Session Spotlight: Building in Canada

Canada represents a dynamic market for U.S. retailers looking for store expansion opportunities. However, before opening Canadian stores, companies must first learn the unique challenges and requirements of doing business within the borders of their northern neighbor.

“Target didn’t perform due diligence on doing business in Canada or what the Canadian consumer wants,” said Dan Wisk, VP facilities and construction at Hertz Corp., and moderator of the SPECS session, “Oh Canada: Design and Building Challenges.”

As a result, Target struggled to gain a foothold in Canada and, in January 2015, announced it was exiting the market, shutting all of its 133 Canadian stores. In contrast, Wisk said, Nordstrom has successfully opened stores in Canada.

“Nordstrom used a measured, controlled approach and is doing well,” he noted.

Wisk noted that Kohl’s has not bid on Target’s Canadian stores, which he called a conscious decision due to the difficulties in marketing in Canada.

According to Wisk, marketing and promotion laws are more stringent in Canada, with limitations on how often items can be on promotion or on sale.

A number of other Canada-specific retailing challenges exist, as well. These include the requirement that any architect, general contractor or other consultant used in the design or building of a Canadian store be licensed in Canada, even if they are U.S.-based. In Canada, architects are licensed by province. Some states have reciprocity agreements with some provinces that will streamline the licensing of architects.

Marissa Sidel, president of National Dispatch Services, a Canadian facilities maintenance specialist, said the knowledge base of U.S. professionals does not always translate to Canada.

“There is specific knowledge and experience required in Canada, depending on the type of units you want to develop,” said Sidel. “You should consider associating with a licensed professional in Canada.”

Other idiosyncrasies of Canadian laws and regulations that can impact retail include the lack of a national standard on disability access.

“There is no Canadian federal law comparable to the Americans with Disabilities Act,” said Sidel. “There are more than 20 federal laws mentioning disability, as well as provincial laws and building codes. There is a patchwork of regulations that touch on disabilities, which are enforced by private lawsuits.”

Consequently, Canadian stores need to be approved by an inspector to ensure they comply with provincial laws and regulations, Sidel advised. Also, each province has its own specifications.

BUILDING CODES: Furthermore, Canada lacks a national building code. Building codes are regulated by individual provinces, with local municipalities often enforcing provincial codes.

“There is a model building code, which is not law,” explained Sidel. “Provinces can adopt the model code as is or modify it. For example, in Toronto it can take eight to nine months to get a plan approved with permits, at a cost of about $21,000.”

While there are entities in Canada that will take payments to expedite approvals and permits, Sidel warned attendees that they must make sure any payments are legal and part of the approval process.

Sidel left attendees with some concluding advice for their Canadian store projects.

“Know the provincial regulations,” she said. “Use partners in the province. Use a customs clearance house, who are experts  with contacts at all points of entry. Have your paperwork. When doing construction for the first time, understand what you will need in the future. Use local suppliers.”