Several retailers have identified Canada as an area ripe for new revenue growth. They have noticed the stronger Canadian dollar, the opening of availability of retail locations as some other retailers shutter their stores, and 50% higher average sales per square foot than the U.S.
The new entrants hope to replicate the success over the last several decades of Home Depot, Staples, Costco, and Wal-Mart. Canada’s population of 35 million is close to California’s population of 38 million, making it an important area of opportunity.
Cabela’s, the $3.6 billion retailer of products and apparel for hunting, fishing, and camping, is picking up their pace of expansion in Canada. Cabela’s entered the market slowly in 2007 and explored what it takes to be successful with a new cohort of consumers in a different country. Its plans now include doubling the number of stores by next year.
Cabela’s currently has 58 stores in North America and plans to add a total of 19 more in the coming two years. They seem to be on track for continuing to grow revenue and profitability by double digits as they have for the last five years.
This year Nordstrom is adding its first Canadian store. Nordstrom will open one store per year and plans to have a total of six stores by 2017.
Target opened 124 stores in 2013 after acquiring over 100 Zeller store locations. While Target’s troubles have been widely publicized, it has addressed one of the most difficult aspects of expansion in Canada – the acquisition of store space in a very tight retail market controlled by a few major players.
Wal-Mart had a similar strategy in 1994 when it acquired Woolco’s Canadian stores and it has not looked back since. In contrast, Lowe’s wants to expand north of the U.S. border, but is having trouble lining up locations.
Target’s sophisticated supply chain is adapting quickly to the fulfillment needs of the new stores and to ending the problem of empty store shelves. Over 30,000 new items will be stores by Christmas as Target adapts to the tastes of Canadian consumers.
Canadian Retailers’ Response
Canadian retailers are reacting. Hudson’s Bay Company is remodeling stores. Canadian Tire is emphasizing its digital strategy like many U.S. retailers.
Canadian EDI invoices can be complicated because of taxes. Taxes on invoices can vary by product type and province. As always, EDI invoices have to be perfect in order to be paid.
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