Canada / Analyst Insights
Top 5 Retail Industries Set for Revenue and Establishment Growth
by Olivia Ross, Industry Analyst
Apr 25 2019

The Canadian retail landscape has transformed significantly over the past decade and continues to evolve quickly. As e-commerce sales’ proportion of total retail sales has rapidly increased more consumer dollars have been siphoned away from brick-and-mortar industry establishments, resulting in a wave of store closures. For example, Sears Canada Inc. completed the closure of its 190 stores in 2018, while retailers such as Gap Inc. and Victoria’s Secret announced plans to close several of their Canadian storefronts in 2019.

However, several retail industries have exhibited strong revenue and establishment growth amid rising e-commerce competition. By expanding their range of value-added services, retailers in Canadian industries, such as Beauty, Cosmetics and Fragrance Stores (IBISWorld report 44612CA), have leveraged their brick-and-mortar presence as an advantage. Retailers have also capitalized on rising per capita disposable income and changing demographic trends to gain a competitive advantage in a crowded retail marketplace. As a result, IBISWorld anticipates the following industries will be equipped to contend with the challenges and opportunities of a shifting retail landscape.

 

 

New and Used Car Dealers in Canada

The New Car Dealers industry in Canada (44111CA) has shifted gears and taken off at full speed over the five years to 2019, as both rising disposable income and historically low interest rates resulted in increased demand for industry products. Over the five-year period, industry revenue is anticipated to increase at an annualized rate of 6.1% to $140.0 billion alongside an annualized 0.9% increase in establishments during the same period. The Used Car Dealers industry in Canada (44112CA) is anticipated to experience similar growth over the five years to 2019, with revenue increasing at an annualized rate of 7.0% to $10.2 billion alongside an annualized 0.9% increase in establishments during the same period. As economic conditions improved and consumer spending increased, consumers released pent-up demand for big-ticket purchases such as automobiles.

Although the internet has enabled Canadian consumers to research and compare the prices of vehicles, industry establishments have remained the first stop for consumers interested in purchasing either a new or used vehicle. Both dealership types have continued to differentiate themselves from online retailers by offering value-added services unavailable online, such as expert advice and test driving. Furthermore, the ability to shop for vehicles on a mobile device, tablet or computer has encouraged industry operators to build an online presence to list vehicle offerings while expanding their brick-and-mortar locations to cater to rising demand. 

 

 

Pet Stores in Canada

The Pet Stores industry in Canada (45391CA) has experienced strong growth over the five years to 2019.  By offering a wider array of innovative, specialized and premium products and services, pet stores cashed in on owners’ desires to pamper their pets. In addition, rising pet ownership in Canada led to an overall higher demand for pet food and supplies. IBISWorld estimates that industry revenue will grow at an annualized rate of 6.8% over the five years to 2019, totalling $1.8 billion.

In response to mounting competition from large chain grocery retailers and online retailers, pet stores are placing greater emphasis on providing specialty services to lure in customers. Grooming and premium boarding options have grown in popularity as operators aim to leverage their price-premium retail space and increase foot traffic. For example, Canada’s largest specialty pet retailer, PetSmart Inc., plans to expand its spa and hotel services for dogs and cats, tailoring to the needs of consumers who travel on a regular basis.  As a result, the number of industry establishments is anticipated to increase an annualized 0.7% to 2,685 locations over the five years to 2019.

 

Health Stores in Canada

Canada’s aging population, increased health expenditure and rising health consciousness have contributed to healthy gains for the domestic Health Stores industry (44619CA). Revenue is anticipated to increase at an annualized rate of 5.7% over the five years to 2019 to total $4.5 billion as industry operators take advantage of demographic trends.

Over the five-year period, the number of adults aged 65 and older is anticipated to increase an annualized 3.3% alongside an annualized 2.9% increase in health expenditure. This demographic is growing at a much faster pace compared to the overall population, which is expected to grow at an annualized rate of 0.7% over the five-year period. This has contributed to a rise in demand for certain industry product segments, primarily orthopedic equipment and convalescent care products, contributing to revenue growth.

In response to higher demand, industry operators have increased their Canadian presence. For example, General Nutrition Centers Inc. (GNC), the industry’s largest operator, has expanded its Canadian store count over the past five years due to rising demand for industry products. As a result, the number of industry establishments is anticipated to increase an annualized 4.8% to 8,674 locations during the five-year period.

 

Nursery and Garden Stores in Canada

The Nursery and Garden Stores industry in Canada (44422CA) blossomed over the five years to 2019 as rising per capita disposable income and private increased spending on home improvements helped the industry grow. As a result, revenue is forecast to rise at an annualized rate of 4.8% to $4.5 billion during the period alongside an annualized 2.3% increase in establishments to total 2,311 locations.

A new crop of plant delivery online retailers heightened external competition during the period. However, per capita disposable income growth and a declining unemployment rate mitigated the effects of increased external competition, giving households more funds to purchase goods at industry establishments and the freedom to comfortably support the higher prices inherent of local businesses.

 

 

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