Canadian Retail Market

Canada is the 8th largest economy in the world with a population of 38 million, the predominant sector is the service industry, but enjoying with diverse resources that make the Canadian economy, one of the most attractive in the world. In 2022 Canada’s Gross Domestic Product per capita was around $57.800 USD. This wealth conditions are ideal to develop one of the largest retail markets in the world. This industry by itself employs almost 12% of Canadians, making it the largest employer of the Service Industry. The Canadian economy is so diversified that just the retail trade represents about 5.4% of the GDP, but when the trade is combined with the wholesale trade, the number goes up to 11%. The largest retailers in Canada are George Weston Limited (Loblaws), Costco Wholesale Corporation (Costco), Empire Company (Farm Boy), Walmart Stores Inc. (Walmart) and Metro Inc. (Metro). These big-box stores control most of the market.

 

Trends

In the market it is possible to find several trends, most of them impulsed lately by the pandemic effects. This trends within other external factors are leading to the companies to rethink their growing strategies and development.

However, retail’s recovery from the pandemic has been a pleasant surprise, with increasing sales even amid diminishing consumer sentiment, and the foot traffic at retail centers has largely recovered to 2019 levels, especially in the open-air segment. It is undeniable that the e-commerce has come to stay. Fortunately for the traditional retailers, in-store and online commerce are not competing each other. Canadians still have preferences in attending to showrooms, whether for buying or products testing, specially for products such electronics or clothes. Combination of electronic commerce in physical stores such as quicker payment process, ordering of out-of-stock products, synced card loyalty programs, or implementation of augmented reality are the ways that large retailers in Canada are succeeding.

It is well known that the implementation of technology is the key for the success in every business. Digital payments are becoming the standard, methods such as Quick Response (QR) or Near Field Communications (NFC) payments are widely adopted not only by stores but for customers as well. The Canadians have incorporated digital wallet in their daily transactions more often by over 40%, showing the penetration of services such Apple Pay, Google Pay, Samsung Pay, Fitbit pay and others. 

The implementation of digital payments and wallets not only open the option to have a faster transaction, but also gives an unmissable chance to access to data that could be use in countless forms. One of the possible ways is to use the data to analyze customers’ payment to see preferences and products, and in that way give personalized rewards, creating in that way synced customer loyalty. But one of the most important uses that could be given to that data is to spot and respond to the different trades and changes in the demand as they happen. With this invaluable information it is possible to adopt marketing campaigns, better inventory management or adjust staff in stores to get the most of the forecasted opportunities. The profit of this data is only used for around 20% of the Canadian Businesses to help with inventory planning, identifying popular products or products line, leaving large margin for improvement and growth.

Status of Canadian eCommerce

Despite a significant disruption in retail outlets, Canadians have embraced electronic commerce. Over 27 million Canadians used eCommerce in 2022, making over 75% of the country’s population. E-commerce sales were estimated to be around $2.34 billion in March 2022. By 2025, it is predicted that retail eCommerce sales would reach $40.3 billion USD. The top three product categories right now are electronics, fashion, and furniture. When making purchases online, 59% of Canadian customers utilize credit cards, and another 20% use PayPal. By 2025, it is predicted that 27% of online payments will be made via digital wallets, which are growing rapidly.

Market entry Opportunities.

Most of the companies and retailers tend to look Canadian Market as the natural transition from the United States due to the common language, cross-border shopping, TV, and advertising. 

But, this reality is not precisely accurate. Canadians as opposed to Americans tend to seek value in shoppers, quality, or prices rather than a particular brand. 

Nowadays, to ensure the success in the Canadian market, it is necessary to focus on Sustainability. According to the most recent EY Future Consumer Index, an overwhelming majority of consumers (68%) are looking to companies (manufacturers and retailers) to drive the sustainable agenda, with the targets on reducing green house gas emissions and waste generated during production. Organic and ethically sourced products are in great advantage considering these trends.

Such is the case of Juan Valdez, that in 2022 started operations in Canada with its line of 100% natural coffee through UniMarket. Juan Valdez does not have plans to open a physical store yet, but its products are distributed to over 170 clients like restaurants, hotels, supermarkets and small retailers. The Canadian Market is an interesting market where the brand is not as important as the quality in the product, service offered, price and the experience, always with the aim of sustainability. 

Get in Touch!

If you are interested in this country, or you would like to expand to one of the other main markets in the Americas or Europe, contact us via the form, and we will get back to you shortly.

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