U.S. retailers are pushing hard to extend their reach across the border – especially those that see international expansion as an opportunity for growth.
Canada has been seen as a natural transition for U.S. retailers, who view it as an easier market to enter due to a common language and Canadian consumers’ familiarity with U.S. brands from cross-border shopping, TV and advertising.
However, the now infamous Target Canada fiasco has provided a much needed reminder that new entrants must be sophisticated when it comes to their Canadian expansion strategy.
A critical factor in successful market entry is not underestimating the Canadian consumer, who is most likely familiar with the company’s U.S. brand standards and pricing.
Despite their surface-level commonalities, Canadian and American consumers are incredibly different and retailers must understand the nuances between them in order to successfully cross the border.
For instance, one of the many cultural differences is in how Canadians consume advertising and marketing.
There is an incredibly low transferability rate between ads that were created in the U.S. and then exported to Canada without any alteration. In one study, 60% of effective U.S. ads resulted in much lower sales effectiveness in Canada.
This small example is only in regard to advertising and marketing and does not account for the greater totality of consumer shopping patterns.
Ultimately, U.S. retailers need to understand whether they can adapt their merchandising, marketing and store operations to achieve maximum effectiveness and efficiency based on a solid awareness of the buying habits of Canadian consumers.
How Are Canadian Shoppers Different?
Canadian consumers don’t think and shop in the same ways as their American counterparts. Highlighted below are two critical differentiators.
Seeking Out Value: One of the fundamental differences between Canadian and American shoppers is the fact that Canadians tend to be value shoppers, looking for the lowest price or the best deal as opposed to a particular brand.
This emphasis on finding values stems from historically having less disposable income than Americans and a higher cost of living, among other factors.
That’s not to imply that American shoppers aren’t searching for the best deal; Canadian consumers just have different approaches to finding value.
Canadians, for example, tend to make an extra effort when it comes to finding the best deals: 87% will stock up on their favorite products when the products are on sale, 57% go to multiple stores to get the best prices on different items and 56% regularly participate in retail loyalty programs.
Divided Shopping Preferences: Canada is ranked 14th in the world for internet penetration rates – 15 spots ahead of the U.S. – with the average Canadian spending roughly 39 hours per month online, not including mobile or tablet use.
In spite of their high rates of internet usage, Canadian consumers have been slower than Americans to embrace online shopping.
E-commerce only represents about 4.5% of total retail sales compared to 7.7% in the U.S.
While e-commerce sales are growing significantly, Canadians are still “touch-and-feel” shoppers, finding importance in traditional brick and mortar retail.
Finding Your Way In The Dark
It’s important to note that while these are important differences between Canadian and American consumers, the list is not comprehensive. Moreover, Canadian consumer behaviors vary greatly based on region – just as consumer behavior in Miami differs from consumer behavior in Seattle.
If the Canadian market is new territory for your brand and you’re interesting in learning more, watch this 30-minute webinar which explores the current Canadian landscape, what you can learn from Target’s recent experience in the market and how analytics can help drive successful expansion.