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Can Canada Handle the Retail Boom?

03/23/2012 09:26 EDT | Updated 05/23/2012 05:12 EDT

The world of retail is often dramatic and competitive, but more than ever before there is a perfect storm brewing in the Canadian marketplace. This country already has more retailers than it knows what to do with and the sector continues to broaden. The likely causes for this trend are our strong economy (stronger than the U.S. for the moment), lots of space to build near our growing urban centres, and the convenience of being a great international market -- that is close to home for Americans and a great testing ground for Europeans heading into the U.S. market and vice versa.

This isn't just about the arrival of Target. Though that has been the inevitable focus of the market since that announcement was made and the side effects of the Target-Zellers transaction will ripple for years to come. Target coming to Canada after more than a decade of rumours has caused Wal-Mart to quicken expansion (acquiring 39 Zellers stores Target didn't want), it has caused other U.S. retailers to dust off international (or Canadian) plans, and -- most dramatic of all -- it will take a well-known, yet the almost irrelevant retail brand, Zellers, out of the mix.

The Target move was a sleeping giant. It was not unexpected, but now that the sound of approaching footsteps is real and not mere myth, the market will scramble.

There has been plenty of "awakening" by retailers big and small. What we're seeing is the tip of an iceberg of spending and marketing -- with the largest activities and impacts yet to come. The marketing spend in the retail sector is showing every sign of a rapid increase in the next 12-24 months. In fact, it could easily be as much as a billion dollar increase in 2013 -- here's a few signs of the times and reasons why I'd suggest that much:

• New competition: Everyone knows that Canadians are going to kick the tires of the newest store in town, but whether these customers will come back can often be determined by differentiators like price and promotion, as well as the customer experience and delivering on expectations.

• Fighting for Zellers customers: They had/have a loyal customer base, but with expected renovations to take months, there's plenty of time to attract the Zellers customer, before the new Target opens.

• Fighting the Zellers fire sale: Target isn't buying the Zellers merchandise, just the leases, so expect them to flood the marketplace with products at ridiculous prices as their stores prepare to close. Small and large retailers will try to compete at some level to ensure some reasonable level of traffic.

• Stagnant economy: While Canada's economy is faring better than most others around the globe, it's by no means flourishing. So retailers know they have to grab every penny of available disposable income. Retail is about commanding the attention of eyeballs, hearts, and minds (which is the goal of flyers, ads, and deals), then it's about drawing and hosting the footsteps that follow (which is the goal of operations and merchandising). Marketing places an integral and exciting part of it all. But, nobody should envy the retail marketer charged with attracting customers in a stagnant economy, in a growing marketplace, when everyone is trying to protect and grow their piece of a static pie.

• The growth of new marketing channels: Many retailers are still addicted to traditional retail marketing channels, like the weekly flyer. However, there are some retailers spending money on online channels or integration strategies that give the best mix of on- and off-line approaches (all with the same message).

In the face of these kinds of challenges, retailers can cower or they can celebrate the fact that they're in the most dynamic industry in the country. The Canadian Marketing Association has decided to help them do the latter, and has recently launched a Retail Industry Task Force. The association sees the inevitable and necessary growth in retail marketing and recognizes that some of the most sophisticated multi-channel marketing strategies are bound to come from this industry.

All told, these factors and a hundred others will be padding the marketing spend of retailers across the country as they battle in one of the most competitive retail markets in the world. The largest single contributor to whether retailers succeed or not will be direct link between the expectations they create and the ones they deliver on. There's so much that can happen between the time a customer walks in the door (or online) and bellying up to the shelf or the checkout. Transparency, accountability and telling a great story can be the difference between just getting increased traffic and seeing a rise in sales.