Canadian Online Retail Trends
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1 Canadian Online Retail Trends and dopportunities May 2010 Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein may be the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian Information Solutions, Inc.
2 Introduction A recent Statistics Canada report revealed that window shopping has become one of the most popular activities online, with 65% of Canadians reporting that they window shop online at home, up 8% since Half of Canadians also report buying goods or services online, up 11% from 2007.* This increased appetite to shop and browse online is reflected in Hitwise data, which shows an 8% year over year gain in April 2010 in the share of Canadian internet visits going to Shopping and Classifieds websites. The chart on this slide illustrates the Shopping and Classifieds Industry s growth, as well as the natural seasonal fluctuations in visits to the category, in particular in the lead up to the holiday shopping season. * 2
3 Canadian Retail Brands Falling Behind Of the top 200 Shopping and Classifieds websites in April 2010, nearly one quarter (48) were websites for Canadian companies. 83 websites were Canadian specific URLs (i.e. ebay.ca, amazon.ca) for international brands. The remainder were international websites, typically US. The following table lists the top ranked Canadian brands among Shopping and Classifieds websites in April 2010, based on share of Canadian Internet visits. Visits to websites of Canadian retail brands grew 6% year over year in April. This gain is slightly lower than the increase to the Shopping and Classifieds category as a whole, indicating that Canadian retail brands are at risk of falling behind international, in particular US, competitors in the Canadian market. For the top10 Canadian Retail Brands, the fastest growing websites year over year were Air Miles Shop (+187%), Canadian Tire (+28%) and Rona (+22%). 3
4 Top Retail Categories in Canada The most popular retail industries online in Canada are Classifieds, Rewards and Directories, Auctions, Department Stores, and House and Garden. The table on this slide lists the top 10 (among 21) industries. The retail industries that have shown the strongest gains in share of Canadian internet visits over the past year are Classifieds (+25%), House and Garden (+26%), Sport and Fitness (+26%), and Flowers and Gifts (+62%). Among the top 10 industries listed below, Classifieds, Rewards and Directories, House and Garden, and Apparel and Accessories have seen strong positive gains. The Rewards and Directories Industry has seen 13% growth year over year and has overtaken Auctions as the #2 retail industry. This industry is made up of comparison shopping sites such as NexTag, Gifts.com and Shopzilla. The category is dominated by US brands, most of which do not carry Canadian pricing; this highlights an important opportunity for the Canadian marketplace. 4
5 Comparison Shopping Growth and Opportunity With demand for comparison shopping increasing among Canadians, the market is ripe for a comparison shopping brand to meet the needs of Canadians by offering Canadian prices and links to Canadian websites. Of particular importance to comparison shoppers are flyers. Flyers have traditionally been mailed to households to promote sales; as consumers move online, searches for flyers have become one of the main engines of growth for Rewards and Directories websites. The share of searches for flyers was up 13% year over year in the twelve weeks to May 22, Similarly, the share of searches for circulaire (the French language equivalent) was up 7%. The following tables show the top search terms in the twelve weeks ending May 22, 2010, that included the words flyer and circulaire. 5
6 Home Improvement Booming in Canada House and Garden websites enjoyed 26% growth in share of visits year over year to April 2010, becoming the 5 th largest retail industry in Canada (up from 7 th in April 2009). Among the fastest growing websites for Canadian brands (see slide #3) were Canadian Tire and Rona, both of which rank in the top 10 House and Garden websites. Home improvement searches have been soaring in recent weeks. The chart on this slide shows the performance of a Hitwise Search Term Portfolio comprised of non-navigational home improvement search terms. The share of Home Improvement searches increased 89% year over year in the twelve weeks ending May 22, Canadians appear to be investing in their homes this spring. Top Home Improvement search terms included kitchen cabinets, wallpaper, solar panels, furniture stores and patio furniture. 6
7 Website Profile: Canadian Tire One of the main beneficiaries of the increased interest in home improvement was Canadian Tire. The site s recent growth (see Slide #3 and #6) can be attributed to an increase in searches for the brand and successful search engine marketing. In April 2010, Canadian Tire ( received 45% of upstream visits from Search Engines, primarily from Google Canada (accounting for 35% of visits). The popular Canadian Tire Flyer website was the #2 source of visits, followed by Facebook; each accounted for 3% of visits. As with most brands, the top search terms sending visits to the Canadian Tire website were variations of its brand name (eg. Canadian Tire, Canadian Tire flyer and Canadian Tire store locator ). As the site s share of visits has increased, so too has the share of searches for the brand s name. Canadian Tire s growth online might be also be attributed to successful search engine marketing. The site was one of the top two recipients of traffic for the top five product related search terms sending visits to the site in the twelve weeks to May 22, Among the top 100 search terms sending visits it to the site, 32 were searches for products the company sells (eg. patio furniture, gps Garmin MasterCraft tools ). Canadian Tire won 25% of all clicks for searches for gps Garmin and 58% of all clicks for MasterCraft tools searches. 7
8 Key Takeaways Canadians appetite for window shopping and buying goods online is growing with an 8% year over year increase in April 2010 in the share of Canadian internet visits going to Shopping and Classifieds websites. (slide 2) One quarter of the leading Shopping and Classifieds websites in April were for Canadian brands. These retailers are at risk of falling behind international (in particular US) competitors as growth to this sub-set of retailers increases more slowly than average for the industry. (slide 3) The most popular retail industries online in Canada are Classifieds, Rewards and Directories, Auctions, Department Stores, and House and Garden. The retail industries that have shown the strongest gains in share of Canadian internet visits over the past year are Classifieds (+25%), House and Garden (+26%), Sport and Fitness (+26%), and Flowers and Gifts (+62%). (slide 4) Interest in comparison shopping is on the rise in Canada. The Rewards and Directories industry has seen 13% growth year over year and has overtaken Auctions as the #2 retail industry. As the industry is currently dominated by US players, an opportunity exists for comparison shopping websites offering Canadian prices and web links. (Slide 4 & 5) Home improvement is booming this spring in Canada with non-navigational Home Improvement searches increasing 89% year over year in the twelve weeks to May 22, Among the fastest growing Canadian retail websites were Canadian Tire and Rona, both of which fall within the top 10 House and Garden websites. (slide 6) 8
9 Next Steps Contact your Experian Hitwise Account Manager for more information on any of the insights in this report. Use Hitwise Search Data to Monitor Demand for Products in Your Category: Internet search data can be a timely source of insight into demand for products and services, such as furniture or clothing. Comparisons can be drawn to demand for your own products to provide an external benchmark of success Find out what your target audience is doing online: Hitwise Custom Mini Panels are based on a custom set of people from the Hitwise 10M sample that have visited a specific set of websites, searched on a specific group of search terms, and/or fall within a specific demographic or psychographic group. Hitwise then identifies all sites this mini-panel or target group visited and all terms they searched on to provide analysis. For more information, contact your Account Manager or support@hitwise.com. 9
10 More Information For further updates on any of the topic covered in this report, please contact: Chris Morgan at or via our website: About Experian Hitwise Experian Hitwise is the leading competitive intelligence service, giving marketers a competitive advantage by providing daily insights on how 25 million Internet users around the world interact with more than 1 million Web sites. This external view helps companies grow and protect their businesses by identifying threats and opportunities as they develop. Experian Hitwise has more than 1,500 clients across numerous sectors, including financial services, media, travel and retail. Experian Hitwise (FTS:EXPN), operates in the United States, the United Kingdom, Australia, New Zealand, Hong Kong, Singapore, Canada and Brazil. More information about Experian Hitwise is available at About Experian Experian is the leading global information services company, providing data and analytical tools to clients in more than 65 countries. The company helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to manage their credit relationships and protect against identity theft. Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended 31 March 2009 was $3.9 billion. Experian employs approximately 15,000 people in 40 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; Costa Mesa, California; and São Paulo, Brazil. About Experian Marketing Services Experian Marketing Services delivers best-in-breed data, analytics and platforms into multiple regions around the globe. It is focused on helping marketers more effectively target and engage their best customers through , digital advertising, customer data management, customer and competitive insight, data enrichment and list rental, modeling and analytics, and strategic consulting. Through these capabilities, Experian Marketing Services enables organizations to encourage brand advocacy, create measurable return on investment and significantly improve the lifetime value of their customers. Disclaimer Some of the data presented in this report is based on custom data sets built for the purpose of this report and not available in the syndicated Hitwise service. This research report may contain names, information, data, links to third party website addresses, and other materials belonging to third parties; including textual references to such items. Any and all such uses are for illustrative purposes only and do not necessarily indicate an endorsement of the opinions, products or services provided by those third parties. Hitwise does not claim any proprietary right in, or to, any such items as may qualify as copyrights, trademarks or other proprietary marks of third parties. Hitwise is not responsible for the content of third party websites, or the manner in which information may be collected on that website and used by the third party. Hitwise disclaims any responsibility towards the visitor of a third party website or any third party for any direct, indirect or incidental reliance, consequential or punitive damages, including without limitation lost profits, expenses or revenue; regardless of whether Hitwise knew, or ought to have known, of the possibility of any loss or damage arising from the use of, or visit to, a third party s website. Use of this research report is at your own and sole risk. Hitwise disclaims any and all warranties or representations in respect of the accuracy or usefulness of information, or any observations that may be derived from such information, obtained from Hitwise. 10
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