Introduction
Short history of the retail industry and its growth
Since the year of 2005, the retail sector of Canada is constantly playing an important role in the marketplace of Canada. The sector has a considerable impact on customers, the Canadian economy, and consumers’ activities. The sales of the foods in Canada, from 2006 to 2011 jumped up to 17 percent (Lau, 2014). The sector accounted for sales of $457.4 billion in 2011 with the representation of 12 percent of the workforce of Canada. The food and beverages stores in 2011 were representing the $104.1 billion of the market share (Office of Consumer Affairs, 2013).
The Canadian food industry traditionally has been a competitive space and it has been evident in 2013 as well. The industry is constantly growing to the date and simply going uphill. The big superstores like Costco, Wal-Mart, Target, and even Longo’s have increased their footsteps. The growth of grocery space has reached its double rate as compared to the history in Ontario alone. The target initiated the most aggressive transformation in the country by opening 124 stores around the nation. Even it is expected that the country will open more 40 stores in upcoming years (Lau, 2014). According to the statistics of the government of Canada, in 2015, the monthly sale of food and beverage stores had reached $ 9451 million that shows the immense growth of the sector (Government of Canada, 2016).
The overall history and growth of the sector until now represents that the industry will continue to grow, and chances of sustainable growth for companies are bright.
External analysis of strategic factors affecting industry
External factors are important to business and have a substantial impact on the strategic planning activities of companies. Different industries use different tools to determine these factors; however, in this paper PEST analysis has been considered to determine the external factors that can affect the strategies of the industry (Fred, 2014).
Political/legal: Political factors play a crucial role in affecting the strategies of industries such as government support policies, increase, or decrease in taxes, increase, or decrease in interest rates, tariff, employment laws, environmental laws, import and export restrictions, and health and safety law.
Economic: The demand of the retail sector is dependent upon the economy. Economic factors that are influencing the retail sector of the country include purchasing power of customers, employment, GDP, and population. Due to the increased population and consumer demographics, the distribution strategy of retail outlets in Canada has changed. Due to changed consumer demographics, the retail industry is embracing multi-channel distribution strategy to have access to consumers (Office of Consumer Affairs, 2013).
Social factors: Social environment of the country is important in the strategic planning of the sector. Factors that are affecting the Canadian retail industry strategies include changing behaviors of customers, social classes, health priorities, attitude towards product and service, and shopping trends (Office of Consumer Affairs, 2013)..
Technology: the Technological environment is playing an immense role in affecting the strategies of the industry. Global access, new technologies, social media, and enhanced mobility are the factors that have been a profound impact on the information gathering and purchase decisions of customers. These factors in result have shifted how retailers attract, target, engage, and maintain their customers. Due to the change in technology, the industry is adapting new techniques and transforming their traditional model into a new one; and offering their customer diverse ways of purchasing products (Office of Consumer Affairs, 2013).
Competition:
Competition is amongst the important external factor that is driving the growth of the industry and playing an important role in affecting the strategies of the industry. Due to increased competition, industry players are adapting unique and multi-channel advertising and promotion strategies (Office of Consumer Affairs, 2013).
Opportunities and Threats
The most common ten factors that are affecting the change in the industry include:
Increased population of the country that enhanced the demand for food and in result growth of supermarket industry improved. This will be an opportunity for the company as the market size will increase.
The improved economic condition of the country that allowed companies to spend more on driving their growth. This again will be an opportunity for the company
Decreased unemployment rate that enhanced the purchasing power of customers and, therefore, growth of the industry, which is ultimately an opportunity for the company
Decreased inflation rate that served the industry with the opportunity to change their pricing strategies and offering customers with low price high quality food (Focus Economics, 2016). This will be an opportunity as the company can attract more customers.
Changed consumer behavior such as health preferences and improved lifestyle are the factors that are changing the retail sector of the country and labeling strategies as well. This can be a threat for the company.
Changed shopping behaviors of consumers are driving the change in the Canadian retail industry. Due to these changed behaviors, stores are adopting multi-channel distribution strategy. In 2014, 76% Canadian shopped online (James, 2015). This will be a threat for the company. However, it can be converted into an opportunity if the company adopts both brick and mortar and click and mortar business model.
Technology is also an important factor that affected the change in the industry and organization started adopting multi-channel advertising and promotion strategy. This can be converted as opportunity for the company by adopting different new technologies.
Government support is amongst the key factor that is helping the retailers in driving the sector growth (Retail Council of Canada, 2016). This is an opportunity for the company.
Increased competition is also contributing to changing the retail sector of the country. This is a serious threat for the company.
The tax rate is also a reason to influence the changes in the industry, as organization changes their operational strategies and other strategies by following the changes in taxes (Canada Revenue Agency, 2016). Increased tax rate can be a threat for the company.
References
Canada Revenue Agency. (2016). GST/HST rates (calculator). Retrieved March 9, 2016, from <http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/rts-eng.html>
Focus Economics. (2016). Canada Economic Forecast. Retrieved March 9, 2016, from <http://www.focus-economics.com/countries/canada>
Fred, G. (2014). Strategic Planning Analyses – Part II. Retrieved March 9, 2016, from <http://www.foodincanada.com/opinions/strategic-planning-analyses-part-ii/>
Government of Canada. (2016). Retail sales, by industry (monthly) . Retrieved March 9, 2016, from <http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/trad42a-eng.htm>
James, D. (2015). 76% of Canadians shopped online last year, Canada Post says. CBC News. Retrieved March 9, 2016, from <http://www.cbc.ca/news/business/76-of-canadians-shopped-online-last-year-canada-post-says-1.3070651>
Lau, V. (2014). Canadian Grocery Retail: A Cramped Space. The Queen’s Business Review. Retrieved March 9, 2016, from <http://www.qbreview.org/canadian-grocery-retail-a-cramped-space/>
Office of Consumer Affairs. (2013). Consumer Trends Update : Canada’s Changing Retail Market .Industry Canada Retrieved March 9, 2016, from <https://www.ic.gc.ca/eic/site/oca-bc.nsf/vwapj/CTU-2013_Q2_Canadas_Changing_Retail_Market-eng.pdf/$file/CTU-2013_Q2_Canadas_Changing_Retail_Market-eng.pdf>
Retail Council of Canada. (2016). Industry Research. http://www.retailcouncil.org/research/industry-research
