Canada Beckons U.S. Retailers
As the U.S. domestic retail market matures, Canada is getting new attention.
Target Corp.'s arrival in Canada with the opening of 24 stores Friday, April 5, is contributing to a price war while casting new attention on the market that so often has been clumped together with the United States.
Despite the common language and similar customs, Canada has a distinct culture and a stronger economy, said Wendy Liebmann, CEO of WSL/Strategic Retail in New York City.
"It feels easier than going someplace where you don't speak the same language. I will say, however, one of the big challenges is it looks very familiar, but in fact there are some real differences that are quite fundamental and can impact anybody's success up there."
Fewer Behavioral Changes
The company's research indicates Canadians in general weathered the recession better than many Americans. While the cost of living is rising and Canadian shoppers are looking for the lowest prices, fewer have changed their shopping habits or cut back substantially on their purchases since the economic downturn than their U.S. counterparts.
While gas in Canada costs about $2 more per gallon than in the United States, 24 percent of Canadians said they were making fewer shopping trips because of higher gas prices, compared with 48 percent of Americans, according to the firm's "How Canada Shops" report.
Consumer behavior in Canada also varies from the United States. "There is a different culture and culture of shopping," Liebmann said."Canadians are much more cautious when it comes to spending. They were not like us in the sense [Americans] loaded up credit cards to get what they want more of."
Fewer Retail Banners
While the nation is geographically vast, Canada's retail landscape is smaller than that of the United States, presenting fewer choices for consumers. But Leibmann said Canada retailers provide keen competition to U.S. companies. "While there might be fewer of them, there are really good, sophisticated retailers," she said.
Still, Canadian retailers—and consumers—are watching closely Target's entrance to the market."Seventy percent of Canadian shoppers said they were aware of U.S. Target before Target launched here," Liebmann said. "Thirty percent had actually shopped at Target in the U.S."
Canada's mid-tier department stores, such as Hudson's Bay, have been freshening up their stores. "Certainly the Bay's doing a lot of renovation work," Liebmann said. U.S.-based Nordstrom also is preparing for a Canadian launch in 2014.
Canada's food retailers also are paying attention to Target's emphasis on grocery and fresh products. "You can see the ripple effect: Target's coming. How do we prepare for it?"