Canada is a country with ten provinces and three territories. Apart from being large geographically, the nation comprises of a large consumer market ideal for related businesses, with the Retail Sector being a major one.
Since 2010, the Canadian retail industry has been rather progressive, reaching a value of over 500 billion CAD in 2014. The highest growing sectors within the retail genre are the Sportswear and Footwear industries which have grown by over 20% in the past 5 years.
Opportunities and Challenges in the Retail Market
A huge amount of opportunities are anticipated owing to future potential of the retail sector in Canada. Since 2010, the retail sales of the country grew steadily at a CAGR of 2.8% till 2014.
Canada’s retail market is believed to be more accessible to European companies due to CETA which is a free-trade agreement between Canada and the European Union. CETA is still being disputed but once approved, 99% of the tariff rates and other factors that stop investors from exploring the markets of Canada will be eliminated.
Canadian consumers are interested in products of high quality and goods of high value. This is evident via the huge nationwide demand for international brands like H&M and IKEA.
While the nation’s retail market seems favourable in many ways, there are challenges that one may face entering this sector. Some of these are:
- Strong competition within the country’s retail market segments
- Negative effect of retail consumption due the inflating housing market in Toronto and Vancouver
- Imports are affected by the weak Canadian dollar due to oil price drop
- Need of geographical strategy due to Canada’s large market
Fast-Growing Segments in the Market
Here are the top seven market segments that are moving on a rapid growth path:
Men and Women’s Apparel
Growth in this genre may be slow but sales for men and women apparel has been steadily increasing since 2009. Men’s wear grew consistently by approximately 6% since 2010 while women’s wear has grown by 3%. In 2014, consumer trends gave birth to a brand new specialised sector in women’s wear called Athleisure which holds great business potential. The current popular brands in the men and women apparel industry in Canada are Nike, Adidas, H&M and GAP.
The Sports clothing market for children has experienced a steady growth. The brand H&M is known to have influenced children’s fashion trends while. Children’s Place is considered to be Canada’s largest children’s apparel retailer with 133 stores across the country.
Compared to the other apparel markets, it’s the footwear industry that’s shown the maximum growth. It is poised to boom even further. Demand for sports footwear has been increasing as well. However, it’s the men’s footwear sector that comprises the largest increase in sales which is 23% since 2009.
In 2015, the Canadian jewelry market reached a total amount of USD7.5 billion in sales. These figures are expected to continue to grow to reach USD9.1 billion by 2020. Companies such as Pandora, Swarovski and Zale are considered to be the largest jewelry companies in Canada.
Home Décor and Design Purchases
This sector continues to grow due to the large demand from older demographic customers. IKEA, which strongly influences most of the home furnishing design trends, has the largest market share of 9%.
Younger consumers interested in purchasing the latest devices to upgrade their lifestyles, lead the demand for electronic gadgets in Canada. Samsung, Apple, LG, and Sony are the major distributors of consumer electronics in the country. This sector too is a successful one.
Household and Kitchen Products
The increased need for organic foods has also impacted the demand for kitchenware, cookware, and bakeware. Hamilton Beach and Applica are the two major brands that dominate the household product market in Canada.
Canada is an active and progressive consumer market with a developed retail sector. Opportunities are many as are established players. To enter this market, it would be beneficial to conduct detailed market research to identify the need gaps and fill these in a profitable manner.