A customer visits the aisle holding light bulbs in the lighting department of a Canadian Tire store in Toronto.Chris Young/The Globe and Mail
Executives at major retailers are racing to reinvent their businesses amid unprecedented digital change, resulting in everything from near "chaos" in staffing overhauls to fears of customers being one click away from switching to a rival.
Retailers ranging from Canadian Tire Corp. Ltd. to electronics specialist Best Buy Canada and home improvement purveyor Lowe's Canada are looking for innovative ways to draw customers and keep them out of the hands of e-commerce powerhouses, including Amazon.com Inc.
But to make the necessary changes requires some painful choices, especially among employees, said Duncan Fulton, president of Canadian Tire's sporting goods division FGL Sports. "People disruption is way harder than digital disruption," he told the Retail Council of Canada's annual conference on Tuesday.
Five years ago, when FGL and its key Sport Chek chain started to shift its advertising from print to digital, the change triggered "borderline people chaos" as staff ripped apart the company's traditional marketing model, he said.
As consumers increasingly shift to online shopping, retailers need to transform their business, creating disruption and, ultimately, new opportunities.
To survive in the digital world, retailers are moving faster than ever to hire the appropriate – and younger – staff while also introducing new store designs to give customers more reasons to head to a physical store, including online-order pick-ups in brick-and-mortar outlets. And they are testing new features, such as "augmented and virtual reality" 3D videos of how to use products, and robots to replenish shelves.
"We've never seen such a crazy or fast pace – ever," Sylvain Prud'homme, chief executive officer of U.S.-owned Lowe's Canada, said of the changes among consumers. "They actually control their purchasing experience. And that's something new for us."
Consumers use the Internet in different ways to shop, he said, citing research that shows 87 per cent of them browse the Web before going to a store; 79 per cent of them search the Internet while in a store, including comparing prices at other retailers; and 35 per cent go online after they make a store purchase.
"Our customers are only one click away from shifting their business to another retailer," he said.
Lowe's Canada, which acquired Rona Inc. last year, began to test 3D virtual reality "skills clinics" on laptops in stores in Burlintgon, Ont., and Beloeil, Que. in April.
Mr. Prud'homme said in an interview that the videos help shoppers see how, for example, tiles can be placed on a floor. The chain has found that consumers retain 36 per cent more information from the 3D videos than they do from a YouTube video, he said.
As well, Lowe's south of the border is testing "LoweBot" robots, helping staff and customers find products on shelves. By next year, the chain in Canada could follow suit, he said.
And the Lowe's parent is testing using 3D printers to essentially manufacture some products on the spot, doing away with the need to stock the products in the store.
Best Buy Canada, which closed 66 Future Shop stores in 2015 and converted all its 134 big-box outlets to its namesake, has introduced a new "experience" store prototype that allows consumers to interact with products more easily, president Ron Wilson said in an interview.
The U.S.-owned retailer can change the "experience" stores' layout overnight – something that can take as long as six weeks in other outlets – to quickly introduce new sections or revise old ones to respond to fast-changing technology, he said.
Sales at the "experience" stores are 20 per cent higher than those at other outlets in the chain while its online-order in-store pick-up business is up 33 per cent at those stores, said Thierry Hay-Sabourin, senior vice-president of e-commerce.
Best Buy is focused on marrying its online and in-store business, even giving store employees bonuses based on both – a departure from past practice when the retailer awarded bonuses for either one or the other, he said.
The retailer has 15 "experience" stores now with plans for 16 more this fall. It has 134 stores in all plus 54 smaller Best Buy Mobile outlets.
At Toronto-based Canadian Tire, top staff are able to navigate the digital waters better than in the past, partly because they are 10 to 15 years younger today – in their early 40s – compared with almost a decade ago, Mr. Fulton said.
He said in an interview that Canadian Tire's FGL is carrying more private labels to help fight off online rivals; those products aren't available on Amazon or at other retailers.
Last summer, Sport Chek's store staff started answering customers' online questions, which differentiates the retailer from online rivals, he said. "Amazon will never give advice on scale."