It seems like the perfect time for U.S. retailers to enter the Canadian marketplace. According to a study by market research firm IbisWorld, U.S. department stores, followed by men's clothing, are the most opportune segments for retailers entering Canada.
According to the study, there are several factors that make it a good time for U.S. retailers to strike. First, the Canadian retail sector has exhibited rapid growth in the past five years, with consumers confident and armed with cash. Second, most Canadians are familiar with U.S. stores and have crossed the border to shop. Third, the Canadian retail sector is less crowded than the U.S. market. And finally, many Canadian chains have left the market, leaving space for foreign companies.
Canadians are looking to spend more on men's and women's apparel, but the market is fragmented. The two largest men's clothing stores in Canada, Harry Rosen and Moores Clothing for Men, only represent 15.8 percent of the Canadian men's clothing industry. Furthermore, Reitmans Limited, H&M and YM control 37 percent of the women's clothing segment in Canada, indicating more openings for retail opportunity.
It's no secret that U.S. department stores have struggled to gain back their foothold in the marketshare, especially among price-conscious shoppers who have turned to big-box stores, warehouse clubs and e-commerce. In fact, the top four operators account for 80 percent of the industry revenue. However, high-end department stores are a relatively new phenomenon.
Big-box stores are not such a novelty. Target's not-so-successful jump into the country has been recently marked with apologies. Since entering the market three years ago, the business has been plagued with mismanagement.
U.S. department stores who are now crossing the border include Nordstrom, which recently announced it would open six stores by 2017, and Saks Fifth Ave.
The remaining three U.S. retail categories primed for expansion into Canada are shoe stores, auto parts stores, and lingerie, swim and bridal stores.
-See this IbisWorld article
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