Dollarama, Tim Horton’s Sit at Opposite Ends of Canadian Retail Spectrum

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Retailing in Canada is embroiled in difficulty, between the travails of homegrown retailers like bookseller Indigo to US-based brands like Target, Sears and Walmart that are attempting industry conquest. 

In that context, it’s encouraging to see the fast success of one domestic Canadian retail brand, Dollarama. The dollar-store retailer appeared for the first time on the Interbrand list of Best Canadian Brands this year, ranked at No. 15 with C$1.273 billion in annual brand value.

“It’s a very simple model,” Carolyn Ray, managing director of Interbrand Canada, told brandchannel about Dollarama. “They do no advertising whatsoever. The price point, of course, is low. The stores are clean and well-organized.”

Dollarama has about 800 stores in Canada now with an expansion to 2,500 stores planned within a couple of years, Ray said. “It’s great to go into that store and get what you were promised,” she said.[more]

Another Canada-based retailer on the march is Hudson’s Bay Company, which bought 90-year-old American icon Saks Fifth Avenue last year. It plans to introduce Saks and Off Fifth outlets to the Canadian market, while it has continued to work on its flagship brand, including a rebranding ahead of Target’s launch last year. Other luxury retailers including Nordstrom and Versace reportedly also are targeting Canada.

The struggle for mid-tier retailers, though, is very real. Target’s deep dive into the northern market, in which it took over real estate abandoned by domestic retailer Zellers, proved to be quite disappointing, resulting in change at the top of Target Canada just as the parent company in the United States recently ousted CEO Gregg Steinhafel. Sears is also struggling anew in Canada, much like it is in the US, and Walmart has confirmed plans to cut 750 jobs in Canada after testing a new management structure in select stores. 

“The question for them is how to adapt a brand to Canada,” Ray said. “We have a different culture and values than the US. It’s not an extension of the US. So strong American brands—even Target and Sears—can’t figure out the market here.”

On the other hand, the difficulties of American retailers in Canada should open up more opportunities in domestic retailing for indigenous companies including Hudson’s Bay, Canadian Tire and Loblaw, which acquired the country’s largest pharmacy chain in 2013 in an attempt to stave off grocery and wellness competiton posed by Walmart and Target. Canadian Tire, meanwhile, has launched an expansion of its smaller stores, Canadian Tire Express, in order to infiltrate urban locations and has continued to adapt its retail strategy based on the in-store and online shopping experience that it created at sister brand SportCheck. 

The problem is, though, that the Canadian retail market is undergoing a long-term bifurcation into thriving upscale brands and struggling mainstream brands, just like the United States. Indigo Books and Music, for instance, last year started to sell American Girl dolls (versus Canada’s homegrown Maplelea doll line) to help make up for lost book sales—despite the fact that the chain’s slogan is, “The world needs more Canada.” Consumers are also seeing less retail options in the marketplace as mergers and acquisitions continue to be the strategy of choice for Canadian brands like grocery chain Sobeys, which aquired hundreds of Safeway stores last year. 

The story isn’t much different for Canadian brands in the US. Despite brands like lululemon and Canada Goose, who have found retail success despite some blunders, that’s not the case for Tim Horton’s, one of Canada’s most successful domestic brands. The brand, which is celebrating its 50th anniversary, secured the Canadian coffee-house palate years ago but is still having huge problems selling Americans on its brand as it struggles to cultivate loyalty in the US against the likes of Starbucks, McDonald’s and Dunkin’ Donuts. 

When it comes to doughnuts and coffee, Harold Simpkins, a marketing professor at Montreal’s Concordia University, told The New Yorker, “What does Canada have to do with that?” Well, it surely would like something.

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