The Evolution of Retail – Changes in the Retail World Evident in New and Long-Standing Markham Businesses

By Carolyn Camilleri

In June this year, Markham Village welcomed a new business, one that exemplifies the direction retail is taking.

Housed in a 130-year-old heritage building, the Cigar Company + Gentlemen’s Barbershop features a custom Spanish cedar humidor, vintage cigar room, 3,000-square-foot outdoor cigar lounge, and an upscale barbershop, offering traditional hot-towel, straight-razor shaves along with haircuts. The staff are all certified Habanos specialists and cigar lovers — even the barbers.

“We’re enhancing the gentleman’s experience,” say cofounder Orion Armstrong. “It’s a unique, tailored experience — something people are longing for.”
The Evolution of Retail_Cigar company photoWelcome to the age of the retail experience, where stores are seeking to become destinations, offering a combination of unique services and products, atmosphere, and customer service that cannot be found anywhere else. It’s the latest disruption in a notoriously volatile industry.

Marshal Cohen, chief industry analyst, retail, for the NPD Group, recently borrowed from Mark Twain to write, “The death of retail as we now know it is greatly exaggerated. Retail isn’t dying; it’s evolving. Just like it has done before. There has always been disruption in the retail sector.”

Retail has certainly taken some hard hits over the years: internet shopping, big box stores, and suppliers becoming competition by opening brand stores. More recently, store closures — Target, HMV, American Apparel, Sears — demonstrate that even big names are not immune to trouble. The challenges will likely continue as new trends develop like virtual stores (where products are ordered through touchscreens in places like subways and airports and delivered to your home) and drone delivery.

The Evolution of Retail_butler imageInterestingly, Cohen refers to the major disruption Sears caused when it introduced catalogue shopping in the U.S. back in the 1880s. He points out that Sears was simply meeting the demands of its customers, 60 per cent of whom lived in rural areas and couldn’t get to the stores easily.

With today’s retail world “transforming at the speed of light,” as Cohen says, “Retailers competing to stay in the game are turning their ecosystems on end, breaking down old-school beliefs, and reinventing themselves.”

The one constant, says Cohen, is the guiding principle of retail since it began: know thy customer.

“Those retailers and brands that survive and thrive are those that base their decisions on the needs and wants of their customers; those that know their customers best and act on that knowledge,” says Cohen.

Today’s customers want what they cannot get online.

“They want an experience. They crave an experience,” says Armstrong. “And they are looking to experience something incredible.”

Savvy Markham retailers are focused on meeting that challenge.

The Evolution of Retail_drone imageMarkham Retailers Get Personal

Long-established Markham businesses are finding ways to fit into the current retail landscape, often by staying true to what they have always done best: provide an exceptional, personalized experience.

Labelle Flowers and Gifts is bringing people back from the internet abyss. Owner Lina Lombardi has been in business since 1987 — pre-internet days. When florists went online, Lombardi caught that wave and set up her website through a wire service — along with hundreds of other florists.

“They all basically have the same webpage — they may have tweaked their pricing — but it’s going to be the same pictures,” says Lombardi. “I know that everybody’s going into online shopping, but in our industry, what it’s also done is create a lot of order takers. It’s no longer a creative industry.”

The result: cookie cutter arrangements and a raft of potential problems, including disappointment about actual arrangement size, flowers out of season, and service charge costs, most of which go to the wire service. When customers aren’t happy, they can sink a business with negative online reviews.

To bring the personal service and creativity back, Lombardi and her staff have focused on educating customers.


The Evolution of Retail_online shopping image
“We let them know that by ordering online, they’re not really being an individual. They’re just getting a product that anybody else can get,” says Lombardi. “It’s better to be unique. It’s better to phone your florist and find out what they have in stock.”

Efforts are paying off: they only get about three online orders a week now, while 90 per cent of orders are taken over the phone, with some walk ins. “People will call us. They want to have a connection. They want to discuss what they’re ordering,” she says.

Vic Hartman, of Hartman Eighty-Five Main, is another retailer whose customers prefer personal service.

“People want to touch and feel and try on items because sizes are totally different. To get into that online, I think you get more people shipping it back to you than keeping it. You can’t fit based on a picture,” says Hartman, who has been in business in Markham for almost 28 years, 10 at his current location. “And they want service. I’d say most of my clients are like that.”

While competition from online stores hasn’t been a serious problem, he has felt other challenges.

four colorful shopping bags closeup isolated on white

“Some of the bigger stores or the big box stores coming through may have a bearing, because people want to get out and look around and see what the new boys on the block are playing with, so you’ll lose that for curiosity’s sake for a half a season,” says Hartman. “But then they come back. They want the service, and they want the quality.”

A complaint often heard about larger stores is that the service isn’t there — either not enough staff or staff not paying enough attention to customers.

“If the big stores were smart, they would open shops within a shop and run them like a shop,” says Hartman.

Mariani’s Custom Clothiers listens to its clientele, going so far as to stock the store with customer preferences and styles in mind.

“We’ve always prided ourselves on our level of service and our knowledge in our industry,” says Eddie Mariani, owner of the business his father started 45 years ago. “Everything in our store we hand pick. We buy our items according to the clientele we have. A lot of the times, we may be looking at a particular jacket or fabric, and we can put a client’s name to it. When it comes in, that’s who we call.”

Of course, that service, quality, and uniqueness come at a price.

“What’s challenging today is spendable income. A lot of the younger executives have found themselves with mortgages that are a little larger and are buying a little bit less, as opposed to the older clients, the 45+, the 50+,” says Mariani.

“Retail has taken some turns along the way — online, and big box stores, and self service-type stores,” he says. “It’s been challenging. These last couple have been a little more difficult than we’ve had in the past. But loyalty will always prevail.”

Markville Aims to Heighten Customer Experience

The Evolution of Retail_Markville Mall photoPerhaps the most obvious signs of the evolution in retail are at Markville. Since 1982, Markville Centre has been a focus for retail in Markham. In 2011, a $110 million renovation was launched to transform the centre and was completed in 2013. Since then, various changes have taken place — new stores and renovations — including Cadillac Fairview’s purchase of the former Sears space.

Daryl Clemance, general manager of CF (Cadillac Fairview) Markville, says the evolution has been aimed at making Markville more of an experience-driven centre.

“Shoppers are looking for unique experiences when they come to a shopping centre,” says Clemance. “We’re always looking for ways to heighten the in-mall experience, for example, creating special events that resonate with our customers, such as our holiday programs or our Lunar New Year program. Experience is certainly part of it, fresh retail offerings are part of it, and really listening to our consumers in the trade area and trying to bring the uses that they want to the shopping centre.”

The changes at Markville are right on trend with the top shopping centres across the country, according to a major retail report from the Retail Council of Canada. The Canadian Shopping Centre Study is the first Canadian consolidation and analysis of the critical metrics retailers use to understand how shopping centres across Canada rank. It also provides an analysis of data comparing top centres in Canada to those in the United States.

The report states: “The overriding finding was that Canadian malls are, on average, more productive than those in the United States. While there are a handful of U.S. centres that beat Canada’s top performers, Canada’s top malls are as busy as the leading U.S. malls.”

Fourteen of Canada’s top 30 most productive malls are located in Greater Toronto. Markville ranks number 28. The renovation at Markville has played an important role in that achievement.

“If you go back prior to when we redeveloped the shopping centre, our overall sales productivity was about $450 a square foot,” says Clemance. “Today, we’re $810 a square foot. So it’s been a vast transformation.”

Other changes at Markville relate to how customers experience shopping centres: complementary WiFi, a text-digital concierge service, free mobile charging, and even online booking for Santa.

While the decline of U.S. malls has been in the news lately, Clemance says the situation is different in Canada.

“There’s certainly more retail in the U.S. on a per capita basis. The department store decline that’s severely impacted B- and C-level malls in the U.S. is unlikely to have the same effect in Canada,” says Clemance. “The CF retail portfolio overall is pretty well insulated, given the lagging e-commerce growth [in Canada] and stronger performance of A malls.”

The biggest risk is e-commerce acceleration, but Clemence says, it is unlikely to have a significant effect in the near term. One contributing factor to the health of malls is Canadians’ relative disinterest in online shopping. Although Canadians rank first in internet usage, 22% say they never shop online, as compared to 12% in the United States and 4% in China. In fact, one of the findings in the Canadian Shopping Centre study was that online retailers are opening bricks-and-mortar stores in malls.

Markville continues to evolve. MUJI, the Japanese minimalist store, opened in July and is expected to do very well. Recently, CF Markville announced the opening of a brand new Saks, as well as another store certain to register high on the experience meter.

“A prime example of a retailer focusing on experience is the new Mercedes Me store that is currently under construction,” says Clemance. “That store is all about experience with the Mercedes brand.”

Saks and Mecedes Me are going into the space previously occupied by Sears.

What Makes a Store Survive?

Location can help. Over on Main Street, Hartman says his location is an advantage.

“A great asset is the fact that I get so many cars going driving by my door every day,” says Hartman. “Highway 40 is a busy street so I do get exposure.”

He’d like to see more people coming to the street.

“We’re trying to do that with the BIA with different events,” he says. “For example, the Markham Music Festival, which is a good draw. Then we’ve got the Auto Classic in September, which is a good event, too. And there’s a farmer’s market every Saturday morning.”

Hartman is planning some customer events, such as wine tasting, at the store this fall.

The physical improvements to the street, such as the new wider sidewalks, have also helped draw people.

“Before, you had to walk behind each other. Now, you can walk two or three abreast, and it’s better. A lot of families are walking on the street now,” says Hartman. “That’s been a plus, most definitely.”

Armstrong also sees a clear advantage with his Main Street location: the exposure to traffic, as well as the proximity to golf courses.

“I live as resident of the Markham Village Historical area, and I’ve been very passionate about the rejuvenation of the street,” Armstrong says. “The area’s rebuilding and resurging. It has its own story, its own voice.”

“I guess I’m pro-Markham Village,” he adds, laughing.

For Mariani, he says his Unionville location has advantages and disadvantages, but he has found a way around it.

“The challenge is that we’re not necessarily easily accessible. A lot of people don’t realize that the little charming jewel of Unionville is here,” he says. “It’s lovely to be here — there’s no doubt about it — but you have to draw clientele here.”

Visitors to Unionville tend to be more interested in ice cream, gift shops, and restaurants than in a full-service men’s clothing shop, so Mariani focuses his efforts on attracting new clients from referrals.

“You have to find a way to shine above the rest,” says Mariani. “For me, it’s so important to give somebody something they never expected. A guy will come in looking for a blue suit, and, well, sure, I sell blue suits, but I want to sell him a blue suit that nobody else has got. I want to make him feel that it’s for him. We don’t hold anything back. We want our customers to be happy.”

Achieving that level of customer satisfaction comes from understanding what his clientele want and offering an experience they come back for and refer to others.

“One of the benefits of creating an experience-driven business is that people talk about it,” says Armstrong. “Half the problem is that we get challenged and find it difficult to reinvent ourselves, and we need to get past that.”

Armstrong has empathy for businesses that are increasingly challenged by changes over the years. He’s been there. Survival in retail means evolving and innovating. Clemance concurs.

“Some of the challenges with the bankruptcies that have taken place over the course of this year, if you look at some of those retailers, you see a lack of innovation, a lack of experience initiatives that have, perhaps, contributed to that,” says Clemance. “The retailers who understand their customers are continually innovating on top of technology and a great value proposition, and they continue to flourish.”

For example, Lombardi has been focused on personalized service but has also enjoyed increased exposure from her website and especially from social media.

“We tend to get more people now with Instagram and Facebook, because it keeps our designs updated all the time, so customers get to see what we’re capable of doing, as opposed a picture on a site that everybody has,” she says.

Hartman expresses some worries about smaller independent businesses, but not because of a lack of customers.

“Customers love to go into an independent, but independents are almost turning into dinosaurs. You don’t see too many young people going into retail anymore,” Hartman says. “Many moons ago, when I got into it, there were lots of people wanting to start up, but the independent thing is starting to wane off unfortunately. I think they just haven’t got the interest to put in all the hours.”

Retail is hard work and it isn’t a given anymore, he adds. “You have to work your butt off to get the customers. It takes years to get a customer, and then it’s seconds to lose them.”

Nevertheless, Hartman is optimistic about the future of Markham and retail. “You’ve got to think positive or you won’t survive,” he laughs.

Mariani shares that optimism.

“Is Markham basically a good place to do my business? Absolutely, it is. Markham is a growing community, a growing city,” he says. “We have some of the finest head offices for multinational companies here, and we do benefit from that.”

Armstrong, who is also involved in commercial real estate, says Markham has a solid urban development plan.

“I really like the direction Markham’s taking. I think it has a solid demographic,” he says. “And I’m looking forward to where Main Street Markham’s going to be in the next five to 10 years. I think there’s great opportunity.”

Sources

The Retail Evolution by Marshal Cohen, chief industry analyst, retail, the NPD Group. NPD News. Retrieved August 1, 2017: https://www.npd.com/wps/portal/npd/us/news/tips-trends-takeaways/the-retail-evolution/

The Canadian Shopping Centre Study, December 2016. The Retail Council of Canada. https://www.retailcouncil.org/sites/default/files/RCCCanadianShoppingCenterStudyFINAL.pdf