| Behind The Store Front
Prepared for the Retail Council of Canada in partnership with Industry Canada By Jacobson Consulting Inc.
The Retail Sector |
One of the principal functions of the retail sector is to provide Canadians with access to the broadest possible palette of goods from all over the world. Increasingly, gains from trade and specialization have lead to greater import penetration in the consumer sector. One of the standard economic concepts is the apparent domestic market. This is essentially an estimate of the total sales or "disappearance" of a particular product or service within the domestic economy. The identity defining the domestic market is shown below.
- Production less exports plus imports = Apparent Domestic Market (ADM)
The estimates of the domestic market for specific industries are development by Statistics Canada and Industry Canada using trade and production data. Production, exports and imports by commodity are classified to the industry generally associated with their production. The domestic market is derived from the identity shown above.9
The next chart (Figure 24) shows the share of imports in the domestic market for the products of specific manufacturing sectors.
The statistical message is that import shares are significant for many sectors that produce goods sold by retailers. This chart highlights the challenges facing retailers in managing a very long supply chain from the local store back to the supplier. Slightly more detail is provided in the statistical appendix. The statistical tables show that in some categories such as home electronics, imported product essentially dominates the market completely.
The next chart (Figure 25) emphasizes the challenges even more by showing the increasing importance of China as a supplier of retail goods. Generally, Chinese suppliers have been assuming an increasing importance in most retail-related market segments. In the selected categories, the Chinese share of imports has increased by 8-10 percentage points over the period from 2000 to 2004.
Additional detail is available in the appendix.
9Necessarily, because of the impact of factors such as alternative sources of production (joint production in other sectors) and inventory movements, the identity is only an estimate. Thus, for very specific sectors, it is possible to develop anomalous estimates of the domestic market such that the import share exceeds 100 per cent.