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A crowd of shoppers snap up deep discounts at Target on the Thanksgiving Day holiday in Burbank, Calif. (JONATHAN ALCORN/REUTERS)
A crowd of shoppers snap up deep discounts at Target on the Thanksgiving Day holiday in Burbank, Calif. (JONATHAN ALCORN/REUTERS)


Ideas for how Canadian retailers can survive Add to ...

Walking into a men’s clothing store, one wouldn’t expect to find the company’s chief executive officer, tape measure in hand, serving customers on the sales floor. But at luxury chain Harry Rosen, it might happen.

“It’s critical to go out to stores, talk to customers, be on the floor,” says Larry Rosen, who took over the top job from his father and chain namesake, Harry, in 2000.

Mr. Rosen is steadfast in his emphasis on customer service in an era in which online sales, discount retailers and seasonal events such as Black Friday have put an unprecedented emphasis on low prices. “I’m from the old school,” he says. “I believe people want knowledgeable staff who are prepared to work hard to make sure they buy the right thing, and get the right level of service.”

The customer service approach has put the Harry Rosen chain firmly on the Canadian retail map, but it is not a quick fix. “Customer service is absolutely important – there’s no debate about that – but it’s a strategy,” says Brent Barr, an instructor at the Ted Rogers School of Retail Management at Ryerson University in Toronto. “Larry Rosen decided they were going to make customer service a pinnacle of what they do.”

Not everybody shops at a high-end retailer such as Harry Rosen, and the customer service experience will never attract the hard-core bargain seekers who are driven by “the thrill of the hunt,” as Prof. Barr puts it, and go to extremes such as visiting U.S. malls.

“The U.S. is known for very deep discounts, which has a huge impact on margins, whereas in Canada, we’re a little more margin sensitive,” says Farah Bundeali, a chartered accountant at KPMG. While Canadian retailers were spooked by a possible shopper exodus over the border on Black Friday, the deep-discount day after U.S. Thanksgiving, those same shoppers provide no loyalty and are gone as soon as they find a better deal.

Customer service, on the other hand, is highly valued and provides a stable foundation for building a business. “Loyalty and the in-store experience is still very important to Canadians,” says Alan Voels, retail practice leader at KPMG. “When asked in surveys, 70 to 75 per cent of Canadians say they still enjoy their retail shopping experience. That is why it’s so important that Canadian retailers focus on the experience, understanding the customer’s needs.”

Atlanta-based Home Depot returned to this approach after following a price-driven model last decade that created disappointing results. It has spent the past six years restoring its former reputation for customer service, particularly among serious do-it-yourselfers and small contractors.

“This emotional attachment with our contractors is what we want to continue to build on for the next two to three years,” says Jamal Hamad, the Toronto-based director of commercial and tool rental sales and operations. “We know that there’s a huge opportunity for us to grow there.”

Kelly Askew, a partner at Accenture, adds Canadian retailers should develop the home-field advantages they have over U.S. retailers. “The stores in Canada better understand the Canadian consumer,” he says. “They understand the purchase drivers of Canadians, but a U.S. retailer cannot physically engage with them.[Canadian retailers] need to make that physical interaction as positive as they can. That’s their trump card.”

As well, trends in retail could spell new opportunities for Canadian retailers to distinguish themselves. “We are moving away from being product-centric in retail to really being customer-centric,” Mr. Voels says. “It’s really about how our products fit in the lifestyles of the consumer.”

Several retail chains have already capitalized on this trend. In addition to selling running apparel, Edmonton-based Running Room holds clinics, prints a newsletter and has an active community of followers, for example.

Despite creating a new form of competition in online shopping, the Internet can be a powerful tool to help retailers build relationships with their target markets. Running Room has a strong social media presence, and retailers such as Ren’s Pets Depot, which owns a chain of four pet shops in Ontario, have active Facebook pages, online newsletters and blogs. Mr. Voels believes technology will have even more impact over the next five years. “The retailer will leverage it to be more efficient,” he says, “and consumers will use it to be better armed with information.”

While Larry Rosen acknowledges the potential of the Web and maintains an active website for his chain, he says the virtual presence augments rather than replaces customer service.

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