Canada country presentation_presentation

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Country Presentation

Canada

Updated February 2011


Contents

Introduction

Demographics

Political Outlook

Economic Overview

The Retail Market

Top Retailers

Challenges

Market Share Definitions

Retailers covered include:


Source: CIA

Area: 9,984,670 sq. km(2nd largest in the world)

Capital City: Ottawa

National Currency:Canadian Dollar

Population (2010):33.8 million

Population Density: 3.39 people/sq. km

Prime Minister:Stephen Harper

Ruling Party: Conservative

Summary


Demography: 10 Most Populated Provinces

Province Capital City Population (000’s)

Areasq. km

Ontario Toronto 13,064 1,076,395

Québec Quebec City 7,828 1,542,056

British Columbia Victoria 4,460 944,735

Alberta Edmonton 3,670 661.848

Manitoba Winnipeg 1,220 647,797

Saskatchewan Regina 1,029 651,036

Nova Scotia Halifax 939 55,284

New Brunswick Fredericton 749 72,908

Newfoundland and Labrador St. John’s 508 405,212

Prince Edward Island Charlottetown 141 5,600

• Nearly 90% of Canadians live within 200km of the US border.


Demographics

Population Split by Age, 2010 (%)Population Growth Forecast (millions)

Source: IGD Retail Analysis Datacentre, calculated in 2011, Statistics Canada


Immigration In Canada

Immigration has helped to make Canada one of the world’s richest and diverse nations.

The number of immigrants entering Canada has increased significantly since the 1940’s.

Over 18% of the Canadian population were foreign born at the time of the last Census (2001).

In the same census, 13% of Canadians identified themselves as belonging to a visible ethnic minority.

The proportion of so-called visible minorities will grow to one-third of the population by 2031.

The vast majority of immigrants are arriving from China and South Asia.

Almost 70% of Canadian’s are English speaking, with 15% French speaking. Everything that is sold in Canada is labelled in both English and French.


The Proportion Of Immigrants Living In Canadian Provinces

Province Foreign Born Population (%)

Ontario 26.8

British Columbia 26.1

Alberta 14.9

Manitoba 12.1

Québec 9.9

Saskatchewan 5.0

Nova Scotia 4.6

Prince Edward Island 3.1

New Brunswick 3.1

Newfoundland and Labrador 1.6

Source: Statistics Canada


Total visible minority population by province%

popula

tion

Source: Statistics Canada


Trading In Canada

Companies have to operate within a system of both federal and provincial legislation,

including differing tax regimes in operation.

The Canadian economy has remained relatively robust during the economic

downturn, particularly its banking sector, and has returned to growth quickly.

Canada is a member of the North American Free Trade Agreement (NAFTA).

The US and Canada have the world’s largest trading relationship.

The Canadian economy is largely tied to the US, which in 2009 absorbed 73.4% of

Canadian exports.

In recent years, the relationship between Canada and the US has encountered

challenges following a number of moves by the US which includes placing tariffs on

Canadian timber.

The slow economic recovery in the US could impact the pace of recovery in Canada.


Political Outlook

Twelve years of Liberal government ended in January 2006 when Stephen Harper was

appointed Prime Minister.

However, the new conservative Government has limited room for manoeuvre as it

failed to gain a majority vote.

The conservative party aims to cut taxes, fight crime, increase military spending and

improve the relationship with the US.

Mr Harper has been criticised for the apparent switch of focus from social to economic

matters.

An economic stimulus package has been broadly successful in protecting the

Canadian economy from the severest impacts of the recession

The next national election is scheduled for 2012


Economic Overview

2007 2008 2009 2010 2011

GDP (Nominal US $bn)1,431 1,508 1,344 1,571 1,655

GDP Growth (%)2.53 0.41 -2.48 2.13 3.55

GDP per Capita (US $)43,525 45,353 40,006 46,404 48,524

Unemployment (%)6.01 6.16 8.43 8.83 7.50

Food Price Inflation (%)2.59 2.51 2.61 2.71 2.81

Consumer Price Inflation (%) 2.12 2.39 0.03 0.53 1.38

Source: IGD Retail Analysis Datacentre, calculated in 2010


Grocery Retail Market Sizes 2010

Country Grocery Retail Market(US$bn)

1. USA 882

2. Brazil 290

3. Mexico 159

4. Canada 104

5. Venezuela 58

6. Argentina 49

7. Columbia 48

8. Chile 25

9. Peru 25

10. Dominican Republic 12

Top 10 North, Central & South American Markets

Top 10 Global Markets


Country Grocery Retail Market(US$bn)

1. USA 882

2. China 790

3. Japan 360

4. India 350

5. Brazil 290

6. France 276

7. Russia 256

8. Germany 215

9. United Kingdom 215

10. Italy 172


The Retail Market

2007 2008 2009 2010 2011

Consumer Spend (US$bn) 798.01 844.72 752.75 895.35 934.89

Total Retail Market (US$bn)

269.02 314.70 287.77 329.03 342.85

Total Grocery Market (US$bn)

90.15 95.60 92.71 104.35 107.70

Grocery as a % of Retail 33.5% 30.4% 32.2% 31.7% 31.4%

Grocery Retail Spend / Capita (US$)

2,742 2,874 2,759 3,083 3,158



Retail Consumer Spend Per Capita in Canada

• Consumer spend per capita is the second highest in the NAFTA behind the US, and amongst the highest in the world.



Retail Legislation

Canada has been one of the leading countries to ban the display of tobacco products. The legislation has been gradually phased in across each province and territory since 2002. Currently 12 of the 13 provinces/territories have a ban in place.

In October 2009, the Council of Ministers of the Environment approved in principle a Canada-wide Action Plan for Extended Producer Responsibility and a Canada-wide Strategy for Sustainable Packaging.

Extended producer responsibility (EPR) is an environmental policy approach in which a producer's responsibility for a product is extended to the post-consumer stage of a product's life cycle.

Two related features of EPR policy include:

Increasing producer responsibility by shifting responsibility upstream toward the producer and away from municipalities and/or regional or provincial waste management authorities.

Providing incentives to producers to incorporate environmental considerations in the design of their products.


The Grocery Retail Market – Structure By Format

The majority of grocery stores in the Canadian market are supermarkets. These are

typically operated under a range of banners by each of the leading operators, many of

which are specific to each province.

Although there are only a small number of convenience operators in Canada, Couche-

Tard, based in Quebec, is North America’s second largest convenience store retailer

with almost 6,000 stores, over 2,000 of which are in Canada.

There are currently few hypermarket operators in the market, although Walmart

continues to expand its presence with its Supercentre format.

The majority of discounters operating in Canada are soft discounters, with this channel

growing in importance, and a key area of development for retailers.

A number of the leading retailers also operate a range of drugstore formats.

Increasingly retailers from beyond the traditional grocery sector are developing food

ranges including drugstores, dollar stores and general merchandise operators.

Developing an offer to meet the needs of Canada’s highly diverse multi-cultural society

is also a growing focus for retailers.


Top Grocery Retailers 2010

Retailer Net Sales ($ CAD m)

% Total Turnover

Growth 2009 v 2008

No. of Stores Sales Area (sq ft 000’s)

Loblaw 31,322.79 +1.9% 1,044 51,470

Sobeys 15,463.46 +1.4% 1,379 28,343

Walmart Canada 12,753.15 -3.3%* 323 43,024

Metro Inc 11,342.80 +1.3% 771 20,967

Costco Canada 10,349.55 -6.8%* 79 10,800

Shoppers Drug Mart 10296.30 +3.1% 1,310 12,186

Safeway Canada 6,096.06 -9.0%* 226 9,040

Couche-Tard (Canada) 2,085.23 -3.6%* 2,072 4,839

* At actual exchange rates



Market Share - Canada

2008 2009 2010

Loblaw 24.8% 24.0% 23.9%

Sobeys 13.7% 13.6% 13.4%

Metro Inc 9.6% 9.7% 9.5%

Safeway 6.7% 6.3% 6.2%

Wal-Mart Canada

4.3% 6.0% 6.7%

Couche-Tard 1.8% 2.0% 2.1%

Canada Market Share - 2010

Couche-Tard turnover only includes goods sold in-store (ex fuel)



Key:

H = Hypermarket

S/S = Superstore/Supermarket C&C = Cash and Carry

H/SD = Hard/Soft Discount

Banner Total net

Sales ($m)

Format No. of Stores

Sales Area

(000s sq ft)

Av. Sales Area

(sq ft)

Atlantic Superstore, Real Canadian Superstore,

9,455 H 183 14,553 79,524

Dominion, Fortinos, Independent Grocer, Zehrs, Zehrs Great Food, Loblaws, Loblaws Great Food, Provigo, SuperValue, Valu-Mart, Atlantic SaveEasy

11,452 S/S 413 22,244 53,860

Extra Foods, No Frills, Maxi, Maxi & Cie

4,909 H/SD 380 7,234 18,988

Cash & Carry, Presto, The Real Canadian Wholesale Club

5,487 C&C 68 7,125 104,787



Loblaws in Montreal

Source: Retail Analysis photo gallery

Loblaw is Canada’s leading food and grocery retailer.

In 2007, Loblaw began its three to five year turnaround plan in an attempt to “Make Loblaw The Best Again.”

The plan involves implementing the three main imperatives of “Simplify, Innovate, Grow”.

A key element of this strategy is to reinvigorate its store base, particularly its hypermarket format – refurbishments will continue in 2011

Loblaw is also investing significantly in its supply chain capability and focusing on driving improved levels of productivity.

It’s private label ranges, no names and President’s Choice, are important levers for growth going forward, with the latter having been extended into banking and telecom services.

The retailer will expand its standalone clothing store operation, Joe Fresh, this year, with six new stores


Key:

S/S = Superstore/Supermarket

C/F = Convenience/Forecourt

H/SD = Hard/Soft Discount O= Other


Banner Total net

Sales ($m)

Format No. of Store

s

Sales Area (000s sq ft)

Av. Sales

Area (sq ft)

Sobeys, Thrifty Foods, Foodland, IGA, IGA Extra, Marche Bonichoix, Les Marches Tradition

13,085 S/S 900 23,909 26,565

Lawtons Drugs, Rachelle-bery 533 O 77 540 7,018

Price Chopper, FreshCo 900 H/SD 110 2,113 19,214

Needs Convenience 510 C/F 284 978 3,444

TRA Atlantic, Lumsden 435 C&C 8 801 100,223


Sobey’s focus is based on being “best in food” coupled with offering outstanding customer service.

In April 2008, Empire Company Limited, acquired whole ownership in Sobeys, buying all outstanding shares in the company for CAN$1.1bn.

Sobeys is the second largest food retailer in Canada, benefiting from a number of strategic acquisitions including the Thrifty Foods in British Columbia, extending the retailer’s reach in the West of Canada.

Although its reach is becoming increasingly national, it adopts a local approach in each of its markets.

In June 2010 the retailer launched a new discount concept, FreshCo. This has a focus on fresh foods and ethnic ranges, and uses a unique layout to guide shoppers around the store.

These stores replaced its existing Price Chopper format, and all conversions are scheduled for completion in 2011

Sobeys and Sobeys express in Montreal



Key:

S/S = Superstore/Supermarket

H/SD = Hard/Soft Discount

O = Other


Banner Total net

Sales ($m)

Format No. of Store

s

Sales Area (000s sq ft)

Av. Sales

Area (sq ft)

Metro, Metro Plus, Dominion, Loeb

7,215 S/S 379 13,072 34,491

Super C, Food Basics 3,023 H/SD 185 6,757 36,522

Brunet, Clini Plus, Pharmarcy Drug Basics

1,105 O 207 1,139 5,500


Metro’s mission is to be “Canada’s best food retailer.”

Metro is concentrated in Eastern Canada, and is the second largest retailer in Québec and Ontario.

Metro operates a multi-format portfolio including supermarkets, discount stores and drug stores.

Metro has now completed the consolidation of its supermarket stores in Ontario under the Metro banner.

In 2009 Metro formed dunnhumby Canada in partnership with dunnhumby to enable it to leverage insights from shopper loyalty programmes.thr

The focus in 2011 will be on leveraging the insights from this programme to drive improved business decisions in pricing, ranging and promotions

Metro has also consolidated its private label offer under two key brands, Irresistible and Selection.

Metro Plus and Super C in Montreal



Banner Total Sales ($m)


Sales Area (000 sq ft)

Av. Sales Area (sq ft)

Wal-Mart Supercentre

7,230 H 118 19,777 167,605

Wal-Mart 5,523 GM 205 23,247 113,398

Key: H = Hypermarket

C&C (Clubs) = Cash & Carry Members ClubGM = General Merchandise

• Wal-Mart first entered Canada in 1994 through the acquisition of 122 Woolco stores.



On the 18 October 2006, Wal-Mart opened its first Supercentre stores in Canada.

The stores are modelled on those in the US, and combine Wal-Mart's traditional general merchandise offer with a wide assortment of perishable goods, a bakery, a deli, as well as a number of fresh food counters.

Developing its food offer, and in particular its fresh food ranging, is an important element of the strategy going forward.

In 2011, Wal-Mart will introduce the Supecentre format into Quebec and Alberta.

In 2010, the retailer began offering its own financial services, following approval from regulatory authorities to establish its own bank

In August 2010 Walmart Canada announced the expansion of the range of products available under the George clothing brand with a major re-launch.

Wal-Mart, British Columbia







Costco 10,350 C&C (Clubs)

79 10,800 136,709

Key: C&C (Clubs) = Cash & Carry Members Club

Entered Canada in 1985.

Costco’s sales in Canada accounted for approximately 13.8% of total group sales in Fiscal 2007.

Canada is Costco’s largest international market.



Costco’s main priorities in Canada are:

Continue to grow organically.

Costco could open as many as 10 to 15 stores in the coming years.

Plans to open 35 new stores by 2015.

Adding gas stations to existing stores.


Costco in TorontoOntario, Quebec and British Columbia are Costco’s largest markets in Canada. Stores in these three provinces account for over 75% of the entire portfolio.




Sales Area (000

sq ft)

Av. Sales Area

(sq ft)

Shoppers Drug Mart, Shoppers Simply Pharmacy, Pharmaprix, Pharmaprix Simplement Sante, Murale

9,954 H&B 1,247 11,745 9,418

Shoppers Home Health Care 342 O 63 441 6,997

Key: H&B = Health & Beauty

O = Other



Shoppers Drug Mart, Langley BC

Canada’s leading health and beauty chain.

Increasing focus on developing food and grocery ranges.

Format development includes larger format Shoppers Drug Mart stores and continued expansion of its Murale beauty stores.

The retailer has also developed smaller format stores, namely Shoppers Simply Pharmacy - these stores are around 1,000 sq ft in size and provide a retail pharmacy format in medical buildings or clinics. Currently there are 30 locations in operation.

The retailer has recently undertaken the first in a series of reductions in store operating hours as a result of the impending funding cuts to community pharmacy by the Ontario Government.

A broader trial of fresh food ranges is also underway.


Banner Total Sales

($m)




Safeway 6,096 S/S 226 9,039 40,000

Key: S/S = Superstore/Supermarket

Canada remains Safeway’s only consolidated business outside of the US.

Operates in Canada through Canada Safeway Limited, a subsidiary of Safeway Inc.

Based in Winnipeg, Manitoba.



Nearly a third of all stores in Canada are less than

35,000 sq.ft in size and are located in Western

Canada.

New store development is likely to remain fairly

limited in the years ahead, as Safeway focuses on

rolling out the Lifestyle concept in its core US market.

2010 saw the roll-out of an aggressive price cutting

programme, reflecting a similar initiative that had

been implemented in the US in 2009.

Safeway utilises its private label capability to create a

key point of difference, particularly in terms of its

Signature café ranges and prepared foods.

Many of Safeway’s Canadian stores also feature a

Starbucks outlet.

Safeway in Canada


Key:

C/F = Convenience/Forecourt

• Sales in Canada accounted for 29.8% of total group turnover in 2009.






Couche-Tard, Macs

2,085 C/F 2,072 4,840 2,336


Couche-Tard’s growth in North America has been fuelled by

a large number of acquisitions, which combined with new

store openings has resulted in a portfolio of over 2,000

convenience and forecourt stores in Canada.

Innovation and well-targeted marketing strategies have

been at the centre of Couche-Tard’s growth.

New product development and in-store merchandising

differs according to regional preferences. A typical store now

offers around 3,200 SKUs, almost twice that of a decade ago.

Own brand lines have played an important role in building

customer loyalty in recent years. Couche-Tard has an

extensive private label assortment in coffee, energy drinks

and sandwiches.

The retailer is currently trialling different foodservice options

in the US as it builds capability in this area.


Priorities in 2011

Continued innovation in private label, national expansion of No Frills and delivering increased supply chain capability through progressing its 2012 initiatives

Completing the FreshCo store conversions and re-focusing its marketing to drive its core business with emphasis on freshness and uniqueness and category management

Leveraging customer insights to deliver its customer first focus, impacting products, pricing and promotional decision making

Investing in its foodservice capabilities should help to drive a step-change in performance in this area

Further tailoring of the offer to demonstrate its local relevance

Around 40 further Supercentres will open in 2011, helping it to demonstrate its commitment to fresh produce retailing


Challenges and Opportunities

Focus on Fresh – A strong fresh food offer tends to feature in all of the leading chains in the Canadian market and will continue to be a key battleground going forward, especially in natural and organic ranges.

Extension of the Supercentre in Canada – Wal-Mart opened its first Supercentre store in October 2006. This has since led to an even greater competition on price, particularly in Ontario, where a significant proportion of sales are now driven through the discount channel.

Discounting – significant innovation is taking place within the discount sector as retailers seek to appeal to more value conscious customers, and to reach new customer groups.

Growth in convenience – The Canadian convenience market is relatively underdeveloped. Apart from Couche-Tard and Sobeys’ experimental convenience stores, there are few operators in the sector. An opportunity therefore exists in the Canadian convenience sector for greater expansion.

Changing demographics – Retailers are developing broader ethnic ranges to cater for the changing Canadian population. With immigration forecast to grow strongly in the future, the major retailers are seeking to replicate the success of more specialist retailers in this area.


IGD Market Share Methodology

IGD has a single, universal methodology to enable comparisons of market shares and consolidation levels between countries. It is calculated by comparing retailers’ sales from grocery formats with IGD’s grocery retail market size.

IGD defines the grocery retail market as all food, drink and non-food products (e.g. health & beauty, pet care, clothing, DIY) sold through all retail outlets selling predominantly food in a given country.

This definition includes both modern retail formats such supermarkets and hypermarkets, and traditional retail formats such as open air markets and traditional food stores such as bakers. However, it excludes Cash & Carry operations and drugstores/pharmacies and sales tax.

IGD market sizes are ‘top down’, derived from national statistical bodies wherever possible. In all other cases, the figures published in this report represent IGD estimates and are based on a consistent methodology and knowledge of local markets.

For each retailer, the turnover used is total sales from grocery format, and therefore excludes non-food formats (such as DIY, electrical stores, department stores etc). IGD also exclude Cash & Carry formats and drugstores/pharmacies from this measure, to ensure the data sources are comparable;

1.Retail turnover is excluding VAT 2.Retail turnover is excluding non-food formats (e.g. furniture, electrical stores etc) 3.Cash & Carry operations are excluded 4.Where known, we have subtracted the Cash & Carry operations of players such as Carrefour

and Rewe to use a pure grocery retail estimate of turnover.

IGD’s market shares differ from panel-based or till-roll markets shares (e.g. from ACNielsen, TNS or IRI) due to the different methodologies; the latter are based on limited categories/retailers.


For More Information

Visit the Canada hub page on Retail Analysis.

Use the IGD Datacentre for key macroeconomic data on Canada, plus statistics on retailers’ operations by banner and format.

Visit the photo archive for images of retailers operating in Canada.

Got a MyReports subscription? Try checking our International Research reports.

To find out how an IGD Customised Briefing can bring you up to speed on the market and the key players, email [email protected]

Still can’t find what you’re looking for? Contact us [email protected] or 01923 857141.

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