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announcing the launch of...

to grow your business in Canada, you need to know your shoppers in Canada The HOW CANADA SHOPS™ benchmark quantitative study will help you build your Canadian business by bringing you a better understanding of Canadian shoppers. • compare US and Canadian shoppers in this benchmark quantified survey

we will

• compare Walmart shoppers in the US and Canada • include global trends and retail innovations that will influence Canada

HOW CANADA SHOPS™

More companies are focusing on the sales growth opportunities in Canada, driven by slowed sales growth in the US, the strong presence of Walmart in Canada now, and Target’s plans to move to Canada in 2013. We are moving to Canada, too.

topics in the report: • Channels Shopped in Last Week and Last 3 Months (Discount, Drug Store, Warehouse, Supermarket, Internet) • Stores/Categories Personally Shopped • Attitudes Toward Shopping • Shopping Behaviors In General, By Food and Beauty • Attitudes Toward Value of Brands • Spending Mindset • Impact of Gas Prices • Health & Wellness Mindset and Behaviors • Shopping Technology/Mobile • Technology/Social Media Impacting the Buying Process

what’s included in the report: • How Canada Shops Benchmark Report: B ehaviors and attitudes that define Canadian Shoppers, and Compared to US Shoppers. • Gotta See Retail Virtual Tours: New retail innovations and formats that will impact Canada • PLUS Online Database Access: Access to WSL/Strategic Retail’s Shopper Insights Database for How Canada Shops™ (beginning 3rd Qtr 2012)

methodology Interview Method: Internet Survey Canada Sample: 1500 Adults: 1000 Women, 500 Men • Representative of 7 Provinces: Ontario, Quebec, British Columbia, Alberta, Manitoba, Nova Scotia, Saskatchewan, New Brunswick

US Sample: 1500 Adults: 1000 Women, 500 Men • Representative of total US population

ANALYZED BY: • Canada Women vs. US Women • Canada Men vs. US Men • Walmart Shoppers: Canada Women vs. US Women • Demographics for Women: Age, Income, Province, French Mother-Tongue

RETAIL CHANNLE

US Channel Shoppers vs. Canada Channel Shoppers Department Store Discount/Off-Price Clothing Store Dollar Store Drug Store Home Improvement Store Mass Merchandiser/Supercenter Mall Specialty Stores Supermarket Warehouse Club Direct to Consumer - Catalog - Internet - TV Shopping

ES CATOR CATEGORI

58 LEADING INDI

Baby Diapers Baby Personal Care Baby Clothing Baking Ingredients Beer (21+) Bottled Water Breakfast Cereal Cake/Crackers/Cookies/Dessert Candy Carbonated Beverages/ Soda Cell Phone Service Clothing For Casual Wear Clothing For Work Coffee (Instant or Ground) Computers & Software Condiments Cosmetics (Women Only) Eating Out At Restaurants Electronics Entertainment Fashion Accessories Fragrance Frozen Food Hair Care Products Hair Coloring Hand & Body Moisturizers Home Décor Home Fragrance/Candles

Home Furnishings Home Improvement Products Home Service Ice Cream/Yogurt Lip Care Liquor/Wine (21+) Magazines Men’s Grooming Products Oral Care Organic/Natural Foods OTC Medication Outdoor Furniture Packaged Convenience Foods Paper Goods Pet Supplies Premium Cable Tv Service Prescription Medication Salon Services Salty Snacks Shoes Skin Care Products Sleepwear/ Loungewear/ Lingerie Take-Out Coffee Take-Out Food Tea Toys And Games For Children Vitamins/Nutritional Supplements Wound Care/Topical

307 SEVENTH AVENUE SUITE 1707 NEW YORK NY 10001 T 212.924.7780 F 212.924.7608 E INFO@WSLSTRATEGICRETAIL.COM

As global retail strategists and shopping futurists, we are recognized for our ability to turn shopper insights into smart retail strategy. Never before has this been so essential. So let us help you navigate this new shopping world

and move on.

ord

now

HOW CANADA SHOPS™ REPORT: $30,000 USD Please send check payable in US dollars to: WSL Strategic Retail, 307 Seventh Ave., Suite 1707, New York NY 10001 NAME:

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TABLE OF CONTENTS: HOW CANADA SHOPS® 4 PAGE 5 PAGE 7 PAGE 35 PAGE

38 PAGE

39 44 49 58 63 68

73 PAGE

74 79 84 93 98 103

BACKGROUND & OBJECTIVES RESEARCH METHOD & ANALYSIS NOTE EXECUTIVE SUMMARY ACTION STEPS SECTION 1: CANADIAN VS. AMERICAN WOMEN SHOPPERS •! Meet The Shoppers •! Economic Status •! Attitudes That Influence Shopping •! Channels Shopped Weekly & Quarterly •! Perceptions of Key Retailers: Walmart, Costco, Shoppers Drug Mart & Target •! Shopping in The Age of Technology SECTION 2: CANADIAN VS. AMERICAN MEN SHOPPERS •! Meet The Shoppers •! Economic Status •! Attitudes That Influence Shopping •! Channels Shopped Weekly & Quarterly •! Perceptions of Key Retailers: Walmart, Costco, Shoppers Drug Mart & Target •! Shopping in The Age of Technology HOW CANADA SHOPS®

TABLE OF CONTENTS: HOW CANADA SHOPS® 108 PAGE

109 114 119 128 133 138

143 PAGE

PAGE

144 149 154 163 168 173

178

SECTION 3: CANADIAN VS. AMERICAN WALMART WOMEN SHOPPERS •! Meet The Shoppers •! Economic Status •! Attitudes That Influence Shopping •! Channels Shopped Weekly & Quarterly •! Perceptions of Key Retailers: Walmart, Costco, Shoppers Drug Mart & Target •! Shopping in The Age of Technology SECTION 4: CANADIAN VS. AMERICAN COSTCO WOMEN SHOPPERS •! Meet The Shoppers •! Economic Status •! Attitudes That Influence Shopping •! Channels Shopped Weekly & Quarterly •! Perceptions of Key Retailers: Walmart, Costco, Shoppers Drug Mart & Target •! Shopping in The Age of Technology GOTTA SEE VIRTUAL TOURS

BACKGROUND & OBJECTIVES BACKGROUND How Canada Shops® is a fresh perspective research report to address the emerging business needs of manufacturers and retailers who currently or will sell to Canadians. This research provides valuable insights that compare the similarities and differences between Canadians and Americans on shopping.

OBJECTIVES The research objectives are as follows:

›! Determine the similarities and differences between Canadians’ and Americans’ shopping mindset, attitudes toward shopping and shopping behaviors

›! Assess the impact of the global recession, and rising gas prices and living expenses on shopping

›! Understand channel choices on a past week and past 3 months basis, as well as retail chains shopped within the past 3 months

›! Evaluate the perceptions of key retailers such as Walmart, Costco, Shoppers Drug Mart and Target ›! Identify the impact of the Internet on shopping, whether from a computer or mobile phone

›! Understand the demographic profile of Canadian and American shoppers by age, income, employment, education, ethnicity, Hispanic heritage, children in household, and health and wellness

RESEARCH METHOD ›! An online survey was conducted between May 3 and May 14, 2012 among shoppers drawn from a nationally representative panel in Canada and the US.

›! The sample is comprised of Canadian and

SAMPLE SIZES & MARGIN OF ERROR

American women and men shoppers.

Women

Margin of Error

Men

Margin of Error

Total Canadian Shoppers

1018

+/- 3.07%

524

+/- 4.28%

Total American Shoppers

1040

+/- 3.04%

513

+/- 4.33%

Canadian Walmart Shoppers

712

+/- 3.67%

American Walmart Shoppers

735

+/- 3.61%

Canadian Costco Shoppers

492

+/- 4.42%

American Costco Shoppers

226

+/- 6.52%

›! To qualify for the study respondents were required to be an adult between the ages of 18 and 70 with

incomes above $15,000. Women had to be the primary shopper in the household, and men had to be responsible for some of the shopping in the household.

›! Analytic Groups:

•! Section 1: Canadian vs. American Women •! Section 2: Canadian vs. American Men •! Section 3: Canadian vs. American Walmart Women Shoppers •! Section 4: Canadian vs. American Costco Women Shoppers HOW CANADA SHOPS® © ALL RIGHTS RESERVED 2012

ANALYSIS NOTE ›! The large bases of Canadian and US shoppers in this report allow for many insights, too many to capture

in one summary without losing the big messages. Therefore, we have edited the content into manageable sections for the summary report and included a separate document with all of the Appendix tables that provides the detailed results for all questions.

›! Each section will primarily report on aggregate percentages for women and men shoppers. Where there are notable demographic differences--generations, household income and Canadian province--specific references will be cited. Detailed results by demographics and geography are provided in the Appendix tables.

›! Walmart and Costco sections are based solely on women as they are the primary shoppers in the household.

›! Statistical differences that are higher between Canadians and Americans are based on a 95% Confidence Interval and signified with subscript letters (example: 50B).

›! Results are based on weighted data across demographics to insure proper representation of shoppers.

HOW CANADA SHOPS®

EXECUTIVE SUMMARY As US companies struggle with sales and profit growth in a stalled global economy, and as the Internet continues to steal share of shoppers from the stores, the opportunity to expand into Canada has finally become very appealing. It’s closer, familiar, less risky and thus easier to do. While this research certainly proves that there are many similarities, there are sufficient important differences in the way Canadians and Americans think and shop to give US companies – retailers and manufacturers – pause. Differences that will require new strategies and approaches. From the insights contained in this report, retailers and manufacturers will gain an understanding of the critical factors in their marketing and sales strategies that need to be customized to entice Canadian shoppers. The good news is that not a great deal of customization needs to be done compared to entering markets such as China, Brazil or Russia. Canadians and Americans share many of the same attitudes and behaviors about shopping. Although, throughout this report there is the sense that Canadians are not as passionate about shopping when analyzing their attitudes and behaviors toward shopping, and Internet buying is well below that of Americans. Therefore, the core differences are as follows: Difference #1: Canadians are feeling restrictions on their budget, but not to the same degree as Americans -- probably because the Canadian economy was not as impacted by the global economic meltdown. Canadians, like Americans, are experiencing rises in living costs, and they are looking for the lowest prices. However, fewer Canadian Women have had to change the way they shop or to make cut backs in what they buy. While Canadians do buy good quality products, fewer believe name brands always insure quality. HOW CANADA SHOPS® © ALL RIGHTS RESERVED 2012

EXECUTIVE SUMMARY Difference #2: There are fewer retailers in Canada; therefore, the competition between retailers are not as intense. Sales are not all-consuming and coupons are not as prevalent. Therefore, Canadians do not have as an aggressive a culture in chasing the best deals and discounts or in using coupons. Difference #3: The penetration of online shopping is lower in Canada than the US. Canadians will use the Internet to research products, but far fewer buy online. Difference #4: Fewer Canadians report health conditions such as allergies, chronic pain, high blood pressure and high/low cholesterol. This could be attributed to the climate, universal healthcare and lifestyle. The impact is a different approach to health and wellness. In a nutshell, while Canadian shoppers have many similarities to Americans, there are enough differences in Canadians’ shopping attitudes and behaviors to support marketing strategies customized to Canada.

EXECUTIVE SUMMARY: WOMEN PROFILE OF CANADIAN AND AMERICAN SHOPPERS MEET THE SHOPPER Canadian Women shoppers are age 44 on average with an average household income of $67,000. Two-thrids of Canadian Women have a college education or higher, and nearly 70% have children living in the home. While the majority of Canadians are Caucasian their minority pool skews Asian (9%) and is low for African Americans and those with Hispanic heritage. Most (61%) live in Quebec and Ontario compared to the other provinces, and as many live in urban and suburban communities. When comparing American to Canadian Women shoppers their average ages are the same (44, 45). More Canadian than American Women shoppers have a college degree or higher (66% vs. 51%), but this doesn’t translate into significantly higher household income. Women’s average household income is slightly less in Canada than the US ($67K vs. $71K), and more Canadian than American Women are in low income households (below $50,000: 50% vs. 42%). A higher percentage of American Women shoppers fall within the middle income category ($50,000 to $90,000: 28% vs. 37%). A consideration for shopping is that more Canadian Women have children in the home (69% vs. 54%) -particularly children aged 18 and older (33% vs. 23%). HEALTH AND WELLNESS Canadian and American Women alike are taking a holistic approach to wellness by watching what they eat, getting adequate sleep, exercising and taking care of their skin and hair. However, fewer Canadian Women report health conditions such as allergies or high blood pressure, high cholesterol or chronic pain. Therefore, fewer women in Canada are managing medications or taking vitamins. •! Managing medications (Canadians 47% vs. Americans 57%) •! Taking vitamins, multi-vitamins or other dietary supplements (Canadians 53% vs. Americans 67%) HOW CANADA SHOPS® © ALL RIGHTS RESERVED 2012

EXECUTIVE SUMMARY: WOMEN BUYING POWER Canadian Women shoppers aren’t struggling as much as American Women to pay for the basics. In response to a question that asked about their buying power, more Canadian Women say they can afford the basics. CANDADIAN WOMEN

Can afford the basics & more

64%

35%

Can afford the basics or less

US WOMEN

Can afford the basics & more

55%

45%

Can afford the basics or less

Financial optimism (or pessimism) is about the same for women in both countries:

›! A net of 50% of Canadian and 54% of American Women shoppers say their household’s financial situation has improved over the past year or will improve over the next year.

EXECUTIVE SUMMARY: WOMEN WHAT’S RESTRICTING SPENDING It’s clear that increased living costs are leading women in both countries to make changes in the way they spend, but women in Canada are not feeling as restrained as American Women by rising food and gas prices.

Gas in Canada costs more than in the US (by about $2.00/gallon), but fewer Canadian Women say gas prices are changing their shopping trips.

FACTORS RESTRICTING SPENDING

TOTAL CANADA

TOTAL US

86 50 49 46 33 25 16 15B 11 9

91A 47 61A 67A 32 22 18 9 23A 11

TOTAL CANADA

TOTAL US

I am making fewer trips to shop because of gas prices

48A

I am shopping closer to my home because of gas price

43A

(1018) A %

MY SPENDING IS RESTRICTED (NET) Increases in living costs (mortgage, taxes, rent, etc.) Rising food prices Rising gas prices Paying down more of my credit card debt Saving or investing more of my money Loss of Job Increases in a child's tuition/ education costs Increases in medical bills Losses in investments or returns in the stock market

(1040) B %

IMPACT OF GAS PRICES (1018) A %

(1040) B %

EXECUTIVE SUMMARY: WOMEN ATTITUDES TOWARD SPENDING Canadian and American Women have decided to take charge of their household’s financial well being by becoming smarter shoppers.

›! 60% of Canadian and American Women stop before they buy to ask themselves if buying this product is a smart use of their money.

Both want the lowest price on most things they buy (72%), which means they will stick to brands and stores they can afford and use coupons; although, fewer Canadian Women are coupon clippers. •! “When I shop I stick to brands and stores I can afford” (Canadians 62% vs. Americans 62%) •! “I regularly use coupons to reduce my costs” (55% vs. 68%) •! “I visit coupon websites” (50% vs. 61%) •! “I pick up circulars in the store” (57% vs. 71%) •! “I visit retailer websites” (32% vs. 51%) •! “I visit manufacturer websites” (30% vs. 49%)

Women in both countries are also intent on paying down debt and saving. However, when they do get some extra money, fewer Canadian Women will use it to go shopping. •! “Paying down more of my credit card debt” (Canadians 33% vs. Americans 32%) •! “Saving or investing more of my money” (25% vs. 22%) •! “As soon as I get a little extra money I go shopping” (15% vs. 20%)

EXECUTIVE SUMMARY: WOMEN SHOPPING TRENDS Canadian Women will sign on to surf but not to sign on to buy. The biggest shopping difference between Canada and US Women is the penetration of Online shopping. Internet shopping among Canadian Women, whether in the last week or last three months, is between 20 ppts. and 25 ppts. below American Women. LAST WEEK SHOPPING The average number of channels shopped in the last week among women in both countries is comparable (Canadians 4.8 and Americans 5.0), with Supermarkets as the leading channel. However, far fewer Canadian Women shop at Mass Merchandisers (-18 ppts.) and on the Internet (-20 ppts.). However, more Canadian Women are shopping in Deep Discount Grocers on a weekly basis.

TOP CHANNELS SHOPPED IN THE LAST WEEK TOTAL CANADA

TOTAL US

(1018) A %

(1040) B %

Supermarkets

Drug Stores

Mass Merchandisers

63A

Dollar Stores

Deep Discount Grocers (i.e. No Frills, Aldi’s)

29B

Internet

40A

Department Stores

Average Number of Channels

4.8

EXECUTIVE SUMMARY: WOMEN LAST THREE MONTHS SHOPPING A better picture of a shoppers’ retail consideration set is shown in their three month shopping pattern. The average number of channels shopped within the last three months is 2 times the number shopped in a week. The leading channels for Canadian and American women are Supermarkets, Drug Stores, Dollar Stores and Mass Merchandisers. However, it is noted again, the Internet is not within Canadian Women’s top five channels as it is for American Women (and has a 25 ppt. differential). Within the Specialty Stores channel, Canadian Women are less inclined to shop a variety of Specialty retailers compared to American Women.

CHANNELS SHOPPED IN PAST 3 MONTHS TOTAL CANADA

TOTAL US

(1018) A %

(1040) B %

Supermarkets

Drug Stores

Dollar Stores

78B

Mass Merchandiser

80A

Department Stores

62A

Internet

75A

Warehouse Clubs

Deep Discount Grocery

48B

Home Improvement Stores

61A

- Specialty Stores for Liquor/Wine

42B

- Specialty Stores for Clothing

40B

- Specialty Stores for Books

37B

- Specialty Stores for Office Supplies

- Specialty Stores for Electronics

- Specialty Stores for Beauty Care

36A

- Specialty Stores for Pet Supplies

37A

- Specialty Stores for Home Furnishings

28A

- Specialty Stores for Toys

24A

- Specialty Stores for Greeting Cards

26A

Specialty Store

EXECUTIVE SUMMARY: WOMEN RETAILERS SHOPPED IN LAST 3 MONTHS Walmart, with 333 stores, was shopped by 70% of Canadians in the last 3 months, far exceeding the Canadian based Zellers, which has 270 stores and was shopped by 47% of Canadians. The combination of the number of Walmart stores, and its perception as having affordable brands and being a good value for the money is cementing Walmart’s place in Canada. Costco is the only Warehouse Club channel in Canada with 88 stores. Half of Canadians (48%) have shopped Costco in the last 3 months vs. 22% of Americans who have at least two other club chains to choose from. Costco’s strength with Canadians includes good store brands, affordable brands, good value for the money and being a nice, well-organized place to shop. Shoppers Drug Mart, with almost 1200 stores, is the clear leader within the Drug channel; 57% of Canadians have shopped the chain in the last 3 months. 15% or fewer have shopped any other Drug chain in Canada. This high penetration is driven by Shoppers Drug Mart’s number of stores, and overall perception as having good store brands, stellar sales associates and good store design. Sears leads within the Department Store channel among Canadian Women. When compared to The Bay, Sears has a 5-point lead in penetration among Canadian Women (33% vs. 28%); although, it does have 1/3 more stores. In the states, far fewer American Women have shopped Sears in the last three months (21%, -12ppts). As a result of location, there is an even split among Supermarket chains shopped by Canadian Women: Sobeys (28%), Metro (28%) and Safeway (22%) are the leading grocers in the channel.

EXECUTIVE SUMMARY: WOMEN SHOPPING IN THE AGE OF TECHNOLOGY A majority of Canadian Women are using the Internet to pay bills, visit their social networks and seek health advice at the same level as Americans, but they are not using the Internet as much for shopping.

Fewer Canadian Women use mobile technology compared to American Women. Whether it’s owning a mobile phone, accessing the Internet via mobile or owning a tablet, Canadian Women are between 8 ppts. to 19 ppts. below American Women.

ACTIVITIES DONE ONLINE IN PAST 3 MONTHS TOTAL CANADA

TOTAL US

Looked for Sales/Coupons/Discounts

85A

Financial transactions like paying bills

73B

Visited a social-networking site

Compare brands, models, features or functions of products

Bought a product

78A

Look for retailers offering lowest prices, deals, or discounts

64A

Looked for health information

Find where to buy something online

61A

Check where to find products I can't find in stores

59A

Among those who have researched

(1018) A %

(1040) B %

MOBILE SNAPSHOT TOTAL CANADA

TOTAL US

(1018) A %

(1040) B %

Use Mobile Phone

89B

Ever Access Internet*

51B

Able to Download Apps**

43B

Own A Tablet

28B

3 0 7 S E V E N T H AV E N U E S U I T E 1 7 0 7 NEW YORK NY 10181 T 2 1 2 . 9 2 4 . 7 7 8 0 | F 2 1 2 . 9 2 4 . 7 6 0 8 | E I N F O @ W S L S T R AT E G I C R E TA I L . C O M