For Canadian retailers, digitization is long overdue

As this year draws to a close, and some of the more important holidays for retailers (Black Friday, Cyber Monday) are behind us, there is no denying that technological innovations are continuing to produce seismic shifts across industries. Retail is no exception. If anything, retailers experience these shifts earlier and more frequently because of their proximity to consumers. Consumers, in turn, reward the brands that leverage technology to improve their buying experience.

Every year, U.S. businesses capture more than a third of online sales from Canadian customers.

While the majority of Canadians shop online, less than half of Canadian retailers have even established an e-commerce presence. These numbers should set off alarm bells. While digitization involves far more than selling online, it’s evident that a sizable portion of our local retailers is failing to leverage technology to maintain their competitive edge in a rapidly changing industry.

Canada’s small- and medium-sized businesses are in danger of falling through the cracks unless they digitize their operations—and fast.

Across industries, the most successful retailers use technology to create a seamless, consistent experience for customers at every point of sale, whether online or in a brick and mortar store. When Canadian retailers forgo technology, they forgo success. They forfeit any chance of surviving the rise of giants like Amazon, Walmart, and Costco, who gobble up increasingly greater chunks of the Canadian consumer base every year. And that’s just in the relatively small Canadian market. The bigger loss is the failure to sell to buyers in the U.S. and other massive consumer bases through online marketplaces. Small- and medium-sized businesses that fail to embrace new technology will even miss opportunities to team up with larger retailers, who look for digitally competent partners in local markets.

Some small- and medium-sized retailers are digging their own graves by downplaying the importance of adapting to a new tech-saturated landscape. Others desperately want to incorporate technology into their operations but lack the resources and expertise to make a change. What these retailers need most is a partner to walk with them on the path to digitization.

For many retailers, especially those looking to sell online, Canadian e-commerce platforms like Shopify will make an ideal partner. Another option is to tap into the resources offered by local academic institutions like McGill University’s Bensadoun School of Retail Management. As a professor at the Bensadoun School, I see the passion and expertise of our students and faculty members as integral to the improvement of the local retail ecosystem.

In recent years we have seen a number of institutions begin to establish retail management programs. This gives retailers the opportunity to access a unique blend of talent, research, and practical support. The shopping experience has become so important that institutions are now producing retail professionals with in-depth knowledge of the role of digitization in growing retail businesses as well as insights into everything from supply chains and consumer behaviour to computer vision and sustainability.

They all have a unique approach to retail research. For example, the Bensadoun School of Retail Management in Montreal is also a unique ‘live’ retail lab where small- and medium-sized retailers can partner with established retailers, tech companies, researchers, and students to improve their operations. This community will help retailers address a wide variety of challenges: How can retailers introduce new technology into distribution networks and warehousing operations? How should they measure the cost of acquiring new customers? What are some data tools they can use to improve demand forecasting?

Dr. Maxime Cohen, Professor of Retail and Operations Management at Bensadoun, recently gathered a team to help the ride-sharing company called Via figure out how to proactively compensate riders for unusual delays. His team conducted field experiments to discover how riders responded to actions like apology texts, waived charges, and credits for future rides. The results painted a clear picture. For Via riders who experienced high delays, apology texts and waived charges did absolutely nothing to encourage future loyalty. On the other hand, riders who received a $5 credit for future rides after experiencing a delay went on to spend between 12 and 37 percent more than riders who didn’t receive compensation. By leaning on the expertise of Professor Cohen and his team, Via learned something valuable about its customers and potentially gained a competitive advantage in the ride-sharing market.

Retailers who commit to digitization should be wary of two pitfalls. First, digitization isn’t a haphazard stockpiling of data that no one bothers to analyze or implement. It’s a deliberate process that requires strategic, thoughtful collection of actionable data. For companies like Via, finding a partner who knows how to translate data into practical recommendations makes all the difference. Second, digitization isn’t a one-size-fits-all solution. The goal is not to impress customers with the look and feel of an Apple Genius Bar inside every retail store. For many retailers, the best applications of technologies like artificial intelligence or machine learning take place behind the scenes. Take fast-food restaurants and convenience stores, for example. Clearly, it’s the speed of service that drives customer experience for these businesses. In their case, successful digitization means identifying the right technology to cut down on service times.

As technology continues to reshape the retail industry, the forecast for Canada’s retailers isn’t all gloomy. What small- and medium-sized enterprises lack in resources and capability, they can make up in agility. The window for retailers to digitize is narrowing, but there’s still time. Local partners like retail schools stand ready and eager to offer their vast resources. With a little help, retailers can evolve to meet the demands of today’s economy.

Saibal Ray

Academic Director
Bensadoun School of Retail Management

Article written by Ashley Rabinovitch

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