It seems that almost everyone is looking to Canada—at least when it comes to the retail industry.
Canadian retailers have a foothold and deep understanding of Canadian consumers. While they are ensconced in the market, Canada’s retailers are behind the curve in delivering omnichannel shopping experiences. And they face a growing competitive threat.
Foreign retailers—especially those in the United States—see retailing opportunities across the border. The combination of Canada’s strong economy, market competitiveness and large consumer base familiar with US brands is attractive. In recent years, several US retailers have entered the Canadian market at an increasing pace with mixed success.
"The retail industry in Canada is at a turning point," explains Kelly Askew, retail managing director, Accenture in Canada. “Domestic retailers must defend against market encroachment by the neighboring goliaths, and US companies must align their expansion strategies with the unique nature of this market.”
Not only is Canada’s retail landscape enticing to many retailers, it is unique—and shaped by three important forces:
The influence of geography
“US retailers looking to expand into Canada cannot rely on the same model that has worked for them in the United States,” says Askew. While the US population is well dispersed, Canada’s population is concentrated in a thin ribbon on the southern border. Four out of five Canadians live in urban centers.
Proximity has conditioned Canadian shoppers to expect superior product selection in-store and curtailed consumers’ inclination to transact online. In fact, Accenture data reveals that only 36 percent of Canadian consumers are shopping online before making an in-store purchase compared to 88 percent of US consumers.
The rise of digital
The digital revolution is already changing how Canadian consumers shop. Yet while Canada is one of the most digitally connected countries in the first world, Canadian retailers lag in digital when compared to their global competitors.
Canadian retailers must act to close the gap. “US retailers have entered the multi-channel space more aggressively than their Canadian peers, and they have the experience to capitalize on changing Canadian consumer shopping preferences,” notes Askew.
The era of the non-stop customer
Digitally empowered in their everyday lives, Canadian consumers will increasingly expect more digital options from retailers. As such, online retail is becoming more prominent as is the demand for consistent brand experiences across channels.
Canadians are also more vocal about their customer service expectations than Americans are. The majority (63 percent) of Canadian shoppers tell other people about their poor customer service experiences.
Looking ahead, Canadian retailers must deliver an effective omni-channel experience that is seamless in bricks and mortar and online, investing in new operating models to make it happen. Doing this begins with deriving customer insights from data to better understand today’s non-stop customers—who they are, what they want, and how they act. It will also be important for them to sell the value of their “Canadian-ness.”
Meanwhile, US retailers that underestimate the complexity of the Canadian market do so at their own peril. They must balance their strengths with a deep understanding of a country that is more different than their own than they might think.