A series looking at the unique challenges facing Canada's mid-market companies and how they innovate, stay competitive and grow. Today, with customer tastes ranging from traditional to exotic, this chocolate maker needs to balance innovation with staying true to its roots.
Small, neighbourhood chocolate stores have sprung up all over Vancouver, like mixed candy delicacies placed throughout the city.
Staff at Purdys Chocolatier, where the chocolate retail chain is headquartered, have counted more than 25 independent neighbourhood chocolate shops in Vancouver. There were only a handful less than a decade ago.
But Purdys executives don’t sound concerned. Those small stores aren’t really the competition, they say, even if Purdys brand chocolates are also handmade and geared to the same kind of customers as the local shops.
The firm’s competition is the larger “gifting” category. For the mid-sized, family-owned chain, with stores throughout British Columbia, Alberta and Ontario, the competition typically doesn’t have anything to do with chocolate; Pottery Barn, Restoration Hardware and wine stores pose the threat.
“That’s the first thing I would say always in terms of competition, it’s gifting,” said Peter Higgins, Purdys president and “chocolate scientist.”
With a background in food science, and having risen through the manufacturing side of the business to become president in 2012, Mr. Higgins stresses the continual need at Purdys to balance old favourites with new concoctions.
“Almost everybody’s a foodie today,” he said. “How do we listen to our customers to not only maintain those favourites and traditions, but create new traditions and new favourites? I think that’s a really big key to staying relevant, and allows for the ability to expand and continue to grow.”
So, while the company keeps its large-scale expansion in Ontario, in particular, it is doing so by selling the smallest delicacies, such as chocolate flavoured with Himalayan pink salt and Indonesian lampong pepper (which has a fruity taste), and another with raspberry balsamic vinegar.
“We’ve tried to put a more foodie trend on that,” Mr. Higgins said. Of the 100 to 150 recipes the company’s head chocolatier Gary Mitchell creates in a year, only six to eight go to market.
One advantage the company has in relation to other gift products, Purdys executives argue, is the strong connections customers have to what it makes.
“Luckily for us, chocolate is such an emotional product. … You really don’t have an emotional connection to a candle, probably,” said Kriston Dean, director of merchandising and marketing.
She says there are the associations surrounding chocolate – memories of a chocolate, or a person with whom we try it, or a tradition of giving chocolate on certain occasions. “That’s the real difference in terms of what we compete against with gifting.”
But it’s more complicated than that, one expert says. “I think that Purdys’ competition is a little bit broader than they have defined it,” said Debi Andrus, assistant professor with a specialty in marketing at the University of Calgary. She noted that even perennials, such as Nestle’s Black Magic box of assorted chocolates, bought in grocery stores, are also competition. Key then is for Purdys to be able to compete on multiple levels.
“It is a challenge for national companies, like Purdys, that come from a family tradition, to keep that family sense. And to try and make sure you can tell your story and differentiate yourself with all the choices people will be making at Christmas time,” Dr. Andrus said.
This means having to balance new tastes and old, being a generally mall-based retailer yet with a small-store feel.
And this is especially true because customers have different, and sometimes surprising, expectations.
Foodie culture may seem to indicate the need for chocolates flavoured with pinches of exotica. Yet the trend with younger buyers, the millennials, tends to be old fashioned, as the company found in recent market research. They like locally sourced ingredients whenever possible, but they want the traditions surrounding gift giving and flavours associated with tradition, more so than the boomers and Gen X’ers.
Add to that cultural distinctions, such as new lines of chocolates marketed to the Chinese New Year, the Persian New Year, Diwali and in the summer to Pride celebrations, and getting the chocolates out to all its retail outlets across Canada from the company’s factory in Vancouver, and it becomes a balancing act.
“Because we’re such an established long-term company,” – founder Richard Purdy opened his first shop on Robson Street in 1907 – “we have deep roots in Vancouver. And we have new roots in the GTA, in Toronto and Ontario. So we have a delicate balance between keeping our customers and giving them their favourites, but also showing them that we are evolving and remaining relevant,” Ms. Dean said.
One of the ways the company deals with its multiple challenges is making sure the sales staff seem expert. They are trained to be able to talk up a product almost as if they made it themselves. “The education component of our teams is paramount to our success,” Mr. Higgins said.
“The interesting thing about Purdys,” added Ms. Dean, “is that we may have many locations for you to shop at, but we’re still handmade. We’re still small batches. We’re not a big manufacturer. [The chocolates] have a really short shelf life. So we are sort of this hybrid, small-batch manufacturer into many locations, which is quite challenging.”