On April 12, Prof. Marie Josée Lamothe’s students, from both undergraduate and graduate retail classes at the Bensadoun School of Retail Management, had the opportunity to meet and discuss with David Bensadoun, CEO of the ALDO Group. From career choices to the nitty-gritty of supply chain management, the conversation was rich in insights and wrapped up the semester with a future-looking retail perspective.
Difficult choices: how did ALDO get back on its feet?
It is no surprise that the COVID-19 pandemic was an unprecedented challenge for all businesses. For the ALDO Group, this was a reality that unfortunately left the company filing for protection under the Canadian Companies’ Creditors Arrangement Act (CCAA). Heavy reliance on brick-and-mortar sales, lockdowns, and health regulations across provinces left not only ALDO but many major fashion players in the red. When asked about the most important decisions to help ALDO work its way out of CCAA protection, Bensadoun touches on three main aspects.
Like many major brick-and-mortar retailers, ALDO closed down 267 of its 725 stores. The new generation of consumers are all about seamless online and offline experiences: trying in-store, buying online, returning at pick-up centers, livestreaming unpacking products. Physical spaces are being reimagined to make the visit to a store worth people’s while and the function and concepts of brick-and-mortar stores are being questioned.
The company also downsized its headquarters, moving from a $10M rent space to a $2.7M office. The savings allowed the company to raise salaries for all and provide bonuses, crafting a safe and stable working environment for employees. Additionally, the company has a profit-sharing policy rewarding employees based on company performance.
Further cutting down its operating costs, ALDO renegotiated the leases of their stores to a percentage of the company’s sales. Although this may seem counterintuitive, Bensadoun explains that this strategy allows them to offset the costs of rent when sales are not going well.
New retail realities: what is in store for ALDO?
Consumer habits have changed. The sooner retailers accept this, the faster they can start tailoring their approach to their customers. As we dove deeper into the waves of the pandemic, ALDO rapidly pivoted its business model to accommodate changing retail trends. With a focus on digitalization, e-commerce, and data collection, the company is projecting strong double-digit revenue growth for the coming years.
Bensadoun shared the implications that seamless shopping has for retailers including store count, size, and digitization. ALDO, like many retailers, is re-designing its physical spaces to become showrooms, allowing customers to experience the brand and try products. ALDO wants to make the in-store experience as frictionless as possible. With around 85% of returns being in-store, the company has dedicated efforts to be able to finalize a return transaction with just a shoe box. Adieu lost receipts!
As shopping centres fall by the wayside, ALDO is set to introduce a new concept in different local ALDO stores. This part pick-up center and part brand community space will allow customers to collect their ALDO packages while experiencing the brand in a new physical environment.
ALDO’s physical spaces are becoming data hubs in addition to the information gathered on the brand’s website. The company has invested in in-store tablets that allow employees to check inventory in the backstore but also, in cases where a shoe size is unavailable in-store, to identify a shoe with a similar fit to confirm the size for home delivery. Using data related to purchase intent in addition to finalized sales, ALDO has an edge over the rest of the industry when it comes to demand prediction in its locations around the world.
Bensadoun also discussed ALDO’s e-commerce strategy and elaborated on the pain point of most retailers: delivery. Same-day and free delivery is increasingly expected by consumers. How many carts have been abandoned at checkout when delivery fees have been calculated? To combat rising shipping costs and warehouse overhead, ALDO has opted to transform its stores into fulfillment centers. By offering employees a timed fulfillment payroll credit, each ALDO store now fulfills between 50 and 60 orders daily! Faster than warehouses, stores can be closer to customers’ destinations and provide a cheaper alternative in terms of labor.
The company is also planning to pilot a new inventory management system featuring an algorithm which would allow ALDO to fulfill orders based on which store is least likely to sell the ordered product in-store and on the customer’s zip code.
Thank you again to David Bensadoun for a refreshingly honest and eye-opening conversation about the current realities of a Canadian retailer. We are looking forward to ALDO’s successes as it navigates the new world of retail. What an interesting time to be in retailing!
Article written by: Marianne Khalil
Photo courtesy of ALDO
Master of Management in Retailing (MMR)
Bensadoun School of Retail Management (BSRM)