Looking for Growth in Lean Times? Look North to Canada!

There’s no getting around it, times are tough and we may still be in for more of these lean times for years to come. Every company is looking for that elusive source of growth to keep driving the top line, or at least to replace any shrinkage in business from the downturn.

But in difficult times growth can be a hard thing to find and merchants both online and offline need to be creative and on the lookout for any potential sources of new growth. For those in the United States still struggling to find growth in the aftermath of the real estate and banking meltdown I have one word which may be the answer and that is … CANADA!

Canada you say? What’s different about the situation north of the 49th parallel that might make it a growth opportunity for me? Well to borrow a phrase well worn south of the border the first answer is “It’s the economy stupid!” On whichever metric one compares, Unemployment, GDP, Inflation or Currency, Canada has fared better during this downturn. Relative to Unemployment, at the start of the downturn Canada and the US were both tracking an Unemployment rate of roughly 6% and since that time the spread has grown to 1.5% with roughly 9% in the US versus 7.5% in Canada. Looking at GDP, Canada and the US both went negative in 2008 and based on aggressive stimulus both returned to roughly 3% in 2011, however since that time there is about a 1% spread with Canada at 2.75% and US at 1.75%.

When it comes to Inflation, again Canada and US were both tracking at 1% at end of 2008 and by end of 2011, the US was tracking just over 3% and Canada is tracking just below 3%. Last but certainly not least the Canadian dollar that has historically been much lower than the US dollar is now trading at or above parity with the US dollar. Concluding, there are likely many factors impacting the above results, but two key ones are that Canada for the most part was able to avoid the impact of the sub prime mortgage crisis, and the country is also riding very high based on the continuing energy boom in Alberta and Saskatchewan, as well as the growing worldwide demand for many of Canada’s other abundant natural resources.

But enough with all of the economic statistics already, what other factors make Canada a potential engine for growth in your retail and e-commerce business? Well when it comes to retail stores the numbers are very simple, Canada only has just over half the number of retail square feet of selling space per person than the US. In the US there are roughly 7.3 billion square feet of retail space for 313 million people for about 23 square feet per person. In Canada there are 34.5 million square feet of retail space for 34.5 million people meaning only 14 square feet of retail space per person. Regardless of whether you think the US is overstored, it’s certainly not to this magnitude, meaning there’s still potential room for store growth in Canada.

On the e-commerce front the story in Canada is even more engaging. Current projections for total online internet sales in Canada show that they are on track to double by 2015. In fact, consumers in Canada are the heaviest internet users in world at 45 hours per month vs 39 hours per month in the United States. Add to this that Canadians spend an average of 47% more per internet order than US consumers and the case for e-commerce entry into Canada becomes extremely compelling.

Sold on the idea of invading the retail and e-commerce market in the Great White North? Next steps might be a sequential series of actions to confirm the opportunity is real for your company and product(s). First step is to establish an e-Commerce test for your products in Canada supported by your US e-commerce/logistics operations with initial support from a Non-Resident Importer (NRI) ready logistics partner in the Canadian market.

Based on the success of your e-commerce test, or even simultaneously, you may decide to conduct retail store tests in the best markets in Canada such as Toronto, Montreal, Calgary & Vancouver. Again while your store volumes are initially ramping up, these stores can also be supplied directly by your US operations with the support of an NRI Delivery Partner.

As volumes continue to ramp for both retail stores and/or e-commerce sales you will very rapidly want to seek out the support and assistance of an experienced retail logistics and e-Commerce Fulfillment Partner. They can assist by establishing an appropriate dedicated retail store distribution network and/or e-Commerce fulfillment operations performing as a third party logistics provider with direct experience in the Canadian market.

So regardless of today’s lean times not only is Canada the world’s leading superpower in hockey, it is also ready, waiting and primed to act as a growth engine for both retailers and their e-commerce product sales.

Jeff Ashcroft

A long time specialist in retail logistics and e-commerce fulfillment, Jeff works with SCI Group in Toronto which provides national retail logistics support for almost 8,000 retail outlets/stores across Canada as well as e-commerce fulfillment operations for Walmart.ca, ToysRUs.ca, Rogers Wireless, Tim Hortons and DeSerres. He can be reached at jeff.ashcroft@scigroup.com or 416.401-3011 x 3033.

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