Moving across the US-Canada border can be the first step toward international expansion for retailers.
Canadian brands like lululemon athletica and Aritzia are thriving in the US. Meanwhile, US-based companies Lowe’s, Nordstrom, and Bed Bath & Beyond recently announced they were leaving Canada. And let’s not forget Target’s famous Canadian failure.
“A lot of Canadians crossed the border into the US states to shop at Target, and they loved it. They thought it was a better Walmart,” our analyst Paul Briggs said on a recent episode of our “Behind the Numbers: Reimagining Retail” podcast. “But the [Target] experience in Canada was not the same. They had supply chain issues and merchandising issues that they could not overcome, and they basically packed up shop and that was a high-profile exit of the market.”
Here’s a look at how brands have fared across the US-Canada border, and the lessons you can learn from them.
Lowe’s and The Home Depot: The hardware store entered Canada through the acquisition of home improvement retailer Rona, but announced the sale of its Canadian business late last year. Yet competitor The Home Depot remains successful in Canada, due to a few advantages.
Lesson learned: When entering a crowded space, retailers need to find a way to differentiate themselves. The Home Depot found one. Lowe’s did not.
Nordstrom: The department store announced the end of its nearly decade-long Canadian endeavor in March.
Lesson learned: Different markets don’t just affect where people shop, but how they shop. Without a mall infrastructure, mall-based stores don’t have the same appeal.
On the flip side, several Canadian brands have had success moving into the US.
Aritzia: The “hottest fashion chain in the US,” as noted by Bloomberg earlier this year, has been around since the 1980s in Vancouver, but only recently built up a strong brick-and-mortar footprint in the US.
Lesson learned: Even an older brand can make a splash by treating its entry into a new market as a branding opportunity.
Lesson learned: Carving a new niche in an existing market can pay off. But brands need to make sure they’re reaching customers at a time when they’re open to change.
This was originally featured in the Retail Daily newsletter. For more retail insights, statistics, and trends, subscribe here.
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