Canadian shoppers to benefit from competition in 2014

Canadian retailer London Drugs has signalled it intends to compete with newly arrived American retail giants like Target and Amazon.com. Photo: Wikipedia.

Analysts expect Canadian shoppers will see lower prices next year as retailers compete for market share

Canadian shoppers, start your engines! American retailers are racing to grow market share in Canada and that should mean massive promotions and deep discounts in an attempt to draw shoppers in 2014.

The arrival of Target and Marshalls – and the expansion of Walmart – hasn’t exactly revolutionized shopping, but it has laid the foundation for what industry watchers say will be a bigger fight for marketshare next year. 

While Target got off to a slow start, experts say Canadian shoppers can expect to see improvements in 2014. Photo: Target Canada/Facebook.

“We can expect to see some very desperate retailers,” said Brynn Winegard, a marketing expert at Winegard and Company.

“A lot of organizations will be vying for the same amount of consumer dollars.”

For shoppers, that could mean significant price reductions, “Buy One, Get One Free” offers and similar promotions, while price matching and lax exchange rules set precedents.

Canadian shoppers – Domestic retailers upping their game

Even domestic companies like Canadian Tire (TSX:CTC.A), Joe Fresh and Indigo will compete more aggressively with the American retailers.

London Drugs is taking direct aim at cross border shoppers with its Black Friday and Cyber Monday promotion, Nov. 29 and Dec. 2 respectively, in which it promises to offer “hundreds of products” with deep discounts, open earlier (though not stay open all night like American stores), and provide a two-hour turnaround for online shoppers to pick up their purchases at the nearest store.

This is the second year Canadian owned and operated retailers like London Drugs are launching their own Black Friday and Cyber Monday promotions, which they say is now a one of the busiest shopping periods of the year in Canada.

Canadian grocery chains have ramped up consolidation to grab a stronger market presence and more buying power with manufacturers, which helps keep their prices lower. Earlier this year, Loblaw (TSX:L) agreed to buy Shoppers Drug Mart Corp. (TSX:SC) while Sobeys picked up the Canadian assets of U.S. grocer Safeway.

Target not embraced by Canadian shoppers – yet

Much of this competition was supposed to play out earlier this year when Target first set foot in the country amid a level of hype rarely seen in the industry. But the retailer failed to impress consumers, especially those who had loyally crossed the border to shop at its U.S. Target locations.

A survey released by Level5, a brand strategy adviser, found that Canadian shoppers sentiment for Target is on level with the struggling operations of Sears Canada.

Some Canadian shoppers likened Canada’s version to “Target Lite,” with lackluster prices and an atmosphere that, despite renovations, still had the feel of the Zellers outlets that occupied the same spaces for years before.

“First impressions are big, and so Target’s not getting off to a great start,” said Bobby Hagedorn, a retail industry analyst at Edward Jones, who said the misstep gave competitors a lead.

Despite the time spared, the U.S. challengers are plentiful and diverse, with big names like Microsoft setting up shop while more niche retailers, such as Zara Home, and women’s clothing shops Ann Taylor and Black House, White Market, vie to corner their own segments. 

One of the most competitive spaces will be grocery stores where intermittent price wars have waged on for years. The recent rollout of competitively-priced produce sections at Walmart supercentres has added to the pressure, while Target also launched a mini-supermarket inside its stores.

Add Amazon.com Inc. to the list after the Internet company opened a virtual supermarket for Canadian shoppers that ships non-perishable food items directly to consumer’s homes.

With files from the Canadian Press.