Features Business Retail
Retailers stay Canadian for holiday buying

NEWS HIGHLIGHT

Retailers stay Canadian for holiday buying

Canada's small businesses are
choosing to forfeit cost-saving opportunities in the U.S. and overseas
in the run-up to the 2011 holiday season, seeing Canada as one of the
few safe havens in the international economy.

Sept. 27, 2011 – Canada's small businesses are
choosing to forfeit cost-saving opportunities in the U.S. and overseas
in the run up to the 2011 holiday season, seeing Canada as one of the
few safe havens in the international economy.

According to a quarterly survey of small and medium-sized enterprises
(SMEs) commissioned by UPS Canada and released today, 90 per cent of
SMEs' holiday season inventory will come from within Canada's borders
and a comparable percentage of that inventory (91%) will be sold within
Canada as well.

The numbers come on the heels of the most recent international currency
valuations that peg the loonie at $0.97 USD, a figure that would
normally prompt a business to seek cost-saving opportunities
internationally or across the border.

"Given the instability in the U.S. economy this year, as well as the
volatility in European markets, many businesses are hunkering down and
focusing on the Canadian market, which has remained relatively steady
thus far," said UPS Canada President Mike Tierney.

Yet, the numbers also serve as an indication of growing isolationism
among Canadian SMEs, many of which are ruling out the possibility of
exploring export opportunities in emerging markets. Despite recent
predictions by Export Development Canada that markets outside the U.S.
will account for half of Canada's exports by 2025, 66 per cent of SMEs
interviewed say they have no intention of ever exporting to emerging
markets.

Those SMEs that do engage in export are still predominantly anchoring to
the U.S. market with 30 per cent increasing exports to the U.S. in the
past six months compared with 18 per cent who have increased exports to
emerging markets.

However, there is some evidence that the overwhelming reluctance to
pursue cost efficiencies overseas may dissipate as the global economy
improves. In fact, one in four SMEs surveyed (24%) say that current
economic conditions are a primary barrier to starting or expanding an
export practice.

"Many small businesses rely on the holiday season to bring in a
significant portion of their annual revenue, so they're reluctant to
seek out new opportunities overseas — be they import or export — at
that time of year because they naturally see the volatility as too
risky," said Tierney. "However, I would encourage these businesses to
seek cost savings and growth by exploring international opportunities
during quieter periods."

Almost one-third of SMEs (29 per cent) see export as either a risky
endeavour with questionable ROI or not worth the investment and
headaches. Only one in five (21%) see it as a competitive necessity
that offers significant growth potential.

The survey further revealed that many SMEs prefer to keep commerce close
to home. Asked which countries would be their top three choice targets
among a new group of emerging markets, Mexico was selected by the
highest number of respondents (66 per cent) with South Korea and the
Philippines as the runners up (44 and 42 per cent respectively).