Canada Continues to Draw U.S. Retailers

U.S. businesses continue to enter the Canadian market at a brisk pace, with apparel retailers Express Inc., Ann Taylor, and Tory Burch opening stores in recent months.  These fashion retailers join a growing number of U.S. businesses that have branched out to Canada including Lowe’s, J.Crew, Crate&Barrel, Victoria’s Secret and Bath and Body Works.  Retail giant Wal-Mart has been in the Canadian market since 1994, and currently operates 329 retail stores across the country.

The American invasion is set to continue, with Target Corp. planning to open its first Canadian store in March 2013, with as many as 135 stores to open by 2014.   High-end retailer Nordstrom has announced plans to open four stores in Canada by 2014.  J.C. Penney, Kohl’s, Macy’s, Bloomingdale’s, and Saks Fifth Avenue are among other U.S. retailers interested in establishing a brick-and-mortar presence north of the border.

Why the sudden interest in Canada?

Retail consultant Wendy Evans, of Evans and Co. told Reuters “Many chains see Canada as untapped territory, having nearly run out of promising locations in the United States to open new stores.”

For others, the allure of operating in a relatively stable economic environment has been a deciding factor.  The Canadian economy weathered the economic recession better than the U.S., although disappointing economic indicators in early 2013 point to a possible slowdown in coming months.  Still, the comparative strength of the Canadian dollar has given consumers newfound buying power for desirable U.S. goods.

But despite the steady trek north, retailers need to do their homework before setting their sights on the Canadian market.  Canada is not ripe for every business.  As Alison Paul, vice chairman at Deloitte LLP told Reuters:  “Just picking up a store that you have in the U.S. and plopping it down in Toronto is not going to mean you are successful.”

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