The problem in Canada, is the cost of doing business, It is not just taxes, but the regulations that jack up the cost, and much of that is at the local municipal level. That means you need much higher gross margins to make a profit.
I was in retail (big box) my whole career. We used to be able to build a store from land purchase to opening in 2 - 3 years. Then it stretched to 3 - 5 years. Now it is not uncommon 5- 7, and even 10 years to get a large store up and running. And the costs just keep going up. And then it usually takes another 5 years or so, just to break even with the new store.
Some places are better than others. Alberta is still not too bad. But BC is very bad, and getting worse, especially in the Metro Vancouver area. And I know Ontario is bad, too.
It is very hard for a Canadian retail chain to grow organically (store by store). It is much easier to buy a dying chain (like Zellers and others gone by) and then get a head start with a bunch of stores. But that takes a lot of capital, which the struggling Canadian retailers don't have. As a result, American chains, with their massive economies of scale can come in and set up shop here, much easier than us locals.
Having said that, they all don't get it right either from the start. Target is a good example. And they can't sell the stuff here either for the same price as they do in the US.
But like I said, the real culprit is the municipal fiefdoms, called planning depts, that are really only there to serve themselves, not the tax paying public and consumers. As a result we are doomed to keep buying from the US whenever we can.
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11-06-2013, 03:51 PM
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