AUGUST 2016
CRS Automotive This Kind of Consideration Brings Customers Back Amos Wood Multigenerational Furniture has to Start Somewhere
C.A.R.S. Unreal C.A.R.S., Real People
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AUGUST 2016 • SPOTLIGHT ON BUSINESS
Get Noticed. Spotlight on Business reaches and engages with influential entrepreneurs, business groups, associations, and all levels of government, so you can be up to date on the latest industry and business news along with feature articles on companies succeeding in today’s every changing marketplace.
For more information on how to get involved, vist www.spotlightonbusinessmagazine.com or email info@spotlightonbusinessmagazine.com
LOTTO MAX is proud to sponsor the Cavendish Beach Music Festival
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SPOTLIGHT ON BUSINESS • AUGUST 2016
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AUGUST 2016 • SPOTLIGHT ON BUSINESS
spotlightonaugust I t is hard to believe that we are already into August and trying to get as much as we can into the remaining weeks of summer. For business the summer months are always the toughest as we try to balance the needs of the business with employees wanting to take well deserved time with their families and friends.
Editor Lee Atwater Managing Director Stewart Gregg International Operations Director Nick Gregg Accounts Manager Samantha Ford Office Administrator Kyte Carter Webmaster Aaron Allen Content Director Rod Gregg Content Manager Brent Brown Advertising & Marketing Team
It is the time away from work that we appreciate why we work so hard at what we do, whether you sell motorcycles, design amazing wood furniture or manu- facture construction materials. It is the time away with our friends and family at the lake or the campground, the road traveling or on the racetrack going for
the checkered flag that rejuvenates our passion and get us ready for the challenges ahead both personally and professional. It reminds us that hard work does truly pay off and that although we might have a little extra work and put in a few extra hours, for some of us a lot of extra hours, the rewards are well worth it. It is interesting the role that family takes in creating the driving passion when it comes to running a business. It is amazing how family then takes on additional roles to make that passion into a business, whether it is helping in the start up phase or helping out once it is running as a finely tuned entrepreneurial machine and how we want to pass that passion onto the next generation. With Todd Leblanc of Atlantic Motoplex, it all started with a subscription to Cycle Canada and a Yamaha PW50 that his Mom and Dad purchased for him that started his passion for motorcycles and motorsports. Funny how an old dirt bike and magazine can create a dream that has grown to one of Atlantic Canada’s premier motorsports multi-brand dealership outlet. What started as a parent’s love for their boy and a boy’s love for his bike has become an amazing business with plans for continued growth and expansion. Having had the opportunity to speak with Todd and his team and touch base with some of customers, this business has a family feeling. Yes, Todd is out to make a profit as is any other business but when speaking with his employees they feel valued and appreciated and so do his customers, funny how that happens. When looking at Amos Wood the passion moves to working with what nature has given us and building on the unique quality of the product that you are working. Wood working is an art form and has the ability to pull your attention and give you something that is truly unique, as no two pieces of wood are alike and the possibilities on design are endless so it is no wonder that Jeff Amos was drawn to the woodworking industry since 1976 and passed his passion onto his son and co-owner of the business, Obe. So we hope you enjoy what is left of the summer and that you take the time to enjoy the benefits that your passion has created with friends and family, remember why you have worked so hard to get where you are today and where you are going to be tomorrow. We wish you all the very best and that you are safe regardless where your road travels in August.
Wayne Jacobs Nicole Rayner Director of Creative & Graphic Design Carmen Fitzpatrick Photographer Alex Maes Research Sarah Lajoie Latasha Hetland Barry Cox Alia Morash Contributing Writers Katie Davis David MacDonald Charlene Boyce James Barrie Ann Graceford Publisher AIDACA Media
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REVVED UP AND READY IN THE MARITIMES Atlantic Motoplex
04 SPOTLIGHT ON AUGUST 06 CURRENT INDUSTRY EVENTS 08 SPOTLIGHT ON BUSINESS 08 SEISMIC ACTIVITY MAKES
It all started with a Yamaha PW50 and a subscription to Cycle Canada. His Dad bought him the bike; his Mom the literature. By the time Todd LeBlanc, founder and owner of Atlantic Motoplex in Dieppe, New Brunswick, Canada, became captivated by the full-spread ad for Calgary-based Blackfoot Motosports in the December 1984 issue, he already had the experience that comes with “two or three dirt bikes and an old Honda ATV,” he laughs (...)
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MOUNTAINS GROW Kodiak Mountian Stone
14 CAPTURING MOBY Wicker Emporium
28 SPOTLIGHT ON INNOVATION 28 BUILDING VALUE TODAY, FOR A GREENER WORLD TOMORROW NUDURA 32 TODAY’S TECH FOR TODAY’S RIDER Razorback Technology 42 SPOTLIGHT ON INDUSTRY 56 REVVED UP AND READY IN THE MARITIMES Atlantic Motoplex 64 UNREAL C.A.R.S., REAL PEOPLE C.A.R.S 70 THIS KIND OF CONSIDERATION BRINGS CUSTOMERS BACK CRS Automotive 76 MULTIGENERATIONAL FURNITURE HAS TO START SOMEWHERE Amos Wood
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THE 2016 VINTAGE THUNDERBIRD CLUB INTERNATIONALS CONVENTION Embassy Suites Kansas City- International Airport – Kansas City, Missouri, United States
August 10th-13th 2016
The Vintage Thunderbirds of Kansas City invite all Thunderbird club members throughout the world to meet in the center of the USA, Kansas City, Missouri, for the 2016 Vintage Thunderbird Club Internationals Convention. Festivi- ties begin Wednesday, August 10, and continue for the next four days and nights, as you greet past friends and
welcome new ones to the greatest VTCI event of the year. For more information visit http://vtkc.com/vtci-2016-convention.html
NATIONAL 4X4 OUTDOORS SHOW, FISHING & BOATING EXPO Melbourne Showgrounds – Ascot Vale, Victoria, Australia
August 19th-21st 2016
The action-packed outdoors haven for fishermen, boaties and outback tourers, the National 4x4 Outdoors Show, Fishing & Boating Expo, is returning to Melbourne Showgrounds this year, 19-21 August 2016. The must-attend event will bring tens-of-thousands of fishing, boating, camping, outdoors and 4x4 products from over 200 leading exhibitors and retailers, as well as renowned industry experts. The event will see over 31,000 fishing, 4wding and outdoor enthusiasts attend the three day event in August. Visitors will have access to over 200 exhibitors in a one-stop shop with their latest wares on display. A wide variety of outdoors products will be showcased, from fishing, boating and marine to camping and four wheel driving – there will be something for everyone at the Show! For more information visit http://4x4show.com.au/MEL/
MILITARY VEHICLE PRESERVATION ASSOCIATION INTERNATIONAL CONVENTION Alameda County Fairgrounds – Pleasanton, California, United States This will be the 41st annual show and vendor event that will descend upon Pleasanton, CA at the Alameda County Fairgrounds. This is a wonderful location in a great tourist region and state so please consider planning a trip to see this amazing show. Over 200 privately owned, former military vehicles from all nations are expected, including bicycles, motorcycles, jeeps, small and large trucks, ambulances, armored cars, halftracks, tanks, boats, and helicopters. Plus we are also celebrating the 75th Anniver- sary of the Jeep. There are indoor and outdoor displays with over 300 vendors showing their products offering seminars, offsite excursions, dinners, a living history displays. Open to the public with some activities for MVPA members only. For more information visit http://www.mvpa.org/home/ mvpa-convention/upcoming-convention/
THE 2016 SEMA SHOW Las Vegas Convention Center – Las Vegas, Nevada, United States The SEMA Show is the premier automotive specialty products trade event in the world. It draws more than 60,000 domestic and international buyers along with the industry’s brightest minds and hottest products to one place, the Las Vegas Convention Center. The displays are segmented into 12 sections, and a New Product Showcase featured nearly 2,500 newly introduced parts, tools and compo- nents. In addition, the SEMA Show provides attendees with educational seminars, product demonstrations, special events, networking opportunities and more. Official Hashtag #SEMA2016 For more information visit https://www.semashow. com
November 1st-4th 2016
August 11th-13th 2016
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17TH ANNUAL BIKEFEST ON THE PIER OOB Pier - Old Orchard Beach, Maine, United States
OLD ORCHARD BEACH 23RD ANNUAL CLASSIC CAR SHOW Downtown Old Orchard Beach - Old Orchard Beach, Maine, United States Classic Seaside Car Show with 24 classes held at Maine’s Premier Family Beach Resort. Car Preview Lineup on Main Street followed by Car Parade with Police Escort.
September 10th 2016
September 16th-17th 2016
Join us as 100’s of motorcycle are showcased with live music and vendors events to let you know what accessories are available to update your side. So get your motorcycle ready to show off and we will see you on the Pier at Old Orchard Beach. For more information visit http://oldorchardbeachmaine.com/events/ list/?tribe_paged=2&tribe_event_display=list
THE WILDWOOD, NJ BOARDWALK CLASSIC CAR AUCTION The Wildwood’s Convention Center - Wildwood, New Jersey, United States Our Boardwalk Classic Car Auction is being held inside Wildwood’s Conven- tion Center. Our auction is very unique and is like none-other. Our show is action-packed with high-energy, it is family-friendly, and it is built around YOU. Our nationally-renowned auctioneer team, Team Adcock, enthusiastic ring-men and dedicated behind-the-scenes workers are second to none. We have a large selection of vendors and will be increasing our vendor participa- tion this year to bring you a full-featured experience. Wildwood Motor Events strives to create an atmosphere of professionalism while making each event a ton of fun, entertaining and an environment that draws our friends back year after year. We hope that you share our excitement for our upcoming auction and we look forward to seeing you in September For more information visit http://www.wildwoodnjclassiccarauction.com/
September 22nd-24th 2016
For tion
more
informa-
visit http://oldor- chardbeachmaine.com/ upcoming/23rd-annual- car-show/
AUCTIONS AMERICA: 2016 AUBURN FALL COLLECTOR CAR AUCTION Auburn Auction Park - Auburn, Indiana, United States
September 1st-4th 2016
THE INTERNATIONAL WOODWORKING FAIR 2016 Georgia World Congress Center – Atlanta, Georgia, United States The top woodworking trade shows in the world for furniture manufac- turing, architectural woodwork, custom and general woodworking industries. For more information visit http://www.iwfatlanta.com/
August 24th-26th 2016
A staple on the national collector car calendar, Auctions America’s flagship Auburn Fall weekend returns to Indiana’s historic Auburn Auction Park.
Auburn Fall is one of the country’s premier celebrations of the hobby, with more than 85,000 enthusiasts making it to the Classic Car Capital of America. The 2016 event is sure to once again provide a fantastic hobby weekend, with some 900 classics, muscle cars, hot rods, exotics and select automo- bilia set to cross the auction block. For more information visit http://www.auctionsamerica.com/ THE 2016 DENI UTE MUSTER Deniliquin Festival Site – Deniliquin, New South Wales, Australia
Sept 30th- Oct 1st 2016
Since the first year, the Festival has shifted across the road from the original venue to accommodate the growth of the event. Today, the event attracts almost 25,000 people to the town of all ages to celebrate all things Australian and the icon of Ute. Country superstar, KeithUrbanwill headline theDeniliquinwhich is an event which generatesmoney for the community groups. For more information visit http://www.deniutemuster.com.au/
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AUGUST 2016 • SPOTLIGHT ON BUSINESS
Six years ago when Kodiak Mountain Stone was a growing five-year-old business venture, Jeff Heggie, President and CEO, was using some rare down-time for reading. The Innovation Secrets of Steve Jobs by Carmine Gallo was his selection. It was 2010 and it felt like the first time in a year he had a moment to sit back and think about his business in tranquility. As he pensively read-on, Heggie imagined the ways in which Kodiak Mountain Stone could benefit from Jobs’ brand of creative thinking when he had a sudden realization: “We finish the dream.” This has since become the company’s motto. “Whether it is a new home or a renovation,” Heggie explains, “the owners see the final product in their minds long before they begin. There are so many vital elements to building a home - the electrical, the plumbing, all those things – but they are not part of the final picture, the dream. It’s our products that they see: our stone, our brick, our stucco – or often a combo of them all.”
By David MacDonald T he year before, the U.S. recession was forcing Heggie’s hand – but not in the way you may think. At the time, the team at Kodiak Mountain Stone had to “really take a look at how we were running the business as strictly manufacturers,” he explains. “When things slow down with housing, we typically see more renova- tions.” As Heggie anticipated at the time, the American housing market correction and subprime mortgage crisis of ’07 to ’09 made competition amongst manufacturers fiercer rather than tamer. Only a year earlier Heggie and his team decided to close their manufacturing operation in Cardston, Alberta – which had been on the decline
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because of a scanty local workforce – in order to focus their attention to their mostly automated production facility in Springville, Utah. Their eggs were, for a brief moment, sitting mostly in an already full American basket. With a weak Canadian dollar to start the year, the supply trail, as it were, between Utah and Western Canada seemed to be getting longer and colder with each passing day. For- tunately for Heggie and his team, the home front began to thaw. With the Loonie surging toward parity with the U.S. dollar in the spring of 2009 and average home resale prices up 5.0 percent and the volume of resales up 7.7 percent in The Great White North from the previous year, “It was a better opportunity to be looking into Canadian sales,” Heggie explains. “That’s when we changed and we put our focus more in the Canadian market than in the U.S.” The change he’s referring to wasn’t just a geo- graphic one; it was also opening two retail showrooms – a first for Kodiak Mountain Stone at the time – in Calgary and Lethbridge respectively. “Our communication within our company is great. We’re always talking back-and-forth and that goes a long way when you’re in sales – being able to call the factory and get ETAs and make specific inquiries to particular people about our products. That’s huge.” In order to convey to customers that Kodiak Mountain Stone and their retail representatives grasp the gravity of their motto, Heggie and CFO, Dave Olsen adopted one of Jobs’ most fundamental methods for growing a product and its presentation: continuing and mandated education with the aim of inspiring innovation. “We want our team to have the opportunity to continue to learn,” Heggie explains. “We have what we call our “Education Plan,” which we’ve modeled on the Google 20 percent rule – their engineers are encouraged to use 20 percent of the traditional workday to pursue pet projects. Our philosophy is our employees spend 20 percent of their time – outside of peak seasons, of course – reading or studying relevant materials to their particular position at Kodiak Mountain Stone.” This has been “a really good fit,” Heggie boasts. “For example, one of our sales represen- tatives spent a number of years in the stucco business. In fact, he owned a hardware store where he sold stucco, mixed paints, and interacted with his customers. Now we’re working with acrylic stucco and we need to match colours to match the dream. He knows the products and the distributors in the industry inside out and now our “Education Plan” gives him that much more time to master his craft. He’s used his 20 percent and found ways This is where Steve Jobs comes back into play.
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“Selling rock over the internet is quite an innovative thing.”
to make things easier, improve quality, and experiment before bringing what he’s learned into the showroom – so it’s just a really good fit for us that way.” There are other ways in which Kodiak Mountain Stone’s Education Plan fits the family and community culture of the business. “There are several books,” Heggie explains, “that we ask the whole team to read. Books like Good to Great by Jim Collins and How to Make Friends and Influ- ence People by Dale Carnegie are, we feel, universally beneficial. We recommend books like these to the whole team – to the folks in the Corporate Office in Cardston, to our sales reps in the two Alberta showrooms, to the factory workers in Utah – and then follow up with what we call our “Education Meetings” via conference call. It’s great to hear how these authors have had an impact and to get to know our employees as community members, wherever they call home. We’re a relatively small company so we know
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each other really well by now. Our Maintenance Manager down in Utah, for instance, performs magic shows with his son.” Heggie himself walks the talk and talks the walk with his employees. He volunteers as a basketball and football coach in his kids’ youth leagues in his hometown of Cardston. “Our communication within our company is great. We’re always talking back-and-forth and that goes a long way when you’re in sales – being able to call the factory and get ETAs and make specific inquiries to par- ticular people about our products. That’s huge.” This is a huge payoff in an industry that is expected to provide a practically limitless line of products and cus- tomizations. “You know, things change, trends come and go and we’re always adapting to that. I think our educa- tive stance and open lines of communication help us do that,” Heggie says. “We also put a lot of effort into social media and we work with a local marketing company and it does pay off. We’re always looking for new reasons for people to come to our showrooms and our website.” As a company that Heggie describes as “still in a building stage,” Kodiak Mountain Stone is not wasting time coming from the ground up in their effort to stay ahead of local and regional competitors. “Selling rock over the internet – and not just manufactured stone, bricks, and acrylics; the natural stuff too – I think is quite an innovative thing,” he explains. “We’ve been able to implement on our website www.kodiakmountain.com something that I’ve dreamt of from day one. We call it the Kodiak Mountain Stone Visualizer. It allows the customer to upload a picture of their project – whether it’s a fireplace or an entire home – and with the click of a button change the stucco, paint, roof, or whatever they’d like. More importantly for us, it allows the customer to see what their project would look like with the addition of our stone in a variety of colours and styles. Helping the tech-driven client through personal service on our website has been big for us and will be a big part of our future because we don’t have national distributers yet.” While this may be true, Kodiak Mountain Stone is not without its clients beyond the reach of its Alberta showrooms. “In the last two months,” Heggie proudly summarizes, “we’ve shipped product to Hawaii, Ohio, Georgia, Texas, California, Mississippi, Oklahoma, Minnesota, Alabama, Massachusetts, and in recent memory, to a customer in Guam. Guam is probably my most memorable online success. We’re very proud of our online presence.” Continuous growth, like continuing education, is always on Heggie’s mind: “We’re definitely in the growth phase again and we’re starting to see growth in the U.S. again.” A new showroom in Springville, Utah has sparked a flame at Kodiak Mountain Stone not seen since the recession and Heggie’s team is doing everything they can to fan the flame.
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“We’ve shipped product to Hawaii, Ohio, Georgia, Texas, California, Mississippi, Oklahoma, Minnesota, Alabama, Massachusetts, and in recent memory, to a customer in Guam. Guam is probably my most memorable online success. We’re very proud of our online presence.”
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Wicker Emporium captures millennial market with affordable, sustainable home décor and strategic marketing choices
By Charlene Boyce A recent post on a blog for restaurant franchises terms millennials the current tastemakers, and this sentiment is echoed in many industries beyond quick service restaurants. Capturing the attention and loyalty of the millen- nial generation has become the “white whale quest” of many a traditional brand manager. Wicker Emporium’s President, Raj Kapahi, is one Captain Ahab who seems to have figured out the way to catch the whale. Wicker Emporium was founded in 1972 by Raj’s father, Madan, who, as a recent immigrant, noticed an unserved gap in the furniture business for light, affordable wicker and rattan. Madan soon realized that more stores would be more profitable, as it would free him to do his own wholesale purchasing, so he quickly spread out, opening another store the next year in the neighboring city of Dartmouth, and a third soon after in Fredericton.
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Madan developed relationships with furniture manufacturers in Hong Kong and, in 1979, the year after Prime Minister Pierre Trudeau’s landmark trip to China, Madan followed, devel- oping new relationships. He was soon purchasing from India, Indonesia and the Phillippines as well. “I love retail. It’s always changing. You have to adapt and be flexible – there’s never a dull moment.” In the 80s, one of his mall landlords proposed that he expand his product line beyond wicker and rattan furni- ture to other items of home décor. Mirrors, window treatments, rugs and various other items of comple- mentary home décor followed, with furniture remaining the prime offering. The 90s saw a surge of interest in wrought iron furniture, and in the 2000s, Wicker Emporium began sourcing increasingly popular solid wood items, made from exotic varieties like acacia, and reclaimed wood. Many of the wood items come with Forestry Stewardship Certifica-
tion, an environmental accreditation meaning they are guaranteed to not be depleting virgin forest. Currently solid wood furniture accounts for about 70% of Wicker Emporium sales. As the company’s product offerings have evolved to meet market demand, so too has the way the company has done business. Raj notes that one of the challenges of family business is the daily task of keeping business relation- ships and personal relationships separate. The last few years have been ones of change and transition for the company.
“We got through. We have the right management team in place now, and there is lots of harmony.”
Which is good, because the digital revolution that has shaken almost every industry has hit retailing as well. Customers today don’t only seek product and price comparison information online, they can indulge in almost every aspect of a retail experience from the comfort of their own home, with everything from painted room emulators enabling them to test colours, to virtual dressing rooms. Even products as generally tactile as home décor products have been affected.
Far from feeling threatened by these changes, Raj clearly embraces the excitement of an industry that is in flux.
“I love retail. It’s always changing. You have to adapt and be flexible – there’s never a dull moment.”
Throughout the 2000s,Wicker Emporiumfollowed a growth strategy that sawcon- tinued brick-and-mortar store expansions--they now have 23 locations. Adapting for the new environment has meant sharpening their strategy and embracing new marketing channels that didn’t exist when Madan brought his first shipment of wicker chairs and loveseats ashore.
“A large part of our market is really millennials,” says Raj. “They value fashion,
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your brand experience then… a more elaborate channel of brand expression.”
affordability and a natural product. They are conscious of environmental choices. For instance, with our solid wood furniture, they want a product that is on trend and a good value, yet, they are concerned about sustainability and being environmentally conscious. Reclaimed wood is big. Live edge furniture, which still features the organic, unique wood feel, is big.” He notes that this environmental emphasis isn’t just a mar- keting tactic, it’s important to the company. “The sustain- ability of our products matters. We are looking at investing in a reforestation program in India and Indonesia to ensure the long term viability of wood products and our climate.” “We got through. We have the right management team in place now, and there is lots of harmony.” He also mentions, “More and more, millennials are gravi- tating toward urban environments. Lofts with exposed brick and beam are a hot trend right now, and Wicker Emporium also stocks a number of products with the industrial design aesthetic to work with that look.” This move to urban areas coupled with the millennials tendency to use e-commerce more regularly than other market segments, is fuelling another aspect of Wicker Emporium’s business strategy. “Today we are not so much looking to build more stores. It’s not the growth in square footage that matters now, it’s more predominance in the digital space,” Raj explains. “It doesn’t mean there will be no brick-and- mortar stores in the future. Now it’s repositioning them to align with the demographics in our strategy. I can see a time when our primary sales channel is one store – the virtual. But the physical stores become an extension of
The company launched its e-commerce site, with in-store pick-up, in 2013, and added delivery to its services in late 2014. Raj is animated in describing the potentials of the digital marketing space.
“You’re no longer limited to a store’s area. Anyone can find and buy our products.”
The company has developed a comprehensive digital strategy employing tactics including SEO, affiliate market- ing, social media and remarketing. With no anchoring store presence, the challenge to develop the Wicker Emporium brand in a new geograph- ic area is steep. The internet is a big place, packed with distractions and competitors. Wicker Emporium employs search engine optimization techniques to ensure its market is finding its products at the right time in their awareness and purchase cycle. However, a brand is not built on SEO alone. Raj talks about the benefits of affiliate marketing. “We engage with affiliate websites like BargainMoose, StyleDemocracy and Shop.com. They publish relevant content for our potential customers and mention our brand in blog posts, reviews, things like that. If the mention results in a sale, which we track through analyt- ics, the site gets a commission. It opens a wider customer base for us.”
“We are also wooing celebrity designers, bloggers and columnists to mention or feature our products.”
The company, again in alignment with its strategy of tar- geting millennials, is active on social media like Insta- gram, YouTube and the more traditional Facebook, where
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the company has 35,000 fans who provide reviews, engage in contests and enjoy previews of new products. Remarketing uses data from users’ searches to target advertising. Wicker Emporium works with companies to connect with users who are looking for a furniture or home décor. The model is more trackable in terms of success rates than traditional adver- tising, as the remarketing companies do not get paid unless there is a sale, or conversion. Raj understands that ultimately, no one understands millennials better than other millennials. Wicker Emporium has taken part in several innovative initiatives connecting them with students in recent years. They have done design contests with students at the Nova Scotia College of Art and Design, and last year, they took part in a live case competition with the David Sobey Centre for Innovation in Retailing and Services, a retail research centre located at
the Sobey School of Business, Saint Mary’s University.
“The great thing about students is they don’t come with baggage, or precon- ceptions about what didn’t work before. Because of the quickly-changing con- ditions, sometimes a solution that didn’t work five years ago will now. Students come to a problem with fresh eyes and a total openness to possible solution. Sometimes when you recruit really experienced people, even though their judgement is beneficial, their prior experience can be an obstacle – some- times it becomes obsolete.” Raj will soon undertake another project with students via the David Sobey Centre, employing them to help with some market and segmentation research. If the quest for millennial customers is like searching for the fabled Moby Dick, Raj Kapahi is on the right path—with a physical and virtual presence, Wicker Emporium’s line of on-trend sustainable furnishings and décor items are exactly what this elusive market are seeking.
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By Katie Davis Y ahoo Inc. which is an American multinational tech- nology company headquartered in Sunnyvale, California globally known for its Web portal, search engine Yahoo! Search, and related services, including Yahoo! Directory, Yahoo! Mail, Yahoo!. The company was in the process of auctioning off its search and advertising business. Yahoo was very tight lipped about the process before a deal was reached basi- cally saying that they are making “great progress on stra- tegic alternatives,” but did not comment further on the auction process. Well it is now known that Verizon Communications Inc was the winning bidder over the other four companies bidding in the final round for Yahoo. The $4.8 billion dollar deal by Verizon Communications Inc beat out offers by Quicken
Loans Inc founder, Dan Gilbert, Vector Capital Manage- ment, AT&T Inc and private equity suitor TPG.
Verizon’s latest deal follows a similar one last year when the company acquired AOL for $4.4 billion to boost its media and advertising businesses. Verizon remains a giant telecom company, but the acquisitions of AOL and now Yahoo show that the company wants to diversify its revenue and operations. Once the deal closes, Verizon has made it very clear that it wants to merge Yahoo and AOL to form a bigger advertis- ing and media subsidiary. This way, AOL gets more scale and reaches enough internet and mobile users to become an advertising giant reaching hundreds of millions or even billions of people globally.
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to produce new products geared towards the changing tastes of consumers who want healthier options in this market segment. PepsiCo has taken that seriously by doubling their research and development budget over the past 5 years. The effort has paid off with a new product line that has nearly doubled in revenue contribution to just under 10 percent of the firm’s total mix of brands. Hugh Johnston, PepsiCo’s chief financial officer said “the North American strength is a big driver behind raising guidance for the year because North America really is per- forming strongly right now.” Johnston added “consumers are willing to pay for affordable treats that they find are new and interesting and, frankly, a differentiated product.” Are there potential trouble spots for PepsiCo like the UK? Johnston says they are somewhat insulated from events such as Brexit in that their raw materials in Britain are grown in country. Declines elsewhere in economic growth are also of little concern given the price point of PepsiCo products. Johnston maintains that they keep their product prices low so demand in developing countries stays fairly stable when economies do not do well. The real positive for PepsiCo’s was cost of sales which fell 6 percent in the three months that ended June 11. The single item boosted net income by 1.3 precent. PepsiCo’s revenue actually fell 3.3 percent in the quarter, but the final number was still larger than market predictions. The revenue declines were in the North America Beverages unit, PepsiCo’s biggest business, which increased very slowly at only 1 percent while revenue from the Frito-Lay business grew at a rate of 3 percent adding extra favor for investors.
By Jamie Barrie I t is rare to see a company exceed market expectations these days, but after their second quarter results were released it is clear PepsiCo did which is refreshing to investors. The firm took the extra step of boosting their forecast on adjusted profit for the rest of the year. Sales of new beverages, increased demand for Frito-Lay snacks and lower costs for raw materials made the difference according to PepsiCo. Their relatively new line of “Simply” branded snacks and SmartfoodPopcornplayedabigpart in thepositive results. The company also pointed out Naked Cold Pressed Juice and Propel flavored water contributed excellent results. These new products have clearly found a niche.
PepsiCo doesn’t deny they are spending significant capital
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AUGUST 2016 • SPOTLIGHT ON BUSINESS
reaping profits through massive growth in Asia. They have just opened their 5,000th store in China and the Asia-Pacific region recently with a goal of reaching a store count of 10,000 over the next 5 years. RBI is micro focused on the Philippines as an entry point into the booming service sector in that region. RBI chief executive officer Daniel Schwartz identified a strong economy and growing service sector in the region as the deciding factors. According to Schwartz the Philippines has “a population that has an affinity for coffee and baked goods” and months of research have suggested Tim’s will be a perfect fit. RBI did not release the number of stores that are planned but chief financial officer Joshua Kobza stated “we aim to be a leader in the market.” Kobza suggested Tim Hortons would try and develop a presence similar to the already established chains that boast hundreds of restaurants in the country. The stores will stay true to the brand by offering timbits, iced Capps and other traditional favorites. As expected there will also be unique items designed to capture the flavor of the local market as Schwartz promised “you’ll have a mix of the kind of products that we know and love here in Canada and some new products.” RBI views Tim Hortons Southeast Asian plans as a gateway into the region, a strategy that worked so well for Star- bucks who are now eyeing India. Since Tim Hortons and Burger King merged in late 2014, the company’s been focused on taking both to market as a franchise package. That move has proven positive for Burger King and is giving Tim Hortons more global recognition.
By Jamie Barrie I f you want to grow in the coffee service world in 2016 you must head to Asia and it looks like Restaurant Brands International (RBI), themultinational owner and operator of Tim Hortons and Burger King, is getting onboard. The company announced it has joined with investors to start a master franchise joint venture company to sell coffee and doughnuts in Southeast Asia, soon hearing the phrase, “ngarsait nhaithkyet nhaithkyet shisai lim maal” will be as common as, “I’ll have a Double Double”. Which in Tim Horton’s talk, means that you want two milk and two sugar in your coffee.
It is a road they needed to travel if their goal is to remain a dominant player in the coffee world. Starbucks has been
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SPOTLIGHT ON BUSINESS • AUGUST 2016
By Jamie Barrie N etflix has big plans to be a global entertainment player but second quarter results cast doubt on their plan and their progress. Wall Street was looking for a home run and Netflix delivered a base hit. As a result, over 20 brokerage firms slashed price targets for their stock by as much as $30 per share. The market showed disappointment in subscriber growth numbers over the period of April to June sending the company’s stock down 13.7 percent. Netflix suggests media buzz about a potential price increase of between a $1 or $2 a month might have caused some subscribers to leave. FBR & Co analyst Barton Crockett feels those numbers “suggests the loyalty of Netflix subscribers is thin, which is not helpful for long-term bull arguments.” Crockett went on the add, “Netflix is making long-term commitments for escalating content costs based on its expectations for (subscriber) growth and pricing leverage.” Netflix, the owners of “House of Cards” and “Orange is the New Black,” impressed the analysts by taking on Hollywood directly, changing viewer habits, and defining the “binge watching” craze. Despite showing slowed growth they still have over 83 million subscribers which is 55 million more than they had 4 years ago. Their stock hit a record high in December when it closed at $133.27 per share. Netflix Chief Executive, Reed Hastings urged shareholders to be patient. Hastings promoted “Internet TV is going to be an enormous market,” he said. “We’re very con- fident of that and our competitive position is very strong.” became important to Netflix after US growth slowed. Netflix has now launched in almost every country in the world at a significant cost. The company is adapting their standard offering to International markets
satisfy unique needs of the new areas and expect this effort will drive growth in subscription rates.
Some analysts stayed strong towards Netflix telling their clients to “buy”. They feel once the foreign market growth begins Netflix’s stock will rise again. Analysts are telling their customers that the current weakness represents a great opportunity to get a discount on a valued stock. JP Morgan analysts agreed. Their anticipating Netflix to resolve the issue with pricing changes in the second half of the year and show up in 2017 as larger and more profitable.
It is hard to tell whether Netflix is under performing or if market gurus are over- estimating the potential for growth.
The company says it expects to gain 300,000 subscribers in the United States in the current quarter however, market consultants are suggesting they should be getting 774,000 or more subscribers to meet targets.
Netflix projected capturing 2.85 million new subscribers in markets outside the United States but fell short of their forecast by 850,000 subscribers.
It is these types of discrepancies that may continue to hurt the stock price.
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AUGUST 2016 • SPOTLIGHT ON BUSINESS
By Katie Davis O ntario enters the online booze business with a bang with the launch of LCBO.com offering over 5,000 products from Canada and 85 other coun- tries for sale online as the provincial government contin- ues its liberalization of alcohol retailing. The online service will allowOntarians the choice of having their purchases delivered to their homes by Canada Post, with proper identification checks and a small $12 fee for a minimum order of $50 or to an LCBO of their choice for no cost other than the price of gas to go pick it up. My guess is unless it is for a party the same day that the to your door service, will get the most use as home deliveries will be made in two to three days and four to twelve days when shipped to LCBO stores. Finance Minister Charles Sousa said the online sales will allow customers to buy products they may not find in their local stores, making for more “virtual” shelf space.
sales, promised months ago and in testing for several months, “gives consumers greater choice and con- venience while increasing opportunities for Ontario’s dynamic beverage alcohol producers.” Sousa said that the current selection of 5,000 products could expand to over 16,000 products within a year depending on sales and customer demand for the online service. Consumer demand was the driving force behind Ontario allowing beer sales in some Ontario supermarkets last December, plus adding ciders this past June and expand- ing to wine sales this fall. Ontario’s launch of LCBO.com follows an agreement last week by Premier, Kathleen Wynne, British Columbia Premier, Christy Clark and Quebec Premier, Philippe Couil- lard to greater choice, convenience and expanded access to wines from their provinces through online ordering.
Sousa said in a statement that the online
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SPOTLIGHT ON BUSINESS • AUGUST 2016
By Jamie Barrie B lackberry appears to be sending mixed messages to analysts regarding the futuredirectionof the company with recent announcements on new software deals. Those watching closely are assessing the firm’s turnaround potential as software contracts are clearly playing a much bigger part of their sales mix than anticipated. The former smartphone leader announced a five year, multimillion-dollar contract with the U.S. Senate to handle their emergency notification needs. At the same time, it was announced an existing deal with the U.S. Coast Guard has been expanded. The Canadian based high tech firm also reported good news that the U.S Department of Defense, a large Black- berry customer, gave a technical thumbs up for their phone software and mobile management system. This move will make Blackberry a preferred vendor which is a major advantage for the company. Even with some positive news, markets were not respond- ing with small declines in share price for Blackberry stock. The primary concern given was that their apparent move towards being a security company needs work. “If you are going to be a security company, you have to be known for that neutrality in the market,” said Nick McQuire, vice president for enterprise research at CCS Insight.
Blackberry’s continued pursuit of the handset business is what causes some experts to feel they aren’t positioned well to be a security leader. New models are rolling out and BlackBerry CEO, John Chen has set a September deadline for handsets to turn a profit. “From my conver- sations with many of its customers, there’s still a tremen- dous amount of confusion out there around BlackBerry because of the handset business,” McQuire added. The handset business may be in trouble as BlackBerry’s adjusted revenue from applications and services sur- passed the declining value of handset sales last quarter. Some critics are demanding an even stronger push into the application market segment. “We’re going to have to see a lot of these types of deals from them going forward to really get the sense that they are moving in the right direction,” said Phil Hochmuth, program director for enterprise mobility at Internation- al Data Corp. Blackberry also struck a deal for its QNX software with a locomotive manufacturer in Turkey and a partnership agreement which allows coders to translate corporate apps for Blackberry systems. When September ends the picture shouldbemuch clearer for investors. If handset sales bottom out again, CEO Chen will have no choice but to seriously consider exiting that market.
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AUGUST 2016 • SPOTLIGHT ON BUSINESS
By Jamie Barrie I t was a short flight from Zurich to Paris but it meant everything to Bombardier. Swiss Global Airlines made the historic first commercial flight in the highly antici- pated C-series aircraft. “I am extremely proud that we are the first airline in the world to put this totally newly-devel- oped aircraft into service,” Swiss CCO, Markus Binkert said in a statement. “The Bombardier CS100 is a class act in every respect: comfort, economics and environmental credentials.” The flight was a complete success. The CS100 is the first of 30 planes ordered by the airline from Canadian manu- facturer Bombardier. They have split the purchase evenly between the CS100 and the larger CS300. The planes are considered to be state of the art while also offering sig- nificant fuel savings to customers. Swiss Global ordered their CS100 with 30 business class and 71 economy class seats. The new machines will help phase out the aging Avro RJ100 regional jets from the airlines inventory. For Bombardier this marked a crucial point in the devel- opment of the C-series. This new C-series aircraft is in a position to compete against the two of the best-selling airliners of all time, the Airbus A320 and Boeing 737 plat- forms and with its capacity to transport between 100-150 passengers the C-series is the first serious contender for Airbus and Boeing in over 20 years. This market segment in the aircraft industry is destined to be very crowded in the future. Several manufacturers have made plans to introduce planes they hope will cut into the sales dominance of Airbus and Boeing. Bombar- dier is the first to step up.
Douglas MD-80/90. It was a case of buying the compe- tition when Boeing bought McDonnell Douglas for $13 billion. The emergence of Bombardier into this space will prove interesting. Despite their recent success the Quebec-based firm is not where it needs to be yet. They have more than 300 firm orders for their new plane. To put it in perspective, Airbus and Boeing both have 10-times that number of orders backlogged for their latest A320 and 737 models. What does Bombardier see as their strength? Well the industry loves their new aircraft. It is widely viewed as a game changer receiving critical acclaim for its fuel effi- ciency, range, and advanced technology. Airways senior business analyst Vinay Bhaskara stated “The CS300 kills the Boeing 737 Max 7 and the Airbus A319neo in terms of ability and efficiency.” The road ahead isn’t paved with gold for Bombardier. They have been tested by development issues and finan- cial setbacks as they build the new C-series program. The multibillion dollar budget for the C-series has put them in a financial crunch. Compounding that problem are sluggish sales to “A” list airline companies. Now that the CS100 has proven it is the real deal Bombar- dier has secured a major commitment from Air Canada and a multibillion dollar order from Delta. The support of these two major players should be sufficient to calm the fears of smaller companies who have been holding back because of Bombardier’s precarious financial condition. Bombardier has asked the Canadian government for bailout money but no commitment has been made so far. It is a widely held belief that there will be support for the manufacturer if it becomes crucial to their ability to stay afloat in a sea of debt.
The two segment giants have gone uncontested since the late 90’s and the disappearance of the McDonnell
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SPOTLIGHT ON BUSINESS • AUGUST 2016
By Jamie Barrie A mericans are giving more than ever hitting $373.3 billion in 2015. Single person donations make up two-thirds of that amount. According to Giving USA’s annual philanthropy report, gifts from individuals, estates, foundations and compa- nies grew 4.1 percent last year. A great year but 2014 was even better with growth reported at 6.0%. The continued growth in 2015 shows that even with poor economic conditions benevolent giving, especially by individuals, is still rising. The Giving Institute’s Giving USA Foundation commis- sioned the report by the Indiana University Lilly Family School of Philanthropy. The Giving Institutes Keith Curtis stated “It’s heartening that people really do want to make a difference, and they’re supporting the causes that matter to them…Americans are embracing philanthropy at a higher level than ever before.”
number is more than two-thirds of the aggregate contri- butions in the U.S. last year. The report also found gifts totalling $100 million or more approximated $3.3 billion in 2015 founded on data released to the public. No amount is too small. Gifts totaling $10 or $20 aided the 3.8 percent increase in total giving by individuals. “Phi- lanthropy is quite democratic and always has been” said Patrick M. Rooney, associate dean for academic affairs and research at the Lilly school. “More people give than vote in the U.S.” Foundations remained a strong source of giving. They increased 6.5 percent to $58.5 billion last year. The other growth area was benevolent endowments which increased 2.1 percent to $31.8 billion. Corporate giving increased 3.9 percent to $18.5 billion. When studying why people donate, religion remains far and away the largest area of support reaching $119.3 billion. Surprisingly Education was next with $57.5 billion and third humanitarian giving at $45.2 billion.
Single person donations made up $264.6 billion. That
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AUGUST 2016 • SPOTLIGHT ON BUSINESS
NUDURA’s innovative products are in the vanguard of a revolutionary change sweeping the building industry. The change is being driven by two key factors: increasing consumer pressure for more energy efficient, environmentally-focused products, and the rising costs of construction, including both the direct and the financing costs. Together, these forces are causing builders to think more long term, both in the effects of the materials they use and in the longevity and lifetime costs of the buildings they put up.
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SPOTLIGHT ON BUSINESS • AUGUST 2016
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