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Bruce Winder: Regulators must recognize that e-commerce empowers small business

Commentary

The retail industry has always been an evolving landscape driven by perpetual innovation. In the 20th century, early disruptors like Sears and Walmart changed the industry forever by pioneering unique business models.

Fast-forward to the new millennium and technology companies have taken on this role — one that offered a crucial lifeline to many businesses and consumers during the global pandemic.

Unlike previous disruptors, however, this new generation of technology-based disruptors often empowers small businesses rather than displacing them.

To allow this evolution to continue, technology companies need to continue reimagining the retail market without excessive government legislation. By encouraging these companies to grow here, Canada can reposition itself to reap the benefits of becoming a technology-driven service economy.

There is no going back: the advent and dispersion of technology in retail has changed the industry forever, whether through the development and growth of the internet, advances in artificial intelligence and robotics, or the harnessing by both business and consumers of the incredible amount of data that is now available at our fingertips. The internet also accelerated globalization, and with it came a worldwide market for goods and services. Canadian businesses both large and small can now sell their goods around the world to new customers and scale their operations quickly, cheaply and efficiently.

Contrary to some assertions, e-commerce has created a marketplace where companies increasingly work cooperatively: small- and medium-sized companies work with Amazon and Shopify to market their wares, while giants like Walmart partner with smaller businesses like PenguinPickUp to make online shopping more convenient. The result is often smaller players leveraging the resources that larger players offer to help build their competitive advantage.

These technologies were never more important than during the pandemic. With the world shut down, our main way of communicating, educating, searching, shopping and getting help was through technology. Can anyone even imagine a COVID-19-inflicted world without it? How would we have survived?

There is no going back: the advent and dispersion of technology in retail has changed the industry forever.

Now, as we begin to exit the pandemic in earnest, many of the retail adaptations developed during COVID-19 will become permanent features. We will see fewer brick-and-mortar stores as customers and businesses right-size the mix between e-commerce and legacy formats.

Some stores will become pick-up outlets for customers ordering online; others will be further integrated with online and other technologies to enhance the customer experience while keeping customers and staff safe from current and future outbreaks. Touchless retail will become the norm.

Smartphones will allow customers to learn, share, shop and transact as much in store as they do at home. Advanced analytics will serve up relevant product and service offerings in real time before customers even realize that they need them.

Customers will continue to use virtual shopping appointments via videoconferencing as well. And more people will become part-time merchants in the gig economy as they utilize platforms to sell new or used products to supplement their income and monetize a hobby.

This massive change within retail will see Canada benefit from the requisite infrastructure development and resulting job creation. Billions of dollars of investment will be spent, and tens of thousands of jobs will be created to build and operate an adapted supply chain infrastructure. This includes fulfilment centres, warehouses, delivery stations and new smart stores.

New jobs will be created to deliver last-mile parcels and design, manage and operate country head offices for leading domestic and foreign technology companies. The tangible and intangible assets used to buy and sell products in Canada continue to be redrawn by the day.

Regulation plays an important role in protecting society from unlawful behaviour and bad actors; without it, our economy would grind to a halt. But regulation must be shaped carefully to avoid impairing innovation and limiting societal gains from new technologies. Over time, natural market forces of supply and demand will reward winners and weed out those businesses that fail to listen to their customers.

Some of today’s Goliaths will themselves be disrupted in due course through the natural evolution of the retail industry. Sears is perhaps the best example of this timeless dynamic. The once innovative retailer disrupted traditional retail in the early 20th century through its catalogue and large departments that could service urban and rural customers alike through home delivery.

With its massive assortment and low prices, Sears transformed retail — only to eventually fall from grace once discounters like Walmart, Kmart and Target were born in the early 1960s.

If we shackle innovation through excessive regulation, we run the risk of missing out not only on the growth and betterment of retail, but also on becoming a destination for technology firms as they expand and grow their global footprint.

Wily consumers will look to domestic sparkling wines as summer heats up

Commentary

The French city of Rheims is the centre of Champagne production. It lies right at the 49th Parallel North, east of Paris.

Conventional wisdom states that the vitis vinifera, or common wine grapes, can only be grown in temperate climates between 30 and 50 degrees of latitude. Global warming is stretching this zone northward, but of the major wine regions of the world Champagne is certainly considered to be a “cool climate” growing zone.

Some regular wine, especially Pinot Noir, is made in Champagne, but its cool climate really does make it best suited to sparkling wines, particularly those made in the traditional Champagne way. When yeast turns sugar into alcohol the byproduct of that fermentation is carbon dioxide.

I have been in wineries when grape juice was being turned into wine and got dizzy from all the extra CO2. The bubbles in most sparkling wines come from that process, but in this case a second fermentation is kickstarted by the winemaker, who adds a dose of sugar to the wine in the bottle.

It’s thought that Champagne became the centre of sparkling wine production in the 17th century when glass bottles became widely used. Wine that had stopped fermenting because of cold winter weather was put into bottles, and started fermenting again when warm spring weather restarted the process. In any event, to counter balance the sugar added for the second fermentation that makes the wine sparkling, it’s best to begin with a wine that is strongly acidic. High acidity is a hallmark of cool climate wines.

The effect of cool climate on Champagne was not lost on wine producers in this country. The bigger producers all make some kind of sparkling wine in the “traditional method.” And there are smaller, family-run wineries across Canada making sparkling wines, with centres of excellence in the Annapolis Valley, Niagara Peninsula and Okanagan Valley.

Champagne is famously a luxury item, and like most luxury products, its consumers are willing to pay high prices for a guarantee of quality.

According to the Comité Champagne website, the latest production numbers were for a bit more than 230,000,000 bottles annually. (Most Champagne is “non-vintage” and made by blending wines made in different years, so presumably this figure is fairly stable.) Consumption is about evenly split between France and export markets.

In France there are many smaller houses that compete for consumers, including “grower Champagnes” made by the families that tend the vines. The export markets, however, are dominated by handful of large producers who buy grapes from multiple sources. So, while Champagne may be a luxury brand, what’s sold in Canada is made on a scale much more in line with a mass consumer product.

This summer in Canada looks to be one of celebration. Families and friends will be reunited after months of little or no contact. Milestones and accomplishments will be toasted and people will get together safely under the cover of vaccination. Bottles of sparkling wine will be opened and enjoyed. Many consumers will pay more for the sparkling wines that come from Champagne. But many wily ones will instead look to domestic bubbles made in the traditional method, that cost less and come from one of the cool climate regions within our borders.

Three pioneering Canadian sparkling wine families and producers that are widely available across Canada are:

Benjamin Bridge in Nova Scotia: https://benjaminbridge.com/

Henry of Pelham in Ontario: https://henryofpelham.com/

Blue Mountain Vineyard and Cellars in British Columbia: https://www.bluemountainwinery.com/