The Canadian retail industry is evolving at a rapid pace. External factors, such as the growth in the relative purchasing power of the Canadian dollar, increasing competition from discount rivals such as Wal-Mart, shifting consumer trends, and the emergence of the retail industry in Western Canada, provide Hudson's Bay Company with new challenges as well as opportunities for growth. The clothing industry on which The Bay depends faces stagnancy in demands compared to the rest of the industry, while Home Outfitters may see a decline in sales as the Canadian housing market cools off. Substitutes to the traditional shopping experience such as e-commerce and mail-order products are growing rapidly and offer advantages which HBC cannot replicate in their stores.
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[...] The importance of each sector as regards to its total retail value in 2003 is given below: Commodity Group Retail Value Food and Beverage $76,869 Health and Personal Care Products $29,283 Clothing, Footwear and Accessories $29,206 Non-Electric Houseware and Household Supplies $7,287 Furniture, Home Furnishings and Electronics $31,605 Hardware, Lawn and Garden Products $23,189 Sporting and Leisure Goods $12,293 Motor Vehicles, Parts, Service and Rental $76,599 Automotive Fuels, Oils and Additives $29,016 Other Goods and Services $32,357 Total Market Value $347,704 Source: Structure of Retail in Canada, Jacobsen When examining sector profitability, it is not the size and the revenue of the sector that matters, but its gross margin; the difference between the cost paid by the retailer for the good and the price paid by the consumer. [...]
[...] Lower selling, start-up, capital, and overhead costs can mean lower prices for customers, or higher profit for the retailer Can ‘leapfrog' steps in the supply chain for more efficient service Shopping data already recorded in systems, so integration into a Customer Relationship Management system is simple (Each shopper exposed to a different storefront) Weaknesse Delay between buying product and receiving it s More difficult to compare between suppliers than in large department stores where they already are many suppliers Source for Size Information: Richtel & Overall Competitiveness of Retail Industry Below is an analysis of the overall competitiveness of the retail industry using the Porter Model at the Department Store and the Discount Store Level: Competition at the Department-Store Level Threat of New Entrants (Medium/High) Low supplier concentration High product differentiation High presence of substitute inputs Average cost relative to total purchases in industry Inbound Logistics Industry Competition Outbound Logistics (High) (Low/Medium) High start-up Medium Average switching costs/capital costs requirements Average buyer Medium economies of inclination scale to substitute Strong Brand High identities price-performance Many proprietary trade-off of products substitutes Threat of Substitutes (Medium) High Buyer volume Low/Medium price sensitivity Competition at the Discount-Store Level Threat of New Entrants (Low) High supplier concentration Low product differentiation High presence of substitute inputs Inbound Logistics Industry Competition Outbound Logistics (Low) (High) Medium capital High Low switching costs requirements High buyer High economies of inclination scale to substitute Weak brand identities Low price-performance Not many proprietary trade-off of products substitutes Threat of Substitutes (High) High bargaining leverage High Buyer volume Low price sensitivity Key Success Factors and Overall Industry Attractiveness The retail industry has been saturating in many regions of Canada during recent years. [...]
[...] This following report presents a comprehensive analysis of the retail industry in which HBC operates, allowing for the accurate evaluation of a specific technology in the future which can be used to help the firm's turnaround gain momentum. History of the Retail Industry and Hudson's Bay Company Retailers sell goods to the general public, generally without modification, and render services connected to the efficient sale of merchandise. In Canada, the retail industry accounts for 29% of domestic demand and 12% of employment (Statistics Canada, 2005). [...]
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