EXPORT TO CANADA APPAREL SEMINAR Jakarta- March 13 2019
The Canadian Market
35.8 9.98 Canadian Million people Million Sq.Km Dollar
Canadian Cultural Diversity
Ageing Population • 1 in 7 Canadians are senior citizens (age 65+) • Baby boomers (born 1946 to 1965) dominate the Canadian market Source: Statistics Canada, Census (2011) Source: Globe & Mail (2012) 5
Top Country Suppliers Source: Canadian International Development Platform
Canadian Imports from Indonesia by Product Source: Statistics Canada
Canadian Apparel Market by Segments Source: Trendex – Canadian Retail Apparel Market
Canadian Apparel Trade (imports & exports) Source: Canadian International Development Platform
Canadian Apparel-Top Suppliers (country supplier market share %) Source: Canadian International Development Platform
Canadian Apparel Market Sales by Market Segments Source: Trendex – Canadian Retail Apparel Market
Canadian Women Apparel Market Source: Trendex – Canadian Retail Apparel Market
Canadian Men Apparel Market Source: Trendex – Canadian Retail Apparel Market
Apparel Market Trends
Canadian Consumers Increasingly Well informed but multicultural demanding Regional differences Affluent but price conscious Tech-savvy, purchase over Home owner internet/mobile Double income Health, socially and (although many environmentally single parent aware homes) 15 Source: TFO Canada Market Information Papers
Canadian Consumers In 2016 Canadian consumers spent on average approx. 62 thousand $CAD on goods and services per household . However only 5% of these expenditures, or 3.1 thousand $CAD, was spent on clothing and accessories. This is almost 300 $CAD less than the previous year, although the overall annual expenditure per person increased by almost 2 thousand $CAD. Canadian consumers can be divided into three main age groups: 1) Millennials (aged 20-39) represent 27% of the population or almost 10 million Canadians. In terms of consumption, they are mostly focused on price, fashion trends and convenience. 2) Baby-boomers (aged 40-64) constitute 35% of the Canadian population or 12 million people. This is the wealthiest group of Canadian consumers. Thus, they are concerned about quality and interested in niche products. 3) Seniors (aged 65 and above) currently represent 17% of the population or almost 6 million people and their share is steadily increasing due to the aging of the Canadian population. Unlike in Ukraine this group of consumers in Canada is not so price-sensitive. They are primarily interested in such features of the product as comfort, ease-of-use and safety. Source: Statistics Canada
Growth of Ecommerce Source: Trendex – Canadian Retail Apparel Market
Consumers Trends The five recent consumer trends on the Canadian market are: • The buy-local movement: Consumers are shopping close to home, looking for locally made goods and aware that buying Canadian-made may be a better ethical and environmental choice. • Rising health awareness: The aging population is becoming more aware of healthy choices in food, cosmetics and ergonomically designed products. Half of Canadians consider the health impact of a product when making purchasing decisions and one-third are willing to pay a premium for healthy products. • Frugality: Canadian incomes are stagnant and debt is high, meaning consumers are cautious about spending. As the baby boomers retire, an increasing portion of the population will be living on fixed incomes. • The desire for customized goods: Consumers are looking to get exactly what they want and new technology makes it possible for them to buy it. • The impact of the internet: An increasing amount of research about products is done online, even when consumers do not buy online. At the same time, online shopping is growing and online reviews are critical.
Canadian Apparel Market Trends Source: Trendex – Canadian Retail Apparel Market
Top Ten Retailers
Labeling Requirements& Sizes
Incoterms
Export Price List Preparation
Everyone knows the traditional maxim for setting prices in the fashion industry: double the cost for the wholesale price, and multiply the wholesale price by 2.0 to 2.5 for the retail price. However, for new brands, this exercise can be frustrating because its difficult to get good cost estimates early in the process. That’s why for new brands we recommend working backwards. Instead of starting with target cost, start with target retail pric e. It’s easier, faster, and will help you make better decisions. Let’s say you wanted start a line of casual button - up shirts, similar to a $125 BOSS shirt from Nordstrom’s. To get the estimate d cost, we divide $125 by 2.5 ( retail mark-up ) for the estimated wholesale price of $50, and then divide $50 by 2 (wholesale mark-up ) to arrive at the estimated target cost of $25, inclusive of import duties and logistics costs.
MARKUP MULTIPLIER EXPORT TO CANADA REVISED Sales through a broker to retail Item Calc. $ Retail Price $50.00 Retailers markup 3.03 $33.50 = Price to retailer $16.50 Trader markup 1 $0.00 = Price to Trader $16.50 Minimum Producers markup 1.2 $2.75 = Maximum cost $13.75
What Influences a Rating out Retailer? of 10 Excellent profit margin 8.6 Exclusivity in my area 8.2 Previous sales success 8.1 Availability 8.1 Cost 8.0 Design 7.9 Supplier's reputation 7.9 Good suggested retail price point 7.8
Digital presence
Negotiations Skills
Best Business Practices • Be punctual for meetings and appointments, as promptness is valued. • If you do give a gift when you arrive or when you are leaving, make it a modest one. A lavish gift, though accepted, would be frowned upon. • Don't be boastful, and don't overstate your product or service's capabilities. You could implicate your company in a legal situation. • Toolbox: • Business cards • Email address • Website • Videos • Testimonials • Price List • Respond to email same day.
Logistics
Logistics Checklist • Establishing a relationship with a good freight forwarder is key to building your business. • Learning INCO terms is critical to your business. Incoterms are crucial to the way you quote your prices for delivery. • Your bank is a good source of advice. • Keep abreast of the range of logistics options that is now available. • Become familiar with shipping times, routes and modes so you can offer your buyer a range of options. • Precise documentation is critical.
Challenges Success Stories and Lessons
Identified Gaps • Lack of knowledge on the Canadian market: Two of the companies indeed had products placed in the Canadian market and they even did had some knowledge of this. For the size of the targeted SMEs what seemed to be standard practice was that intermediary agents contracted production with their specific requirements and for all practical purposes the transaction ended up being a local sale. For this reason, the companies were not aware about Canada’s regulations and standards, distribution channels, import process, etc. • Lack of production capacity to export: The vast majority of the production is destined to the local markets, and there is not production capacity for export. • Export experience: Due to the “agent -export- model” there was no export experience or knowledge from the SMEs. • Language Barrier: Only 2 or 3 companies had competency to transact with a Canadian buyer in the English language. • Product’s quality: Since the local market demands product with great durability, the SMEs were proud of the “good quality” in their garments. However, this is not necessarily the only attribute a Canadian buyer might be considering; other attributes are also very important such as price and capacity for timely deliveries. The SME’s need to work on export price list to adjust their prices for the Canadian market, as well as understand the delivery times to reach North America. • Certifications and labeling not present: The local market does not require certifications and labeling is rarely present. The Canadian market is one of the most demanding markets in the world. Proper labels in French and English and meeting expected specifications are required to enter the market. Of all interviewed companies didn’t have marketing material in English. • Marketing: • Negotiation skills: Lack of negotiation skills
Summary of Impact DEKATAMA UNIQUE KNK CENTRA Design of a new Provide more Provide products that coll ection “Cotton products that can can compete in the North American market Flair” (2018) that is compete in the North more suited for the American market North American market Presentation of “Atmosphere” brand in Canada TIGA SELERAS BULE BULE SAKURA BERSAMA Provide more Provide more Provide more products products that can products that can that can compete in the compete in the North compete in the North North American market American market. American market Adequate their products.
Pictures: Before Unique/Cotton Flair
After: Unique/Cotton Flair
Before: Bule-Bule
After: Bule-Bule
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