The global recession caused many companies to delay any expansion goals and to stay away from risky proposals. Retailers, for example are still risk-averse, however their concerns about future growth is making start considering expansion again. Some U.S. companies are taking steps into international expansion into Canada.
J. Crew Group is for the first time looking into foreign markets. Limited Brands is planning on doubling its Bath & Body Works stores in Canada as well as introducing Victoria's Secret there.
Apparel stores have saturated the U.S. heavily in the past few years to the point that substantial growth can only be achieved by expanding abroad.
Why not Asia or Europe?
One of the main reasons why U.S. retail companies are not launching new projects in Europe and Asia is that as the economy is still fragile, they prefer to minimize risk. Furthermore, going into a different continent, there is a bigger difference in labor laws, shopping habits, and preferences.
Some factors to consider are that Canada is closer and thus the market there is more familiar and has more similarities with U.S. market. Moreover, Canadians are more familiar with U.S. brands. Also, sales in Canada have held steadier than those in the U.S. during the recession.
What are some potential issues?
The two countries might be neighbors and share some similarities; however there are differences to be taken in consideration. For example, Canadians are slower, steadier shoppers. Also, focusing too much on international growth may lead to distraction from domestic operations.
As U.S. companies are anxious about growth, Canada seems the perfect candidate for expansion because it does not require aggressive international expansion due to its proximity and familiarity. Companies can approach international expansion slowly and cautiously.