More US Retailers Invading Canada
While a lot of hype surrounds the arrival of Target stores in Canada, there are a number of other big US retailers crossing the border too. Is this the critical mass period where we see a landslide into Canada as big US companies find it easier here? The timing looks right.
As they settle in and put tremendous pressure on Canadian retailers, will the retailing landscape change and evolve? And given that these retailers have their preferred products and supply chain, are you somewhat apprehensive about the US invasion or you thinking about the opportunities for distribution and POP campaigns?
Last spring, Colliers International Consulting, in their spring 2012 report, suggested Canadian retail is an attractive investment opportunity and they purportedly suggested the Americans would be arriving. And arriving they have been and the trend may grow faster with smaller US firms coming in. Target and Nordstrom are following Best Buy, Costco, Walmart, Gap, Old Navy, Home Depot, and GNC to literally dominate Canadian retail.
With US revenue per square foot at US retail malls a paltry $309 compared to Canadian malls which generate $590 per sq ft, Canada must seem like an oasis amidst a US recession that just won’t quit. Perhaps out of desperation, they’re finally taking the move they could have taken decades ago. A few are taking a cautious approach in working out “mini-store” arrangements within current Canadian retailers establishments.
If it still doesn’t appear to be a threatening situation for Canadian retailers, just one more competitor in any space can be another critical mass event that sees some retailers exiting the scene. Walmart has captured more of the grocery market, and now Loblaws is laying off almost 900 staff. Target and Nordstrom are competing for similar ground with Sears and the Bay. If either one of them fold, it leaves an empty space for yet another big US firm to fill their place. One by one, the Canadian retail landscape could change dramatically within 5 years.
Those major retailers that have established a Canadian presence or are entering now:
- Victoria’s Secret
- Boys Co
- Tanger Outlets
Why else are the US retailers showing up at our border? The high Canadian dollar makes the profit picture look nice, it’s a brand new additional market, it could be easy for them to dominate (WalMart’s done it), economic growth tends to create malls or shopping plazas creating opportunity in previously closed retail locations, strong, sustained economic growth, the US is too competitive and crowded, and big US companies have plenty of money and clout to move in.
WalMart already has 333 stores in Canada, including 164 supercentres. And more are to come. In fact, they’re remodelling some of the old Zeller’s stores. Perhaps we’re forgetting about Walmart, Costco, and Home Depot and how much they’re growing marketshare. Costco saw an increase of 8% in net sales ( $9.31 billion for the month of September 2012, from $8.61 billion during the similar period last year).
It just seems like every year, some company gets bought out by an American (or Chinese) company as well. The Alberta oilsands is now primarily foreign owned according to a story by Canada.com.
How have marketing and distribution channels changed for your company? Are you experiencing additional challenges in being competitive in retail? Has it changed your use of point of purchase advertising and merchandising?
Looking for new POP tips and techniques? Read up on disruptive retailing, giving a product a brand lift, and improving POP display design. The latest shopper research shows point of purchase does work and that consumers make purchase decisions in the retail store. Find out more about what you need to consider when you’re looking for a new packaging company.