Regina Leader-Post

Change coming for Canadian retailers, former Sears CEO says

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TORONTO As the chief executive of beauty retailer Sephora Americas, Calvin McDonald is suitably wellseason­ed to advocate for change.

The former CEO of Sears Canada Inc. exited abruptly for the San Francisco-based role in 2013 after reported clashes with Sears Canada’s board over the degree and pace of funding for his radical transforma­tion plan at the struggling department store chain.

Now, McDonald believes bricksand-mortar retailers, particular­ly in Canada, need to better embrace digital technology to stay relevant in an era when almost everything can be ordered from Amazon.com.

“What we are seeing in the U.S. is a fight for survival — traditiona­l retailers are under siege,” the London, Ont. native told an audience at the Retail Council of Canada’s annual Store 2016 conference in Toronto. “They are having to recreate themselves in order to survive.”

Sephora, owned by French luxury conglomera­te LVMH, first opened in Canada in 2004 and now has 60 stores across the country. Its corporate culture became much more focused on change and innovation after failing to win over consumers when Sephora opened in the U.S. 17 years ago, said McDonald, who is in charge of Sephora in North America and Latin America. He suspects Canada’s five-year lag behind the U.S. in e-commerce is also related to our high penetratio­n of foreign retailers relative to domestic ones: 19 per cent of retail sales in Canada are conducted through foreign owned retailers, compared with three per cent in the U.S.

Foreign enterprise­s typically have less empowermen­t at the local level, and that decentrali­zation of power might dim the urgency of a drive for change, he said. In addition, two-thirds of Canadians order online from U.S. and internatio­nal websites when they do not have access domestical­ly to the product that they want, McDonald noted.

That’s key for Canadian retailers because even as e-commerce rates in Canada continue to lag that of the U.S., we are expected to catch up.

By 2019, an estimated 10 per cent of retail purchases will be made online, according to Forrester Research, up from six per cent in 2014, and coming close to the 11 per cent 2019 forecast for the U.S.

Sephora’s business is thriving as it invests more of its resources in mobile technology, the fastest growing area of e-commerce. Mobile technology forges a better emotional connection with consumers than a desktop computer, “because her (phone) is with her constantly,” McDonald said, affording a retailer opportunit­y to regularly interact with customers and send them loyalty offers, product informatio­n, or allow them to book in-store appointmen­ts.

In February, the retailer launched a “virtual artist” program through a mobile app that allows users to see a live image of themselves and digitally “try on” one of its 5,000 available shades of lipstick and purchase them.

“In the first four weeks, we had over two million unique visitors,” McDonald said. More importantl­y, it led to “a ton of add-to-basket, click, and buy,” he said.

The mobile push is driven by consumer demand. A new survey from American Express reported 77 per cent of Canadian retailers say customers are driving them to adopt more mobile technology, with 35 per cent of respondent­s saying they will create or invest in updating a mobile app in the next year; 45 per cent they will add mobile payment options in the next year.

At the Body Shop Canada, retail vice-president Laine Ferguson says the company has given staff iPhones to interact with customers through social media.

And Marc Metrick, president of luxury retailer Saks, said parent company HBC also has its eye on mobile technology.

“Just based on its maturation, mobile needs a lot more attention right now — it’s not as developed,” he said. “But the fusing together of the online with our bricks and mortar business — that’s what we are focusing a lot of our technology on.”

 ?? KIMBERLY WHITE/GETTY IMAGES ?? Calvin McDonald, Sephora CEO, with actress Serayah McNeill, says retailers have to reinvent themselves.
KIMBERLY WHITE/GETTY IMAGES Calvin McDonald, Sephora CEO, with actress Serayah McNeill, says retailers have to reinvent themselves.

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