Is It All About The Branding?

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Don’t let the polite and pleasant nature fool you. Canadians are actually the most ruthless people on the earth. Ok, maybe that’s a bit harsh but when it comes to the retail world, Canadians are indeed the most ruthless consumers in the world. Recent high profile retail closures indicate that Canadians have no problem punishing brands that don’t deliver to their own expectations. They are mean aren’t they? Another good question is, does branding actually matter in Canada anymore? Or is there more to the consumer sales cycle when working with Canadians?

When it comes being American, Canadians are really the next closest thing. We do love iPhones (or anything else with an i in front of it), we also love BMW’s and luxury homes and have no issues plunking down 10 grand for the latest curved TV. The average American spent $17,900 per year in retail in 2013 while Canadians spent an average of $17,000. In terms of actual spending, we are close to on par with our neighbors to the south and it is a clear indication that we have no problem opening our wallets. Yet the retail landscape in Canada has never looked bleaker. 2015 has been a devastating year for retail brands in Canada. Target had hoped to fill a void in the retail marketplace but crashed and burned by underwhelming and under delivering on the hype that follow the brand around. Future Shop, a once proud Canadian electronics retailer was recently shuttered by its parent company Best Buy in a bid to consolidate the marketplace. Best Buy acquired the brand in 2001 and mysteriously opened its own stores within the vicinity of existing Future Shop locations. Heritage brands could not escape either with the closure of Black’s Photography locations nationwide which had been providing photography services to Canadians since the 1950’s. Names and history really mean nothing to us when it comes to spending our money. While on the subject of heritage brands, Eaton’s was perhaps the biggest failure in Canadian retail brand history.

Established in 1869, Eaton’s had, in its heyday, controlled 60% of the retail sales in Canada. Billed as Canada’s greatest department store, Eaton’s would not adapt to a changing marketplace and was closed in 1999. Canadian consumers put little faith in the 130 years of brand equity Eaton’s had built up and spent their money elsewhere. Eaton’s who? We actually do get offended pretty easily and take out our frustrations on brands as well. Tim Hortons is considered to be one of those classic heritage brands that represent all things Canadian. Timmy’s has been in the news lately as a foreign company has taken over the operation and looks to expand the brand beyond Canada’s borders. The menu, cup sizes and restaurant procedures have all been fine tuned to fit a global platform and you can almost feel the loss of identity as you walk into a store. Perhaps this non-loyalty to brands isn’t actually Canada’s fault after all. So Canadians are ruthless consumers? They also reward brands who do continue to deliver on product, service and experience. Walmart has been extremely successful in Canada due in large part to the lack of actual competition in that segment. Costco has a bulletproof business model that keeps Canadians coming back for that excellent 20 gallon pickle bucket value. Canadian Tire’s “Tested In Canada” marketing campaign has paid off in bottom line results by connecting itself to the consumer through nationalism (and an always changing feature item inventory helps too).

One Canadian brand that will have its loyalty tested is luxury department store Holt Renfrew. US luxury retailer Nordstroms sees potential up here and will challenge Holt head on (as Holt Renfrew has essentially been unchallenged in that category for a while now). There is a market in Canada; you just have to play by our rules. The competitive landscape has always been a struggle for Canadian consumers. Our geography and population makes for a challenging business case for any brand that looks to the north for expansion. Lack of competition could actually be a reason as to why we don’t show any brand loyalty. The cell phone, cable TV and ISP business is a perfect example of lack of competition and the drive to other brands. Big providers such as Rogers and Bell are seeing their subscriber bases shrink as consumers flock to other alternatives that are, at the very least, not Rogers and Bell. A colleague of mine escaped a war torn country in Africa to build a better life for himself and his family here in Canada and is quick to point out that he had more cell phone options back home than he does here. This lack of choice builds psychological resentment among consumers who will be quick to jump ship when a new brand appears in the market.

Canada is a very diverse nation that promotes immigration. Hey, our cultural mosaic is what makes us amazing! Unfortunately, it’s tough for business. Anyone who tells you that culture doesn’t define consumer behavior is not telling you the full story. And in Canada, catering to different cultures is an art form in itself. Building brand loyalty and equity is an uphill battle for any business in Canada especially when working within communities that are culture specific. Aside from the market specifics, it basically boils down to experience for Canadian consumers. If we don’t see value for our dollars, we are very quick to vote with our money. We have to be fickle as our disposable income is about $10K less per year than our American counterparts. Add inflation, taxes and generally higher prices across the board, it’s no wonder we are a skeptical and conservative bunch. Companies that are over hyped, aren’t managed well and don’t deliver in value and service can never survive our harsh Canadian retail climate.

We love stuff. The numbers don’t lie. In proportion to our geography and population density, we do pretty well when it comes to retail spending. Maybe we aren’t the best place for expansion but a brand that has the right strategy could do very well in Canada. We certainly are lacking in competition across all industries but it’s not as simple as filling a void (see Target). Brands that understand Canada and Canadians can position themselves to grab market share here. After all, spending money on shiny things is just as Canadian as maple syrup and back bacon (which are all priced higher here than in the US fyi).

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