Michael Kane, sitting in for Bridgitte Anderson: All right. A lot of news this week from the retail side: Clothing retailer Le Chateau is up for sale. Loblaws has a new line of clothing. And Fairweather has hired Isaac Mizrahi to design its women’s clothing line. Pretty revolutionary. Just some of the developments in Canadian retail this week. What does it mean for the whole retail landscape in this country? Let’s ask Rick Wolfe, President of PostStone Consulting. Thanks for coming in today.

Rick Wolfe: Good to be here.

MK: Quite a buzz around some big names. You’ve got Joe Mimran who’s got his Joe Fresh line into Loblaws Superstores. Mizrahi in Fairweather. We’re drawing some big names here, some clout. What is changing about the Canadian retail landscape that this is a good idea?

RW: What’s changing is that most consumer companies today are figuring out that the customer has the power. This is big news. It used to be that the manufacturer had the power and then the retailer had the power. Today it’s the customer who has the power. And they’re asking, how do we respond?

MK: Do we have more power because we have more money? Is that why it is?

RW: That’s one of many reasons. We have more money. Thanks to the Internet we have way more information. And so we can find out on the Internet that if we can’t get it in our town, we can get it one town down the road. We have more choice. There are way more products available today, way more different types of stores available today to buy in. All those factors.

MK: Joe Mimran has his Joe Fresh line that he’s putting into Loblaws Superstores. What’s your impression of that? Let’s start there.

RW: Well, they launched Joe Fresh two days ago. Yesterday I took a drive out to the Superstore. The closest Superstore is about a forty-five minute drive from where I live, so I’m not sure that we’re going to be going there all that often. But I was very impressed by the store.

MK: Why?

RW: The old Superstores that I’m familiar with from western Canada, they’re a pretty tired concept. But this new thinking from Loblaws on the Superstore is beautifully executed. It takes the best of their big Loblaws store formats. Plus it’s as if they dropped a Target store into the footprint. It’s 150,000 square feet. I know they have stores as big as 170,000. And Joe Fresh works.

MK: You talk about a tired concept. That is troubling for some retailers. Is that what happened to Le Chateau?

RW: Well, I think that Le Chateau has performed a little bit better than some of their peers. At least their numbers are better than some fashion retailers.

MK: But they haven’t changed at all in 20 years.

RW: You know I am inclined to agree with you. We have to give them credit for one and a half things. They have shifted their target a little bit older, which says that they are keeping their old customer. They are not finding a new customer. And they have figured out how to get goods into the store pretty quickly. And that’s very hard for a smaller retailer to do. But basically, they haven’t changed much in 20 years.

MK: Outfits like The Bay are paying big bucks to find out this information. How do you get people in here? This is the thing. And we always say, look at Wal-Mart, "Look at Target" or whatever. Could it not be just as simple as keeping it fresh? Kind of like McDonald’s - never changed their menu, then they started weekly or monthly specials and it built the traffic right away. Should the retailers be doing that?

RW: Well, yes they do need to keep it fresh. The trouble is that with the huge costs of getting supply from a factory in China to a hundred or a thousand stores across Canada or North America, it is an enormous challenge keeping it fresh. And if you get it wrong, if you have the factory in China make the wrong thing, then it’s not fresh, it’s foul.

MK: OK let’s move up the chain a little bit. Fairweather, which has had its troubles, and it seems to have gotten things turned around a little bit. They contract a big name like Isaac Mizrahi to design clothes. What’s the strategy there? Can they afford to do that?

RW: Well, I think that Isaac Mizrahi has good managers who have figured out how to value his name in different sized footprints. So I am sure that they worked very, very carefully to make this an attractive deal for him and an attractive deal for Fairweather. If it works at Fairweather than they can go to other similar, non-competitive retailers in different markets and offer similar deals. They can probably even offer the same clothing or much the same clothing. The Fairweather name doesn’t have much clout in the marketplace. With Isaac Mizrahi, they’re buying themselves some bigger clout very quickly.

MK: It’s been an interesting change over the years. Alfred Sung, of course, seemed to be exclusive. Then he got involved with the more mainstream retailers like we’re talking about here. Is it a kind of a compromise situation where the retailers are willing to compromise a bit more, maybe pay a little bit more, and the designers are willing to come down a little bit?

RW: Yes, and when you look at the price points that this is being delivered to the consumer at, that means that everybody is shaving cost out of the system. Joe Fresh: the most expensive item in the Joe Fresh line is $39. On the website for Joe Fresh they are advertising ensembles for $79. And Joe Mimran has to be making a dollar out of this, too. So you know that powerful management of the supply chain is a key part of the puzzle.

MK: One of the toughest parts about business in Canada is that retail sector. Is this concept, is this going to be what saves the retail sector in Canada?

RW: One thing alone won’t save it, but customer focus – understanding that complete customer experience – understanding how to collaborate with the customer, because if it’s the customer that has the power, you can’t fight the customer, you have to work with the customer. That will save retail in Canada.

MK: Appreciate your concepts. Thanks for coming in.

RW: A pleasure to be here.

MK: Our guest this morning has been Rick Wolfe, the president of PostStone Consulting, talking about the business of retailing in Canada and how the face is changing. Stay tuned. More of AM Business straight ahead.