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Monday, April 14, 2014

Blurring Lines Between Retail and Technology - Growth in E-commerce and Mobile Purchases

By Rodney McDonald (Toronto)

Blurring of the lines between retail and technology is the key message from a panel session I moderated at CanTech, the Canadian Retail Technology Conference, hosted by Informa Canada in Toronto on April 10, 2014.

The four panelists mentioned seven examples of the use of technology by consumers, retailers, and retail landlords: 1) e-commerce and mobile technology by consumers to make purchases; 2) Revit by landlords to design new base building retail spaces, 3) social media, such as Twitter, by consumers to follow the latest trends, which influences consumer retail sales; 4) tracking online store customer purchase data by U.S. retailers to understand their customers' purchasing preferences when planning an initial physical retail store in Canada; 5) web sites and electronic outdoor signs by mall owners to help visitors more easily find a parking spot; 6) pinging of customer cell phones in stores by retailers; 7) and sophisticated virtual technology tools by landlords to show a digital fly-through of their mall interior to retailers designing or redesigning a store in their mall.

The four panelists were Elizabeth Evans, Associate Dean, Academic Undergraduate Programs, Ted Rogers School of Management, Ryerson University; Brad Keast, Vice President, Development, Osmington Inc.; Anthony Casalanguida, Director of Retail, Oxford Properties Group Inc.; and Colin Graham, Founder, President & CEO, Arcade Inc.

Elizabeth Evans presented the latest Statistics Canada Retail Trade data. Annual growth of non-automotive retail sales is 1.59% with average annual growth from 2005-2011 of 1.7%, and a projection for much of the same ahead. By comparison, annual growth in e-commerce from 2005 to 2011 was 13.3%, with an annual growth projection of 8.9%. Mobile is expected to equal e-commerce in 2014. These trends are due in part to the Millennials, who are mutli-taskers, connected, and tech savvy, and want to make purchases anywhere, anytime.

I polled the 75-person audience. In the last 12 months, 100% of the audience made a purchase online and 50% made a purchase using a mobile device. I am part of that group - recently, I purchased yet another book online and used my iPhone to purchase a plane ticket with the airline's app.

Brad Keast talked about the future of retail at Toronto's Union Station. Toronto's Union Station is Canada's busiest multi-modal passenger transportation hub - regional commuter rail and bus, intercity rail, subway, bike, and soon-to-be airport rail express - with more than 250,000 people passing through daily and double to tripple today's numbers projected by 2030. Toronto's Union Station is currently undergoing a $800 million revitalization with 160,000 square feet (sf) of new retail space, including a new retail concourse. Osmington Inc., through its subsidiary Redcliff (Union Station) Inc. is the head lessee developing the new retail space for restaurants, shops, services, culture, and entertainment. Smaller format stores might use display technology rather than display space to display products, or big box retailers could have a smaller version of their store to help a commuter purchase an item - a television or lumber, for example - and have the item delivered from a fully stocked suburban store closer to the commuter's home. 

Anthony Casalanguida talked about Yorkdale Shopping Centre. Located north-west of downtown Toronto, Yorkdale boasts 1.5 million square feet of retail floor area, over 250 stores, including many luxury retailers, and the second highest sales per unit area of any mall in Canada. Yorkdale is undergoing a $330 million expansion to add 288,000 sf of retail, including a 188,000 sf Nordstrom. As the panel discussed what the blurring of the lines between retail and technology means for retail landlords, Mr. Casalanguida reminded the audience that Yorkdale's two original anchor tenants - department stores Simpson's and Eaton's - are each no longer in business. Yorkdale adapts. 

Using interior images of Yorkdale, Colin Graham presented a tablet-based technology that retailers and landlords use to virtually visualize and digitally experiment with options in 3D. The software can be used to provide a virtual fly-through of a mall, to virtually move stores around the mall to see how each store fits in different locations in the mall, or to virtually see how different storefront designs fit in with the mall and neighbouring stores. The technology allows retailers and landlords to experiment and play what-if in a dynamic 3D virtual environment. 

Personally, I like the blurring of retail and technology and new retail formats beneath busy passenger stations, for reasons no one mentioned during the panel session: financial, environmental, and social sustainability. Making purchases online, on my iPhone, or at Toronto's Union Station before I hop on the subway home saves me time, which I can spend with my family (social sustainability), saves me from driving around, which reduces my energy use and greenhouse gas emissions (environmental sustainability), and saves me money (driving less saves me $10-15K annually), which I can invest, save for later, or spend at retailers (financial sustainability, for me, retailers, and landlords).

By blurring the lines between retail and technology, consumers, retailers, and retail landlords are co-creating the future.

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