.

The Toronto store is a nearly 13,000-square-foot space and follows adidas’ opening of its first Halo store in New York City on 5th Avenue in 2016. The brand has subsequently opened many Halo stores in key cities around the world, including Dubai and London most recently.

“There’s a real focus on community within our Halo store,” she says. “So, it’s a destination for our consumers to engage with the brand and really feel

“The concept will bring the outdoors inside into a retail community environment with new things, state-of-the-art materials and technology,” says Hawkins. “There will be a digital footwear wall that provides the consumer with an immersive experience through dynamic product presentation and unique product testing environments. There’s also a Discovery Zone where they can learn about all of our sustainability efforts to end plastic waste. There is a flexible space for community events, a try-on and test space that will also be available for speaker opportunities within those community areas. In addition, unlike anything you would have seen in retail to this point, our real outdoor canopy brings nature indoors with live plants and a living wall.”

“There’s a real focus on community within our Halo store. So, it’s a destination for our consumers to engage with the brand and really feel like they’re part of the family."

- Lesley Hawkins, adidas

32 | Retail Insider the magazine | Issue four

Terrex outdoor store Another concept that adidas has launched is the first branded Terrex outdoor store in North America in the Kitsilano area of Vancouver. It’s a concept designed to connect the consumer to the outdoors with a focus on sustainability, membership and the ultimate outdoor experience. The first Terrex store was expected to open before the end of the year.

Globally, the first Terrex branded store opened in Munich, Germany in November 2021. Terrex is adidas’ outdoor brand with an extensive product assortment of footwear, apparel, and accessories.

The location chosen on West 4th in Kitsilano is a

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very busy destination for the young urban outdoor enthusiast and will be just under 2,300 square feet.

The Collection Another new retail concept is The Collection which is for adidas Originals - a space that curates moments and captures culture, contrasting the past stories with a future vision, just as the Original brand does. It will provide access to hype collaborations, the latest Originals Collection, and serve as a destination for that urban lifestyle consumer.

The first store will open in Canada next year at massive mixed-use development, The Well, in downtown Toronto. Bordering Front, Spadina and Wellington, The Well is an extension of the urban vibrancy of King West. It is on 7.8 acres and will include 320,000 square feet of total retail space, 1.2 million square feet of office space, 1.5 million square feet of new residential space and 1,700 condominiums and purpose-built rental suites. The store will be 5,800 square feet and is located in the highest profile, most visible space of the project, at the main entrance of The Well and surrounded on three sides by windows.

The Pulse “Another exciting new concept that we will be introducing is for our value seeking consumer and will be introduced in 2023 at some existing stores called The Pulse,” says Hawkins. “Like the heartbeat of the sporting community, that’s what The Pulse is. It’s going to offer an elevated experience with commercial products along with a real focus on activation and promotions. It will be our premium, factory outlet concept that we’ll roll out. It’s just been introduced in Dallas earlier this year and will be coming to Canada in the Spring of 2023.”

Partnership development adidas has also worked out a partnership to bring its products into dedicated spaces within several Indigo stores in Canada as well as online. The kids’ 34 | Retail Insider the magazine | Issue four

LEGO collection has been installed in some locations. In addition, adidas joins Indigo’s community of wellness brands, offering products from the adidas women’s studio and loungewear collections.

Canadians can expect to see everything from yoga pants to after-work-out essentials available both in store and at Indigo.ca.

“Indigo believes in a healthy lifestyle which ties perfectly into our brand’,” says Hawkins. “It’s a great opportunity for partners that are working towards helping the health-conscious consumer.”

She adds that one of the things that retailers have learned over the last few years is the importance of adapting and changing with the times.

“The ability for business to adapt has become more and more important,” she explains. “The idea of having a retail space that adapts to the changing consumer, easily adjusting not only their assortments but the look and feel of their stores, drove a lot of our decisions. Communities have changed over the last few years. Communities are changing constantly. So, the more nimble we can be in making those adjustments to better align with the consumer and the neighbourhoods in which we are located, the better we can serve the consumer.”

In a previous interview with Retail Insider, Alim Dhanji, President of adidas Canada said the brand is excited about the opportunity in Canada for adidas to continue to grow.

“Consumers are demanding a truly omnichannel experience. We will be expanding our retail footprint over the next four years. What we want to do is ensure that we’re in the right place at the right time for the right consumer. The consumer is looking for an omnichannel experience where it’s seamless for them to navigate online but also have an experience touch point within our stores and offer that seamless ability to order and pick up or return in store. We’re certainly, with the expansion of our fleet, going to be able to deliver more of that omnichannel capability.”

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FEATURE // RETAIL OPERATIONS

Image courtesy of geopaul

Direct-to-consumer brands intensifying focus on the customer by opening physical retail locations As the cost to acquire customers via digital means continues to increase, many direct-to-consumer brands are evolving their strategies to include brick-and-mortar locations // By Shelby Hautala

A

s the costs associated with the acquisition of customers in the digital world continue to rise, direct to consumer brands are increasingly moving towards the opening of physical locations or the expansion of wholesale options in order to continue growing. It’s a trend that Liza Amlani, Principal and Founder of Retail Strategy Group, says is set to ramp up over the course of the next 12 months or so, adding that it’s one being driven in large part by an intensified focus on the customer.

36 | Retail Insider the magazine | Issue four

“It costs a lot more to acquire a customer solely through digital channels,” she asserts. “But if you open either a wholesale or physical retail store, then those costs of engagement and acquisition decrease. What we have also learned is that brickand-mortar, physical retail stores, is what consumers are gravitating towards even though they may be digital first. We are seeing a rise in physical store sales, which is another reason direct-to-consumer brands are venturing into physical retail stores.”

Amlani says that marketers have been talking about the transition and costs related to customer acquisition for the last few years in an effort to combat the oft prohibitive cost of digital marketing. And, she adds, only recently have many within the industry started to recognize the additional benefits that physical retail locations present.

“There is a higher rate of product return when operating a digital store versus physical retail locations, particularly for fashion and apparel brands,” she says. “When consumers purchase through digital channels, they often buy multiple sizes of the same item or outfit and then return the sizes that don’t fit, significantly impacting the rate of return and the cost to the retailer or brand. The same problem doesn’t exist within the physical retail environment, costing less to service the customer with the opportunity to engage with them directly.”

Challenges DTC brands face Amlani says one challenge for direct-to-consumer brands is the fact that it’s hard to open their own physical retail store if they do not have the fundamentals in place, investing in talent to help them properly and efficiently serve the customer and provide them with a memorable experience. In addition, opening a physical retail location costs owners a lot more money up front, preventing some from taking the leap.

“The upfront costs associated with opening a physical retail location will lead many digitally-native brands to approach multi-brand retailers to help carry and distribute their assortment. If they venture into the world of wholesale, they are able to expand their physical presence through the development of strategic partnerships.”

Ensuring the right location In addition, Amlani says that if a brand is looking to open up their own physical retail store, they’ve got to ensure that they secure the right location, considering new operational elements such as

monthly rent, lease agreements, and the hiring of brand ambassadors. And, if the brand is looking at expanding within wholesale, they’ll need to find the right partnership that will benefit their organization and customer.

“It’s really important that if a digital brand is looking to open up a physical store, they need to really have a good handle on attracting the right brand ambassadors to the store and understand the location that will work best,” she says. “If they are looking to partner with a multi-brand retailer, they need to have a deep understanding of where its products will be positioned in the physical store in order to maximize the potential exposure that it will receive.”

The future for DTC retailers As a significant number of direct-to-consumer brands continue with a ‘wait and see’ approach to the future of their businesses, Amlani says that some are beginning to leverage partner online marketplaces as a testing ground for their brands and the products they offer.

“If they [DTC brands] venture into the world of wholesale, they are able to expand their physical presence through the development of strategic partnerships" - Liza Amlani, Retail Strategy Group

therimagazine.com | 37

Image courtesy of Oez

“Before bringing a product into a physical store, some brands are testing their products first... So, we’ll start to see more and more brands introducing products into these marketplaces in order to gauge the reaction of the consumer."

- Liza Amlani

38 | Retail Insider the magazine | Issue four

“Before bringing a product into a physical store, some brands are testing their products first,” she says. “The Bay has a marketplace and so, too, does Walmart and Nordstrom. So. we’ll start to see more and more brands introducing products into these marketplaces in order to gauge the reaction of the consumer. And, we may even see more pop-up locations as well as another means by which consumer sentiment toward the brand can be evaluated without the need to open a permanent physical location.”

In the end. Amlani says that direct-to-consumer brands that were digital first hold an advantage over traditional retail stores in that they already possess e-commerce experience and an understanding of the digital experience that their customers desire. And, as the industry continues to advance into a post-pandemic environment, their development and enhancement of in-store retail service will only serve to elevate the shopping journey, creating a more seamless and integrated experience between channels.

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The future of payments The integrated retail shopping experience The evolution of the Canadian shopping centre

Distributing March 2023

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