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U.S. Exporting More Retail to Canada

canadian-flag-11072202 Credit: Dreamstime.com

The next time you hear someone lamenting America's trade deficit, refer them to Canada. Our neighbor to the north is increasingly the recipient of one of our most valuable national products — retail stores.

That's the finding of a new study from Ryerson University Centre for the Study of Commercial Activity, which determined that popular American retail powerhouses are eyeing Canada as an untapped market to expand their customer base more than ever before.

“International retailers, especially from the U.S., have long been part of the Canadian marketplace,” said Joe Aversa, lead author of the report. “However, the global recession has made it difficult for them to achieve growth in the U.S. market . So, American and other foreign retailers are now looking for other ways to grow and Canada is seen as a ‘safe’ test bed.”

Their research found that by the end of fiscal year 2009, 47 percent of the top 121 leading retailers in Canada were foreign-owned and operated, mostly by U.S. companies. The total retail sales of these international retail companies was $85 billion, which accounted for more than 40 percent of the total retail sales in Canada by the 121 leading retailers.

U.S. retailers that have recently expanded into Canada include the Apple Store , Coach, Bath and Body Works, Lowe’s and Marshalls. Target is poised to open up to 150 Canadian stores in 2013.

Although U.S.-based companies operate nine out of every 10 foreign-owned stores in Canada, major retailers from Europe and Asia have also joined the Canadian retail scene during the last decade. They include Sephora (France), H&M (Sweden) and The Sony Store (Japan).

The researchers believe foreign retailers are attracted to Canada for several reasons. In the case of American retailers, the countries’ close proximity, shared popular culture and common official language allows for a smoother transition process for retail concepts and store formats. The exception to this rule is Quebec. The report found that although the province accounts for 23 percent of the national population, it is home to only 13.5 percent of Canada’s foreign-owned leading retailers.

The report was co-authored by Tony Hernandez, director of the Centre for the Study of Commercial Activity, and Christopher Daniel, a senior GIS analyst at the center.