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Calgary merchants forced to innovate in battle against online retailers

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Online retailers such as Amazon are making ever-deeper inroads into the fortunes of brick-and-mortar merchants, and are forcing traditional retailers to innovate in a bid to hold their own.

In Canada, e-retailers that made $6.6 billion in sales in 2011, hawked $19.2 billion last year — a number expected to have increased once again in 2017. Online shopping has become such a mainstay, Calgary police have issued warnings about the doorstep theft of parcel deliveries.

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Favourable prices on websites such as Amazon are the big draw for Calgarians like Mike Chrest, whose forays into actual stores aren’t as common an occurrence as they once were.

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“It depends on the purchase, but I don’t buy anything at the store unless I know the price is going to be 20 per cent cheaper,” said Chrest.

With Amazon recently announcing the construction of a so-called fulfillment centre, or distribution centre, in the Calgary area that kind of online shopping option is even more attractive, he said.

“Soon, instead of waiting for two or three days for delivery, it’ll likely be one day,” said Chrest.

Several years ago, Chrest plied an online business through Amazon selling boat-pulled tubes. It became so successful, his supplier cut him off because it was slicing into more conventional sales modes, he said.

“Nobody wanted to mess with regular stores, but that was five years ago,” he said. “Things are changing fast.”

Mount Royal University economist Donna Lazdowski notes 70 per cent of Canadians under the age of 35 have done some online shopping at least once in the past month.

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She said on-site sales are even being disrupted by so-called grinchbots, which snap up huge quantities of popular toys like Fingerlings and re-sell them at inflated prices on sites like eBay.

Malls, she said, have to continue adding value to the experience they offer to keep their shoppers coming back.

“They have to keep repositioning into entertainment and restaurants, as a destination,” she said.

She points to Calgary’s Southcentre Mall’s use of concierge service as an example of that.

To hold onto that younger demographic, Cadillac Fairview, which operates two of Calgary’s largest shopping centres, Chinook and Market Mall, has held so-called campus nights, where students enjoy deals, food and entertainment.

“They’ve been really well received and we want to make sure we’re in constant dialogue with students,” said Craig Flannagan, Cadillac Fairview’s vice-president of marketing.

They’re also using text message services to help shoppers with parking and purchases, among other things, to make the experience easier.

“Impulse and immediacy and getting things faster is growing and we’re responding to that,” said Flannagan.

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He also said in 2016, only two per cent of retail sales were conducted on the web, giving traditional retailers a longer runway to adapt.

And while he wouldn’t reveal how much online shopping might be disrupting Cadillac Fairview’s traffic, Flannagan said Chinook and Market Mall remain strong performers, ranking seventh and 17th respectively among Canada’s top 30 most productive malls.

Lazdowski agreed, saying if brick-and-mortar retailers continue to merge with technology, for example making it easier for shoppers to use hand-held devices on site, they can hold their own.

“As long as retailers aren’t working against technology, they’re not going to go away,” she said.

BKaufmann@postmedia.com

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