U.S. Retailers In Canada: 7 Reasons They're Suddenly All Showing Up

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US RETAILERS CANADA
It’s no coincidence these retailers are showing up now. A whole slew of circumstances have come together to make Canada suddenly very attractive to U.S. retailers. | Getty Images

Marshalls showed up last year, as did J. Crew. Ann Taylor is planning to open its first store outside the U.S. in Toronto this year, and Target Canada is set to change the retail landscape next year. After that comes Nordstrom.

So what gives? Why are all these American retailers suddenly falling over each other to get into Canada? After all we’ve been here, waiting, for decades.

It’s no coincidence these retailers are showing up now. A whole slew of circumstances have come together to make Canada suddenly very attractive to U.S. retailers. Our recently strong dollar is more or less an obvious reason, but there are others that are less obvious — such as that the U.S. just has too damn many stores, and retailers need to go elsehwere.

Here are seven reasons big U.S. retail names are showing up in Canada. (Text version below slideshow.)

7 Reasons U.S. Retailers Are Flocking To Canada
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The Booming Canadian Dollar

The Canadian dollar has risen from around 62 cents U.S. in 2002 to around $1.03 U.S. at present. What this means is that, from the perspective of international retailers, we’re spending a lot more in stores.

Colliers Canada reports that Canadian shopping malls brought in 50 per cent more in sales, per square foot, than their U.S. counterparts in 2011. While U.S. malls earned $400 U.S. in revenue per square foot, at Canadian malls it was around $600 U.S.. That’s a powerful magnet for U.S. retailers looking to expand.

Our Existing Stores Are Disappearing

Remember Zellers? How about Eaton’s, or Woolworth’s or Simpsons? A&A Records, anyone? Those are just a few of the retail names that have disappeared or are disappearing from Canada’s street fronts and malls. With traditional retailers fading, U.S. retailers are seeing opportunity left and right. They are also seeing vacant space they can easily convert to their own stores, as Target Canada is doing with Zellers locations and Nordstrom Canada is doing with Sears stores.

Our Retail Sector Is Growing Fast

Growth in Canada’s retail sector was 34 per cent faster than it was in the U.S. between 2004 and 2008, according to data from the Retail Council of Canada -- and that’s before the financial crisis sank the U.S. into an economic no-man’s-land. The Council’s data also shows that retail grew 96 per cent faster than the Canadian economy as a whole during that period.

There Are Too Many Stores In The U.S., And We Have Room For Growth

In the U.S., retail supports one-quarter of all jobs and accounts for about 18 per cent of the country’s economic activity. By comparison, Canadian retail supports only about one-eighth of all jobs in the country, and retail accounts for just more than six per cent of all economic activity, according to a report at Nasdaq.com. This would suggest that the U.S.’s retail market is saturated, while there is plenty of potential growth in Canada.

More Of Us Have Disposable Income

The U.S.’s persistently high unemployment rate in recent years has left many Americans with little cash for buying anything beyond the basics. Data from WSL/Strategic Retail shows that only about 50 per cent of Americans have disposable income, but the same is true for 64 per cent of Canadians.

Less Competition From Online Shopping

Canadians often complain that our options for online shopping are more limited than in the U.S., and that seems to show in our shopping habits. Research on women’s shopping habits finds that only about half of Canadian women shop online, compared to 75 per cent of American women. That means more opportunity for brick-and-mortar stores planning to move into Canada.

We're Not As Big On Bargain-Hunting

The same study of female shoppers found that, while 68 per cent of American women use coupons when shopping, only 55 per cent of Canadian women do. Half of Canadian women look online for coupon opportunities, compared to 61 per cent of Americans, and 57 per cent of Canadian women pick up in-store circulars, while 71 per cent do so in the U.S.

This lack of hunger for bargains translates into bigger profit margins for retailers.

Also on The Huffington Post

Major U.S. Retailers Coming To Canada
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