A look inside Le Chateau's new concept store in Carrefour, Laval.
In 2011, clothing retailer Le Château embarked on a major rebrand. The market that it had targeted for several years – late teens and early twenty-somethings – was becoming increasingly competitive, and so the 55-year-old company decided that a shift in focus was required.
While many foreign retailers have come to Canada over the last decade, Le Château felt there was still one market that remained underserved: the 30-plus crowd. These are people who used to shop at Le Château and now need higher-quality clothing for work and all other aspects of their lifestyle.
"We've gone from putting clothing in the closet of a 20- year-old to providing a modern, quality wardrobe that is perfectly
suitable for the lifestyle of the 30-plus customer," says Emilia Di Raddo, the Montreal-based company's president
If anyone knows what it takes to adapt to a constantly changing retail landscape, it's Le Château – the company has gone through several rebrands since it opened its doors in 1959, says Ms. Di Raddo.
Why so much change? Because evolution and innovation are critical for companies that want to stay ahead, she says. This is especially true for retail businesses, which are facing increased competition from American brands, plus high levels of Canadian household debt, with consumers remaining cautious on discretionary spending.
Ed Strapagiel, a Toronto-based retail industry consultant,
3 percent this year and 3.3 percent in 2015, down from its historical 5 percent growth.
"We're in an era where we have modest retail growth," he says. "It's not much more than the combination of inflation and population growth."
KNOW YOUR CUSTOMER
For companies that want to grow faster than the average business, sitting back and waiting for the market to change won't work these days.
Businesses need to offer new products and exclusive items, says Mr. Strapagiel, but the only way to do that is to truly know what the customer wants.
One way that companies are learning more about their shoppers is by analyzing data related to store purchases, age of buyers, when people shop and more.
Over the last several years, Le Château has been doing just that. It was able to see that people's purchasing habits were changing. It could also tell from its data that its customer base was shifting. In 2005, about 75 per cent of shoppers were under 25 years of age, while the rest were over 25. Five years later, those figures have reversed.
It was because of these numbers and what Le Château saw taking place in the retail industry overall that it decided to rebrand.
"We can look at real-time feedback and shift our investments quickly and accordingly, so it's easier to optimize the product lineup, says Ms. Di Raddo.
FLEXIBLE FINANCING
Many businesses fail to adapt to changing markets because innovation is often a costly endeavour.
However, there are ways to finance change without putting pressure on a company's operations, says Robert Guy, a Montreal-based senior vice-president with GE Capital.
Over the last two years, asset-based lending has grown in popularity, he says. A financing company, such as GE Capital, appraises the assets of a business and then issues a line of credit based on the value of those assets.
While this practice is used in every sector, asset-based lending tends to work especially well in the retail industry, which has a lot of inventory, says Mr. Guy.
When Le Château needed a larger line of credit to finance its rebrand, it turned to GE Capital, which has a compelling asset-based value proposition compared to what the market offers.
Based on its inventory, GE Capital was able to increase Le Château's operating line of credit by about $60-million.
KEEP THINGS FRESH
Having that kind of money to work with has allowed Le Château to refresh their stores and offer exclusive products – two things companies must do to remain competitive, says Mr. Guy.
In September 2014, the company launched an exclusive line of clothing and footwear curated by actress Lauren Holly. The "Lauren's Closet" line features chic daywear and trendy pieces for all segments of Le Château's new demographic.
The company has also created 15 more modern and upscale concept stores to appeal to a customer base that now includes the 30-plus crowd. It plans to roll out the new look to other locations across the country over the next three to five years.
By changing focus to cater to what Ms. Di Raddo thinks is an underserved market, Le Château will continue to thrive, even as the retail landscape gets more competitive, she says.
And if her current market gets crowded one day? Then the company will adapt once again.
"You have to keep changing," she says. "Who knows what the retail landscape will be like a few years from now? Retailers must continue adjusting if they want to stay in business."
This content was produced by The Globe and Mail's advertising department, in consultation with GE Capital. The Globe's editorial department was not involved in its creation.