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Record 1 of 1 in CBCA Fulltext Business 7/99 - 1/01

TI:  Roots grabs inside track in online retailing: European expansion. Company sidesteps problems that hurt larger rivals
AU:  Shaw-Hollie
PN:  Financial-Post-National-Post
SO:  Financial Post (National Post), S 26'00 pg C8.
Illustrations
FA:  Fulltext: 718 words
IS:  1486-8008
CI:  Roots-Canada-Ltd
CZ:  Roots Canada Ltd
PT:  News-article
SF:  Illustrations
PD:  20000926
PY:  2000
AN:  4946510
LN:  SHORT
FT:  While some clothing retailers' efforts to sell online have been spectacular
failures, Roots Canada's site has managed to find an electronic retailing
formula that works -- so much so, in fact, the Olympic outfitter is
planning to offer roots.ca merchandise to European consumers in 2001. 

"In the online world, some of the advantages enjoyed by our competitors --
such as store size and geographical reach -- are rendered somewhat
meaningless," said Darlene Goren, vice-president of operations and
e-business at Roots Canada. 

Canadian electronic retailing success stories are noteworthy because there
are increasing signs that selling online, even in a limited capacity, can
help boost a retailer's overall sales. 

"There is growing evidence that the online user is even more valuable at
retail than the average retail customer," said Michael Szego, an
e-commerce consultant at J.C. Williams Group in Toronto. 

A recent survey by the National Trust for Historic Preservation, a U.S.
non-profit group, found that smaller merchants who sell online have
experienced a 12.8% increase in overall sales. Another study by the U.S.
firm Jupiter Communications estimated that every US$1 spent online
generates about US$8 offline in Web-influenced spending. 

Some retailers in this country, such as Chapters Online, are banking on
that principle. Although the bookselling Web site did about 10% as much
revenue in fiscal 2000 as its bricks and mortar counterpart, the company's
philosophy is that cross-pollination between its online and offline
customers will boost revenues for both companies. "If you're giving your
customers more opportunities to shop, they'll end up shopping more," said
Martha Cass, spokeswoman for Chapters Online. 

Many Canadian retailers, however, have struggled to find a Web strategy
that works for them. A recent IDC Canada study suggested 64% of this
country's retailers believe they lag behind their U.S. counterparts in the
area of electronic commerce. 

There is clearly a consumer lag as well. Canadians have been less keen to
embrace shopping than their southern neighbours. 

Roots, which operates 120 retail stores in Canada and eight in the United
States, has sidestepped many of the problems that have forced other
clothes retailers, including Holt Renfrew and Co. Ltd. and Levi Strauss
and Co., to shel ve their online retailing ventures. 

Fraud is not a major issue, Ms. Goren said, and the level of returns -- a
costly and frequent stumbling block for online retailers -- is lower on
the Web site than it is at Roots stores, most likely because the company
spent so much time rolling out the site. "Roots listened to consumer
demand before they launched. They knew they were not going to run out of
product and that they would be able to deliver on time, and that is
crucial," Mr. Szego said. 

He also noted that the clothing available at roots.ca is casual apparel
such as T-shirts and sweats, which is less likely to be returned because
size is not a crucial factor as it is with fitted clothing. 

While Roots is a private company and does not reveal what percentage of
sales are made online, co-founder Don Green has said the company is on
target to sell between $10-million and $15-million worth of merchandise
overall by the end of the Olympics on Oct. 1. Since its site began selling
merchandise last year, the company has had a marked increase in demand
from international consumers. 

Being the official outfitter of Canada's Olympic team members in Sydney
also helps. "The [on-site] traffic and the sales for the Olympic product
has been phenomenal," Ms. Goren said. 

Industry speculation is high that Roots' current crop of Olympic-themed
offerings, including a hockey-style shirt, a camp hat and a racing cap,
will not match the runaway success of the "poor-boy" hat. About 500,000 of
the fire engine-hued caps sold in the wake of the 1998 Winter Olympics in
Nagano. 

Ms. Goren said the company chose to offer a variety of merchandise this
time around rather than focusing on one signature piece of merchandise.
"We are very pleased with how it is selling," she added. 

Copyright 2000, Financial Post from National Post (formerly the Financial
Post Company). All rights reserved.


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YC:  2000
UD:  20001024