Newswise — TORONTO, July 21, 2011 --- Canadians may not need to endure the long line-ups at the border to buy their favourite labels at U.S. retail outlets anymore. According to a new report by researchers at the Ryerson University Centre for the Study of Commercial Activity, more U.S. popular retail powerhouses are eyeing Canada as an untapped market to expand their customer base than ever before.

“International retailers, especially from the U.S., have long been part of the Canadian marketplace,” said Joe Aversa, a GIS analyst at the centre and lead author of the report, Foreign Retail Chains in Canada. “However, the global recession has made it difficult for them to achieve growth in the U.S. market. So, American and other foreign retailers are now looking for other ways to grow and Canada is seen as a ‘safe’ test bed.”

Co-authors of the report are Tony Hernandez, director of the Centre for the Study of Commercial Activity, and Christopher Daniel, a senior GIS analyst at the centre.

The researchers analysed the centre’s database of Canada’s leading retailers with annual retail sales of $100 million CDN or more. According to their findings, by the end of the 2009 fiscal year, 47 per cent (or 57) of the top 121 leading retailers in Canada were foreign owned and operated, mostly by U.S. companies. The total retail sales of these international retail companies was $85 billion, which accounted for just over 40 per cent of the total retail sales in Canada by the 121 leading retailers.

Going forward, Hernandez predicts the impact of foreign retailers in the Canadian marketplace will continue to increase. “Foreign-owned retailers will be part of the evolution of retailing and the competitive landscape. As a result, Canadian retailers will need to sharpen their game through competitive pricing and product selection, as well as through merchandising and advertising.”

U.S. retailers who have recently expanded into Canada include the Apple Store, Coach, Bath and Body Works, Lowe’s and Marshalls. Target – a heavy-weight American retailer – is poised to open up to 150 Canadian stores in 2013.

Although U.S.-based companies operate nine out of every 10 foreign-owned stores in Canada, major retailers from Europe and Asia have also joined the Canadian retail scene during the last decade. They include Sephora (France), H&M (Sweden) and The Sony Store (Japan). The majority of all foreign-owned retailers are based in major markets (e.g., Toronto, Montreal, Vancouver, Calgary and Edmonton), and more than half are located in malls.

The researchers believe foreign retailers are attracted to Canada for several reasons. In the case of American retailers, the countries’ close proximity, shared popular culture and common official language allows for a smoother transition process for retail concepts and store formats. The exception to this rule is Quebec. The report found that although the province accounts for 23 per cent of the national population, it is home to only 13.5 per cent of Canada’s foreign-owned leading retailers.

Across Canada, certain retail segments have been especially affected by the presence of foreign retail chains. For instance, the level of foreign-controlled market share has grown significantly in the general merchandise category (Wal-Mart, Wal-Mart Supercentre and Costco), and in the electronics and appliances sector (Best Buy, Future Shop). However, Canadian-based retailers still control the lion’s market share of the grocery and pharmacy/personal care sectors, according to the report.

For copies of the report, please contact Suelan Toye, Public Affairs, Ryerson University.

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