A Canadian retailer’s web sales soar following a revamping of digital roles
June 10, 2015 11:13 AM
Like other retail chains, Reitmans Canada LTD, which operates 823 stores across Canada and six brand-dedicated web sites, faces changing consumer shopping habits that are reducing in-store sales. With e-commerce its fastest-growing segment, the retailer is betting that it can hike overall sales by restructuring its organization so that it can more move quickly on online openings, Nathalie Belanger, vice president of e-commerce and insights, told attendees in a session last week at the 11th annual Internet Retailer Conference & Exhibition Chicago.
The declining effectiveness of traditional advertising and reduced mall and store traffic across Canada contributed to a 0.2% decrease in store sales for Reitmans in its 2015 fiscal year, Belanger said. Online sales increased 63.5% for a net sales increase of 1.2% for the retailer. “The Canadian consumer was finally shopping online,” she said. Reacting to that shift, the company has reduced its store count by 6% to 823 from 878.
At the same time, Reitmans noted a high correlation of online browsing to in-store buying and an increase in mobile traffic. E-commerce, while growing, still constitutes only 2% to 7% each brand’s total sales. The company’s total revenue in fiscal 2015 was $940 million, but it does not disclose online sales.
The increase in web sales is due in part to a decision to realign e-commerce responsibilities within the company. In 2013, Reitmans centralized many functions formerly divided among its brands, such as responsibility for e-commerce profit and loss; digital strategy and digital media buying; the e-commerce promotions calendar and operations such as order management and customer service. At the same time, it added social media, content creation and blogs to the brands’ existing responsibilities of public relations, loyalty programs and store-based promotions.
Belanger said more organizational changes are ahead. “We’ve merged e-commerce and digital strategy. Going forward, e-commerce will be responsible for driving traffic, not just sales.”
The presenters noted that it’s not just a company’s organizational structure that promotes e-commerce agility—a retailer’s e-commerce platform also must be nimble enough to allow a retailer to take advantage of trends and marketplace shifts. Co-presenter Elana Anderson, senior vice president of worldwide marketing at e-commerce software provider Demandware Inc., said results of a study Demandware commissioned underscore the correlation between e-commerce agility and financial growth. Of 82 brands scored in the study, conducted by research firm L2, those with cloud–based platforms showed higher site rank, faster sales growth and stronger operating margins than their peers, with 73% of those with cloud platforms categorized as high-growth with an average annual sales growth of 15% in web sales annually, Anderson said.
Demandware, a provider of the kind of cloud-based e-commerce software studied, is the provider of Reitmans’ e-commerce platform.