Retail 2.0

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Summary

The face of retail in Canada is changing. Canadian consumers are ranked as some of the most digitally savvy in the western world, while Canadian retailers are falling behind their American competitors when it comes to digital maturity. This report by Chasm illustrates how Canada’s top retail organizations use digital channels to attract and retain their customers. The report ranks the retailers based on digital strategy and performance in the use of web, social, mobile and email channels.

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Top 5 Key Findings

Canadian retailers lag american competitors

Of the 21 retailers we examined, the bottom 10 were all Canadian, while the top 11 are mostly Canadian branches of US retailers. It’s quite evident that U.S.-based retailers seem to understand, value and invest heavily in digital technologies. This lacklustre performance by Canadian retailers is in sharp contrast to the digital connectedness of Canadian consumers— who rank near the top for broadband usage,

time spent on social networks, use of email and mobile adoption. And yet, Canadian retailers
lag their American competitors in using digital technologies to attract, serve and retain Canadian retail customers.

Most retailers fail to deliver a unified digital experience

From awareness and research to purchase and post-sales support, retail customers span multiple digital channels. Shoppers may come across an offer via email on a phone, get advice from friends in a social network, lookup pricing using a tablet on a retailer website, and make a purchase in store. But most Canadian retailers still seem to lack a full understanding of how to provide a consistent and unified experience to customers across multiple digital channels. Most of the retailers we examined seem to do some things within a few channels well, but do not provide anywhere near a unified digital experience to online shoppers.

Despite growth of mobile and social, web remains the top digital channel

Although mobile and social show the greatest innovation and opportunity, retailer websites still remain the core digital channel for most retailers. Yet, most Canadian retailer websites lack basic essentials consumers have come to expect. The web has come a long way, and we were surprised to see most retailers fair so poorly on how they use their web channels to serve shoppers. Our conclusion is that they are either wilfully ignorant of consumer expectations and the fierce competition they face or have simply decided to cede territory to the likes of digitally mature companies like Amazon.

Grocery and pharmacy retailers are living in the digital dark ages

Despite their size, profitability and market share, grocery and pharmacy retailers behave like digital novices. The majority of grocery and pharmacy retailers don’t offer ecommerce, any transactional capability, have little to no social presence and seem unaware of the massive consumer adoption of mobile. As a result, Canadian consumers remain underserved. New entrants and digitally mature retailers are exploiting this incredible market opportunity. Amazon is exploiting this weakness with its recent expansion into the Canadian retail m grocery sector.

Smaller, niche retailers show greater digital maturity and sophistication when compared to the retail giants

Overall, we were quite surprised with the digital performance of the larger, more established Canadian retailers. In l general, Canadian retailers face some real challenges. These include: stiff competition from larger, more established US competitors, pure ecommerce retailers like Amazon, thousands of smaller American retailers in border towns, and innovative services like Border Free, which make it easier for American retailers (like Lands End ) to service Canadian shoppers. In the face of these threats, Canadian retailers should be leveraging everything in their arsenal to gain a competitive edge. And nothing offers better ROI, or more opportunity, than digital technologies. Even though most large Canadian retailers seem to miss the mark, smaller, niche players like Lululemon, Chapters and London Drugs show that there is a way to compete and succeed. They clearly illustrate that it’s possible to use O digital channels to win against larger, more established American retailers. They understand and value digital, execute their strategy with craftsman-like precision, understand the intricacies of each channel and engage with customers online using every digital channel.

Overall Retailer Rankings

This table shows the overall scores for each retailers. Unsurprisingly, Amazon took top honours in our assessment. By leveraging their US parent, Amazon Canada is setting the pace for the rest of the retailers in Canada. In second place, Best Buy is doing a lot of things right and has done a great job integrating in-store and online operations. They offer a number of key multi-channel features that digital consumers have come to expect from retailers:. These include product ratings and reviews, in-store returns of products purchased online, inventory information available online, option to ship online purchases to closest store for pickup and reserve online and pickup in store. The bottom 10 retailers were all Canadian, with Rexall, Pharmasave, Superstore, Holt Renfrew and The Hudson’s Bay with the lowest overall scores.

Rank Retailer Score Chasm Digital Maturity Level
1
AMAZON
3.6 / 5 EXPERT
2 BEST BUY 3.3 / 5 EXPERT
3 HOME DEPOT 3.1 / 5 EXPERT
4 SEARS 2.9 / 5 INTERMEDIATE
5 LULULEMON 2.8 / 5 INTERMEDIATE
6 COSTCO 2.6 / 5 INTERMEDIATE
7 CHAPTERS 2.6 / 5 INTERMEDIATE
8 LONDON DRUGS 2.5 / 5 INTERMEDIATE
9 LOWES 2.5 / 5 INTERMEDIATE
10 CANADIAN TIRE 2.4 / 5 INTERMEDIATE
11 WALMART 2.4 / 5 INTERMEDIATE
12 HOME HARDWARE 2.4 / 5 INTERMEDIATE
13 SHOPPERS DRUG MART 2.1 / 5 INTERMEDIATE
14 RONA 2.1 / 5 INTERMEDIATE
15 SAVE-ON-FOODS 1.9 / 5 BEGINNER
16 SOBEYS 1.8 / 5 BEGINNER
17 THE BAY 1.8 / 5 BEGINNER
18 HOLT RENFREW 1.4 / 5 BEGINNER
19 SUPERSTORE 1.3 / 5 BEGINNER
20 PHARMASAVE 1.2 / 5 BEGINNER
21 REXALL 0.5 / 5 NOVICE

Other Findings

The 21 Retailers we assessed

4 Retail Categories

Home & Fashion

Grocery

Pharmacy

Home Improvement

4 Digital Channels

Web

Social

Mobile

Email

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