A lot depends on how the retail industry handles the current recessionary situation. If they are able to pull through this period of time, it may give them a chance to breathe a sigh of relief. However, if things turn for the worse, the potential downfall might be so huge that they will have to take several steps to keep their business afloat. Let us try and analyze what needs to happen in the retail industry in Canada.
First of all, they should focus on their market strategy. The failure to plan can cost the business dearly. The first step is to identify the main customer base and target them effectively. This means focusing on the segments of the market that you think have the highest propensity to purchase products. This way you can increase your sales.
Once you have identified these groups, then you need to make sure that you offer them quality products at competitive prices. It might seem a bit strange to say that considering that the US retail sector is experiencing a severe problem recently, but this is true. The Canadian retail market too has been hit hard by the recession. However, the difference here lies in the fact that we are dealing with a small retail sector here. This means that we might be able to rely on local suppliers quite easily. In the US, there is no guarantee that you will find the right supplies locally.
This means that you might have to spend a lot of time sourcing out your retail requirements from different locations. A number of US companies have simply chosen to close down their Canada operations. As a result, those who were working there have lost their jobs. Unless you find a reliable local supplier, you will not be able to sustain your business into the future.
How can retail industry to tackle the problem? Well, it is simple. If your business revolves around the distribution, it might be possible to start sourcing your goods and materials locally. This means that you do not need to have a presence in Canada. For example, if you are into retail clothing and shoes, then it would not make any sense for you to open up a distribution centre in Canada if you are based in the United States. It is simply because the products that you will be distributing will not be of interest to the Canadian consumers.
The same is valid for electrical and electronic goods. Even if you get a contract with a large US retailer, chances are that you will not get preferential rates when it comes to delivering your goods into the States. The same holds true for the trans-continental delivery of manufactured goods. In this case, you should consider outsourcing such processes so that you do not have to spend too much time and effort thinking about them.
What about the supply chain and logistics aspect of the retail industry? What if the retailer is sourcing their raw materials from China or other foreign locations? While it is possible to source these goods locally, it would make a lot of sense to get them from a third party country so that you do not face the Covid situation. At the same time, if the manufacturer is located in Canada, it would make a lot of sense to source your manufacturing materials from Canada as well, especially since the tariffs and taxes that they impose on imported goods make it difficult for them to do business in the United States and Europe.
How can retail companies in Canada to combat the situation? First, they should identify the factors that lead to the Canadian consumer becoming “frugal” and those that lead them towards “luxury.” They should also find ways to reduce the cost of their products so that they can sell them at higher prices than other similar products. This way, they will be able to retain some profit and eventually earn enough to pay for outsourcing.