The Size of the Canada Retail Market

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What is the size of the Canadian retail market and what is the level of competition cross-border entrants can expect to find?

 

The presence of US retailers in Canada is unsurprising, but they don’t necessarily dominate to the extent that they might. Some of the local sites of cross-border retailers are noticeably poorer than their domestic equivalents, which suggests that not all retailers are approaching the market with particular aggression.

 

Even for large US companies, not all northward ventures have ended in success. So don’t assume that the presence of a US giant means that your efforts would be hopeless.

 

This article looks at the value of the total retail market in Canada and outlines the current competitive landscape there.

 

Key Points

  • Canada is a very open and internationalised retail market
  • More than half of the top Canadian retailers are non-Canadian owned
  • US retailers are very prominent, unsurprisingly. However, their online presence may not be at the same level or quality as their domestic website.
  • Global brands, such as Zara or H&M, are present in Canada. Their online presence is typically ‘the same’ as you will already be familiar with domestically, and they should therefore be considered as competitors in the same way

Size of retail

Total retail in Canada in 2013 was worth CA$483bn (Source: Office of Consumer Affairs - Industry Canada: Canada’s Changing retail market). At current exchange rates, that’s about £258bn, or just below 70% of the total size of retail in the UK. Overall retail is growing steadily in line with the general economy, growing 2.7% from 2012-13.

 

Note that the Canadian definition of ‘retail’ also includes motor vehicle dealers and petrol stations (which, however, also act as convenience stores and therefore don’t just sell petrol), while the UK one does not (Figure 1). Excluding this category, then Canadian retail is about half the size of the UK, more or less proportional with the comparative sizes of populations.

Canadian Retail Top Level Category Split

Figure 1: Canadian retail top level category split (source: Office of Consumer Affairs - Industry Canada: Canada’s Changing retail market)

Canadian Annual non-food category sales

Figure 2: Annual non-food category sales in CA$ Bn (source: Office of Consumer Affairs - Industry Canada: Canada’s Changing retail market)

A list of the top ’local’ retailers reveals a characteristic which is probably unsurprising, but nevertheless is a significant difference from many domestic markets: the prominent presence of large retailers from across the border in the US (Figure 3). In fact, 53% of the top 125 retailers in Canada were foreign-owned in 2011.

 

This invasion from the US hasn’t been a consistent success story, by the way, so don’t assume a dominant US retailer in Canada in your category is as off-putting as it might be. For example, Target recently announced the disposal of all its operations in Canada, which were loss-making and against which it took a significant write-off (Target 10-K SEC filing, 2015).

Largest Canadian Retailers

Figure 3: Largest Canadian retailers (source: Office of Consumer Affairs - Industry Canada: Canada’s Changing retail market, 2013)

Obviously if there’s a big US presence in ‘your’ category, you might want to check out their online presence. US retailers, as we are all aware, typically have strong websites. However, don’t just assume that because there’s a sophisticated website in the US that you are probably already familiar with, that this necessarily carries over into Canada.

 

As we’ll see below, Canada has until recently been something of a backwater for online retailing, and this is often reflected in the state of the websites. Compare, for example, the homepages of Sears in the US and Sears in Canada (Figure 4):

Two Sears Websites

Figure 4: Two Sears sites

International brand presence

Non-US based leading retailers in Canada include some very familiar names (Figure 5):

non-US non-Canadian retailers present in Canada

Figure 5: non-US non-Canadian retailers present in Canada (Source: Office of Consumer Affairs - Industry Canada: Canada’s Changing retail market. Note that the data in this government report was originally sourced in 2011/2.)

Those who have already invested in internationalising their websites, such as Zara, H&M or IKEA have a presence in Canada, backed by a website of the same quality you will find at home. By extension, if your domestic competitors include international brands such as these, then you should be checking out their Canadian presence by default.

For more information on the Canadian eCommerce Market, download the FREE Canada Country Guide.

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