Consumer products to Canada

(Last updated: 31 Oct 2008)

Trends and opportunities

The market

The Canadian retail industry is progressive, dynamic, and well positioned to meet the demands of the Canadian market.  There are over 227,200 retail locations across Canada that generates sales of close to $390 billion annually.

Retailers offer consumers an enormous range of products from around the world, which are sold through many types of retail formats. Retailing in Canada range from mass merchandising organisations to department stores, pharmacies, supermarkets, specialty chains, independents and boutiques. The majority of retail firms are small, owner-managed businesses, but the industry is dominated by large firms with multi-billion dollar sales figures.

Most head offices of retailers are located in Ontario which is the largest populated province in Canada followed by Quebec and British Columbia. On a per capita basis, each Canadian spent $12,529 in retail stores, up 4.7 per cent from 2006.

Opportunities

Canadian consumers are savvy and conscious of the environment and so are some of the large retailers that have introduced certain environmentally sound business practices. Some retailers have made announcements about cutting back on packaging or purchasing green-produced energy, while smaller retailers have made gains by sourcing environmentally-friendly merchandise such as reusable bags, natural household cleaning products, mineral cosmetics, organic beauty products, clothing made from natural fibres, water saving and energy saving devices are but a few. Increasingly, environmentally friendly ‘green’ consumer products are more evident on supermarket shelves and no longer a small section of specialty items.

There is definitely a strong interest in eco-friendly consumer products that are innovative, carbon neutral, don’t contain harmful ingredients or products that are not destructive to our environment.

The Canadian population is ageing and one of the by-products of this is more consumer emphasis on products oriented towards comfort, leisure and well-being. Canadians are becoming more health-conscious and seek out products that are natural and promote good health.

Opportunities for innovative products exist in every sector of the Canadian consumer market. A few sectors in which current opportunities exist for Australian suppliers include:

• Products that promote the ‘reduce, reuse and recycle’ approach
• Environmentally-friendly consumer products
• Beauty products with natural/organic and indigenous ingredients
• Products for the disabled and elderly

Competitive environment

A number of large non-Canadian retailers (mainly from the USA, such as Walmart, Best Buy, Lowes), have established a significant presence in Canada, bringing with them new approaches to doing business, such as use of the ’big box’ retail format, everyday low pricing, and advanced logistic systems. Several Canadian retailers are transforming themselves to compete successfully with these large newcomers, while in some sectors; there is evidence of specialty retailers increasing their breadth of products to create a one-stop shopping experience for consumers. 

There is a constant cycle of ‘change’ to create differentiation, offering new innovative merchandise; hardware stores becoming more female-friendly by introducing homewares such as drapery, window furnishings, and towels, while bookstores offer gift and bodycare products.

Tariffs, regulations and customs

Duty is applicable on imported merchandise and levied based on country of origin and product content. Each product is determined on its own merit. Canada Customs and Revenue is the government agency that determines the relevant duty on products.

Industry standards

Any goods marketed to consumers in Canada must have certain information on the product label in both the English and French languages. There are additional bilingual labelling rules for products destined for the Province of Quebec.

Cosmetics and drugs are also regulated and must conform to the Canadian requirements.

Canadian standards also exist for certain goods entering the market such as electrical appliances.

Marketing your products and services

Market entry

The most common market entry options are through:

• Sales direct to retailers
• Agents
• Importers and distributors
• E-tailers and direct mail catalogues

Market entry options vary depending on product, price, distribution channels, market dynamics, purchaser, etc. Large mass merchandisers’ and some chain stores prefer to buy direct as this cuts out the middleman mark-up. The downside to this is that the exporter lacks market presence to follow up with accounts and grow the business.

Specialty retailers, smaller chain stores, and independents prefer to deal with local representatives because their relatively low purchase volumes and lack of import experience do not warrant direct import.

Most online retailers and direct mail catalogues must have merchandise in stock to respond to consumers’ demand for immediate delivery of purchases. E-tailers and direct mail catalogues, depending on their size, may prefer to buy direct or to deal with importers, distributors and agents.

Canada mirrors Australia in many respects. Canada is made up of 10 provinces and three territories and has a population of 31 million. To adequately service this market, it is common to divide the country into five market regions as follows:

• The Atlantic Provinces of New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador.
• The province of Quebec, where the French language is predominantly spoken.
• Ontario, the largest populated province in the country.
• The Prairie Provinces, consisting of Manitoba, Saskatchewan and Alberta, the Northwest Territories and Nunavut.
• British Columbia and the Yukon Territory.

The three most populated regions are Ontario, Quebec, and British Columbia with many head offices located in Ontario. One importer, distributor or agent with adequate staffing to offer countrywide coverage may serve potential exporters, but this is not very common. As a result, exporters are advised to have regional representation to achieve efficiency and greater market penetration and coverage.

Relationship building and servicing accounts are critical in Canada as buyer loyalty is not common. Providing in-market support for your representative is vital for successful market penetration and longevity. The most effective in-market support and those most commonly practiced in the industry are:

• Trade shows
• Advertisements in leading trade and consumer magazines and journals
• Television advertisements
• Billboards
• Public transit advertisements
• Retailers' flyers

The uptake of e-commerce is slow in Canada but predictions are that as consumers gain confidence in the security of the system, there is good future growth potential. 

Large retailers such as Sears, The Hudson’s Bay Company, Canadian Tire, and Chapters are well established for online shopping.  Books, clothing and computers are the most popular items sold online.

Distribution channels

Although direct purchasing is favoured by large mass merchandisers, an Australian exporter is best served through the services of an agent or importer or distributor. The channels of distribution for consumer products are:

• Australian exporter > Retailer
• Australian exporter > Importer > Retailer
• Australian exporter > Warehousing > Agent > Retailer

Links and industry contacts

Consumer products–related resources

Canadian Standards Association – www.csa.ca
Retail Council of Canada – www.retailcouncil.org

Government, business and trade resources for Canada

Canada Customs and Revenue Agency – www.ccra-adrc.gc.ca
Government of Quebec, Bureau of Language – www.olf.gouv.qc.ca
Industry Canada – www.ic.gc.ca
Statistics Canada – www.statcan.ca

Media

The Globe and Mail – www.globeandmail.com