Canadian Retail Industry Analysis

Canadian retail industry analysis is one of the means for testing the progress made by the sector over the years. The retail industry in Canada is one of the chief contributors to the nation’s economy. Considering the stabilization of gas prices and slow economic growth, it is expected that retail sales will improve in 2016 and beyond, within the range of 3.5% to 4.0%. Compared to the previous years, the pattern is likely to assume that of 2014, characterized by a slow beginning and acceleration towards the end of the year.

Evaluation of Canadian Retail Industry Analysis      

The Canadian retail industry comprises a wide range of businesses. Some   of the key segments of the sector include; food and drug, merchandise, automotive, furniture and furnishing, electronics and appliances, specialist retailers, internet retailing, leisure and personal goods among others. However, the categories vary in sizes, products offered, pricing and channels of distribution. This is clearly shown in the performance of each section in the industry, with regards to sales and revenues.

In order to properly analyze the Canadian retail industry, there are main elements of the sector that should be highlighted. The following are some of the key areas to be evaluated when conducting Canadian retail industry analysis;  

Retail Sales

The retail business in Canada mainly obtain their operating revenues from sales. However, some portions can also be generated from labor revenues, commissions, manufacturing sales and revenues from leases and rentals.

Throughout 2015, the retail sales in Canada have been on the decline despite the projected growth in the coming years. Statistics indicate a seasonally adjusting trend across the various segments of the sector. Retail sales grew by about 2.3% in the previous year, almost half of that recorded in 2014. This has been blamed on the huge sales declines in the gas stations, however, this can be redeemed by the increasing sales in motor vehicles.

Recent economic setbacks in the economy of Canada has impacted a culture of bargaining among consumers. This has had some positive impacts on retailers offering low prices like, Walmart, Dollarama among others. To businesses that rely on big sales of tickets like electronic and appliances, this trend has to some extent negatively impacted revenue growth.

Operating environment

The retail market in Canada has not been very smooth for many business, mainly because of the weak growth, stiff competition from local and international retail chains, and low profit margins. This has sent shockwaves to many investors, considering even of the key local players, Target Canada has not been able to make any tangible profits.

Due to these tough business environments, any international chains have not been able to effectively enter into the market on their own. As a result, acquisitions and merges across the retailing industry have been on the rise throughout the review period. Market analysts say this trend is likely to continue into the future since there are no indications the market will become more flexible.

Although the Canadian retail market has been experiencing slow growth, many foreign retailers especially, American companies with larger premiums are considering venturing into the steadily improving luxury market. Businesses like Sephora and Nordstorm (all American-based), are of the view that if consumers in the Canadian market are offered premium products, there are chances they will stop shopping from the US and instead, buy locally from their branches in the country.

Several foreign-based companies operating in Canada like Walmart, which target low and middle income consumers have performed quite well over the years. This is because of the wide product portfolio and lower prices that they offer to customers. In fact, retailers operating on such elements are likely to record significant growth in sales in the years to come.

Conclusion

The above Canadian retail industry analysis has mainly described the performance of the market in the recent years to date. Just like other industries, the retailing sector continues to face turbulent times but with prospects of better performance in 2016 and beyond. Generally, the Canadian economy is slowly picking. However, retailers have to be more cautious and focus on developing strategies to counter the intense competition from local and international retail chains, and the rising costs of inventory in order to maintain a sustainable and profitable business environment.

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References

http://strapagiel.com/retail-sales-analysis-Canada.html

http://www.euromonitor.com/retailing-in-canada/report

https://strategis.ic.gc.ca/app/scr/sbms/sbb/cis/revenues.html?code=44-45&lang=eng

http://www5.statcan.gc.ca/subject-sujet/theme-theme.action?pid=60000&lang=eng&more=1