Canadian retail report

Anyone doing business in Canada should probably take a look at some of the latest intelligence on Canada's retailers from the USDA. This recent Foreign Agricultural Service annual report provides a 48 page pdf summary of the Canadian retail sector performance. From the report:

Consolidation in the grocery sector has been the trend in the retail market over the past few years. This has boosted the sales of large grocery chains and brought the three major chains to the top. These are Loblaw Companies Limited (1,577 stores), Sobeys Inc. (1,709 stores), and Metro Inc. (1,628 stores) – all Canadian-based companies. Metro Inc, which, until recently, as mainly in the Quebec market, acquired the A&P Canada business in 2005, which gave the company a strong presence in Ontario, the largest Canadian market. Both Loblaw and Sobeys have been expanding through new store openings and a shift towards larger store formats. Loblaw has also been increasing the share of retail space allocated to general merchandise, to counteract competition and to maintain its strong positioning against Wal-Mart’s expansion. In contrast, Metro Inc, with an average store size below the national average, has also begun pursuing a strategy towards large-size formats stores. In 2003, it opened its first superstore under the Metro Plus banner, since then the number has grown to 58 in 2006. This amalgamation of the Canadian retail food sector has increased competition for the consumer’s retail food dollar in Canada within the traditional grocery store environment.

Later....

The chain share of total food sales decreased 0.7 percentage points between 2002 and 2006, decreasing from 60.7 per cent of total sales to 60 per cent. Total chain sales for 2006, which combine both grocery and convenience store figures, increased 17 percent from 2002, reaching nearly CDN$ 44 billion. Share of independent food sales has increased slightly since 2002 from 39.30 percent to a 40.00 percent in 2006. It is forecasted to decrease by 0.05 percent in 2007, while chains are expected to increase their market share by the same amount. Among the independent stores, the unaffiliated had the biggest sales increases in the past two years -- 4.6 and 4.8 percent increases in 2005 and 2006, respectively.

TK: There is much more to the report, including the interesting observation that food price inflation in Canada is being mitigated by Wal-Mart's expansion there.
Retailers are seeking to hold on to market share by holding back price increases, the USDA notes.