L10: Canada’s Leading Retailers
- 121 Leading Retail Conglomerates in Canada
- These 121 Conglomerates operate 404 chains
What is a Classified as a Leading Retailer
- The CSCA considers retail conglomerates that meet or exceed the 100 million dollars in revenue threshold to be Canada's Leading Retailers
- However, certain retailers who do not meet this sales value do exist within the list of Leading Retailers
o These tend to be conglomerates that operate within Canada and although their Canadian revenues do no not meet or exceed the 100
million dollar threshold they do have substantial brand recognition in international markets.
Categorizing Leading Retailers
- The North American Industrial Classification System (NAICS) is used
o a classification system that categorizes a retailer according to the products that it sells in order to perform these comparisons.
- This system of categorizing retail stores was developed as a result of the North American Free Trade agreement
o adopted in Mexico, Canada, and the United States
o provides a standard platform to assess and compare retail chains across North America.
- NAICS allows for comparisons and inferences to be made for similar and dissimilar retail chains/conglomerates
- Consists of a unique six digit code that is assigned to each type of business
o for example 445110 is the code given to supermarkets and other grocery stores (excluding convenience stores).
- While the six digit NAICS codes represent specific types of stores, the codes also can be shortened to represent more general categories of retail.
o NAICS code 445110 can be shortened to just 445, which indicates that the store belongs to the category of Food and Beverage Stores.
- Main Issue
o With the boundaries between retail sectors becoming somewhat blurred in recent years, due to many retailers selling a wide variety of
products, it is increasingly difficult to sort chains into single categories.
Canada’s Leading Retailer
- Retail sales (2009) indicate that the 121 LR conglomerates contribute to over 74% of the non-automotive retail sales
- The majority of the retail activity experienced within the Canadian economy is accounted for by these Leading Retailers
- The top three corporations in Canada (Weston Group, Wal-Mart, The Empire Company) control approximately 24% of the non-automotive
retail market, or $66.5billion, with 2,994 retail locations between the three combined.
- 30 different companies operating in Canada that have at least one-billion dollars in total retail sales, controlling a combined 19,309 store
locations and approximately $184 billion in total retail sales.
LR Market Share (CR4)
- The concentration ratio (CR4) depicts the sum of the market shares of the four largest corporations in a given industry
- The CR4 is an important measure of market concentration as it gives a good indication of the relative size of the four largest corporations in
relation to the market as a whole
o For example: if the top four companies in a given sector each produced 10% of the total sales for that sector, the CR4 would be 40%
- In most nations, when the CR4 for a particular industry reaches 40%, oligopolistic behaviour becomes likely in the marketplace
- Since the 1980's, mergers and acquisitions have been a key tool for corporate growth strategies in Canada
- Due to a somewhat more relaxed approach to the merger and acquisition process evident in the Canadian regulatory environment Canada
typically experiences higher levels of market concentration amongst its retail sectors
- Canada typically experiences higher levels of market concentration amongst its retail sectors
- At the core of the Canadian Competition Act is the idea that efficiency gains can outweigh the costs of a reduction in competition because the
smaller Canadian economy requires greater market concentration in order to achieve economies of scale and be competitive in the world
- Concentration ratios of 40% or more can be seen within five out of the nine retail sectors outlined in this report.
- The top four general merchandise retailers have the highest levels of market concentration at 79.86%
- The home improvement sectors top four companies accounted for 75.1% of all Canadian retail sales within the sector
- The pharmacy and personal care sector 63.6%
- These are then followed by Grocery (62.81%)
- Electronics & Appliances (51.1%)
- Furniture & Ho