Saturday, May 18, 2013

US Retailers Looking to the Canadian Market to Propel Growth

With the US enduring the worst economic environment since the depression new markets are being eyed for growth, particularly Canada. Ease of entry makes this a logical and relatively low-risk move towards market development. Canada offers a stable economic environment (one of the best globally through the recession), political stability, and a consumer that is already very familiar with US based brands. From Target to Crate and Barrel to Marshall's and beyond - the move north is fast and furious.

Opening up shop in Canada means more than leasing retail space and marketing. The supply chain and distribution network must be clearly planned and in place. Continuously moving up product from the US can be costly, as can be establishing warehousing and distribution facilities. Quite simply, upon entry, new US retailers (and any international brand expanding into Canada, for that matter) have yet to achieve the scale required to efficiently establish dedicated distribution. This is particularly at issue with smaller entrants.

Flexible Third Party Warehousing and Distribution to Reach Largest Canadian Markets

Rather than tying up much needed capital, retailers entering the market can look to lease warehousing space on an as-needed basis. In this sense, in fact, there is no lease to speak of. Third party warehouse and inventory management companies are offering everything from product storage, management, and fulfillment/distribution services. This lets retailers utilize the space required - scale up or down as needed - and also to distribute products across the country to their locations "on demand" from a domestic distribution point. In fact, establishing distribution in the GTA market (Greater Toronto Area) provides retailers ready access to the entire "Golden Horseshoe" area, which represents over one quarter of the entire Canadian population. That proximity and ability to penetrate a relatively affluent Canadian consumer base is highly attractive. Further, the majority of Canadians live in a handful of major urban centres; distributing to Montreal, Vancouver, Edmonton and Calgary markets beyond the GTA reaches even a far greater portion of the country.

The Role of E-commerce

Having a physical presence establishes the brand, yet the opportunity is increasingly attractive when the e-commerce opportunity is in place. With Canadian distribution established with a third party provider, it is a logical extension that direct-to-consumer drop shipment of online driven orders is not only possible, but increasingly essential. Almost immediately, US and international brands can establish a brick presence and e-commerce presence supported by ready-distribution with the right outsourced warehousing and distributions partner.

While the US economy continues to struggle to bounce back in the area of consumer spending, a ready market in Canada is seen to be the most logical location for growth. Executed carefully, profitable sales may be achieved with a Canadian consumer base keen to have the best brands the US has to offer. Establishing relations with the right distribution and fulfillment partner may be a key to achieving such success.

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