By George, Canada embraces Wal-Mart—and vice versa

DSN Retailing Today, Dec 13, 2004 by Mike Duff

The next step in Wal-Mart's advance in Canada has a name and that name is George. The retailer has added a new look to its discount stores and Sam's Clubs, but George, the retailer's private label apparel line, is the vehicle that the company believes will change its positioning in the Canadian marketplace.

Yet, with all it has been up to, Wal-Mart still hasn't done what Canadian observers have been awaiting--open a supercenter. Wal-Mart supercenters in Canada are so inevitable that supermarket operator Loblaws already has responded to the threat with hypermarkets, and discount store operator Zellers has expanded food assortments organized into departments it refers to as "Neighborhood Markets."

Despite these factors, Wal-Mart Canada continues insisting it has no plans to introduce supercenters for at least another couple of years.

Supercenter threats aside, retailers in Maple Leaf country have benefited from an expanding economy. Canadian non-automotive sales have gained steadily over the past five years from $169.5 billion (U.S) in 1999 to reach $208.9 billion (U.S) in 2003, according to Statistics Canada, a statistical agency that provides economic data for the country.

The warehouse club sector has developed differently in Canada than it has in the United States. With more than 60 stores, Costco clearly dominates. But Wal-Mart Canada recently completed the initial phase of its Sam's Club debut. The company opened six Sam's Clubs in the Toronto area this year, spreading units expansively across the metropolitan area, with one club as far away as London, Ontario, considered the edge of the market. The 120,000-square-foot London store is typical of the Sam's Club operations Wal-Mart has opened in Canada and is very similar to the most recent generation in the United States. Canadian vendors are featured, as are some products that wouldn't be typical in the United States, such as hockey equipment. And each Sam's includes product particularly suited for its immediate local market with, for example, hallal foods available at a club located near a significant Muslim community. Still, the basic product assortment and its business-oriented spin are in keeping with U.S operations.

Currently, Wal-Mart has embarked on a period of review and analysis regarding Sam's Canada, said spokesman Kevin Groh. After consideration and perhaps some refinement to Canadian tastes, Wal-Mart will look at opening more units.

With its discount stores, Wal-Mart is moving ahead with a more modern look. These stores aren't exactly new prototypes, but include a number of elements to make them fresher for shoppers and more compatible with surrounding communities thanks to a flexible decor package. Sporting more elaborate flooring and muted exterior tones, the latest generation of Wal-Mart discount spokesman Kevin Groh. After consideration and perhaps some refinement to Canadian tastes, Wal-Mart will look at opening more units.

With its discount stores, Wal-Mart is moving ahead with a more modern look. These stores aren't exactly new prototypes, but include a number of elements to make them fresher for shoppers and more compatible with surrounding communities thanks to a flexible decor package. Sporting more elaborate flooring and muted exterior tones, the latest generation of Wal-Mart discount stores in Canada started rolling out this year. The company had opened six such units by mid-November bringing its discount store count to 239.

Yet, George remains central to Wal-Mart Canada's plans. Canadians have an income profile that makes them a prime target for Wal-Mart and George. Because of Canada's economic and tax structures, incomes tend to be level more than in the United States. So, the extremes of wealth and poverty tend to be less pronounced, and disposable income tends toward middle-class dimensions. Thus, a fashion brand available at a relatively modest price should be a good fit with the Canadian consumer.

In terms of retailing, Canadians tend to be more heavily influenced by Europe and Asia than their U.S. counterparts. From the start, said Rick Weinstein, vp/gmm apparel, Wal-Mart Canada's apparel team worked with the designers who developed George in the United Kingdom to create a Canadian assortment. The line had to be reworked for Canada to take colder weather into consideration and to accommodate certain differences in merchandising.

"The only apparel they've got is George," Weinstein said of ASDA, Wal-Mart's U.K. division. "It runs the gamut from basic underwear and socks all the way up to tuxedos and very forward high-fashioned merchandise. So it covers every type of customer. In the United States, we merchandise by lifestyle. Whether it's traditional lifestyle, contemporary lifestyle, or young men's or junior lifestyle, we merchandise our floors that way and our proprietary brands are targeted to one of those lifestyles. We determined that what we call neo-traditional lifestyle, which is really an updated traditional customer, is where we wanted George to be."