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Canada: Discount retailers get boost as consumers react to sluggish economyTuesday, July 26, 2016 > 11:49:55
(The Globe and Mail)
Canada’s slow-growth economy, which is still struggling following the slump in oil markets, has given a boost to brands in the discount retail space.
Consulting firm Brand Finance PLC is releasing its annual ranking of Canada’s most valuable brands on Monday, and found that low-cost retailers’ brands were relatively strong compared to the overall Canadian market. Consumers who have reacted to the sluggish economy are holding tighter to their wallets, and viewing discount in a different light.
Brand Finance is one of the firms that attempt to demonstrate the value of branding by calculating a dollar amount that brands contribute to their companies’ overall financial value.
There is not much budging at the top of the list, which is dominated by banks and telecom companies; Royal Bank of Canada is number one, with a brand value of $13.2-billion, according to Brand Finance’s calculations. But there was consistent movement in the list among lower-cost and convenience retailers.
Dollarama Inc., for example, rose in rank to 33rd place on the list from 39th in 2015, and its brand value rose to $1.8-billion this year compared to $1.5-billion last year. Metro Inc.-owned discount grocery store Food Basics moved on to the list at number 92, from being out of the top 100 entirely last year. In comparison, Loblaw Cos. Ltd. flagship grocery chain – which is not positioned as a discount grocery destination – fell from number 17 to number 24 in the ranking. Convenience stores also did well: Alimentation Couche-Tard Inc.’s Circle K brand moved from 26th to 15th place.
“During the 2007 to 2009 financial crash, the best performing brand in the States was Wal-Mart. For about two years, we had them as the most valuable brand in the world,” Brand Finance chief executive officer David Haigh said in an interview. “People were looking very carefully at their spending, as you would expect. When I saw the information in Canada, it was all very familiar. At a time of downturn, people look to lower-cost retailers.”