To survive in Amazon era, retailers need to use technology to stay relevant: HBC digital expert

TORONTO — Amazon need not be a bogeyman for all retailers, given what digital experts are learning about consumer shopping patterns.

Some retailers have seen their store-based traffic increase after selling certain exclusive products on Amazon, while others note consumers are using the online giant as a browsing tool for products before they buy at a store, Jorge Carrasqueiro, director of digital marketing at Hudson’s Bay Company, told an industry audience at the annual eTail Canada conference in Toronto on Tuesday.

“We have seen that many consumers read Amazon reviews before going to buy locally,” Carrasqueiro said. Still, in an environment of declining mall visits, Amazon represents 51 cents out of every $1 of online growth, he noted. At the same time, only one in four shoppers say they have a favourite retailer, making it a critical time for merchants to leverage technology in order to remain relevant to consumers.

“The intelligence and insight provided by search (marketing) is invaluable for marketers today,” he said. “We want a complete view of our customers across all channels to drive actual insights.” Technologies such as machine learning are helping to drive retail research about customer insights, Carrasqueiro said.

“We are really excited at HBC about AI (artificial intelligence systems). As an example, if you search on Google Home or Alexa for a suit to wear to a wedding, it will provide you with not only the product information but contextual information about the occasion.” Those technologies will help retailers time advertising strategically to suit a customer’s needs, he said.

Still, despite assurances from better-performing traditional retailers about their prospects, trepidation remains high in the industry. Hundreds of department stores have closed in the United States where HBC operates Lord & Taylor, Saks Fifth Ave and its assorted off-price banners. Specialty chains have also been hit hard, sparking the closure of Bebe and Toys ‘R’ Us in the U.S., while others such as Nine West, jewelry chain Claire’s and department store Bon-Ton Stores Inc. filed for Chapter 11 bankruptcy protection this year.

Credit Suisse has forecast that up to a quarter of U.S. shopping malls will close over the next four years and predicted online sales in the country will fill the gap, doubling by 2030 to an estimated 35 per cent of all retail sales.

HBC has not been immune to the industry struggles: The performance of its European division, off-price banners and Lord & Taylor has been weak, though the retailer said in March that its Hudson’s Bay banner in Canada managed to generate double-digit online sales growth in 2017 while largely maintaining its store traffic and sales.

During the fourth quarter ended Feb. 3, HBC’s comparable digital sales rose 9 per cent at the retailer’s department store banners and were up 2.8 per cent overall.

“While I applaud the work that the teams have done over the last few years, we are definitely, as a leadership team, seeing real opportunity to take our digital and store performance to the next level,” Helena Foulkes, the company’s new CEO, told investors on the quarterly conference call.

At the same time, HBC has been under pressure from investor Land & Buildings Investment Management LLC to sell more of its leases and properties.

Carrasqueiro said the company does not view its stores as a hindrance.

“We actually see them as an asset,” he said. “Hands-on product interaction is still an important thing.”

Store-based returns are much easier at a cost level for retailers who have stores and are convenient for customers, he said, and online retail does not have a good solution for impulse purchases: if you want something immediately, the quickest way to get it is to drive to the nearest store.

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