The majority of Winning Brands shareholders reside in the USA. A question that arises from time to time is whether Winning Colours Stain Remover is likely have the same per-store-turnover figures in the USA home improvement channel compared to Canada.
For planning purposes, Winning Brands expects sales results for Winning Colours Stain Remover in the U.S. home improvement retailers to eventually be higher than in Canada, even on a per capita basis, when such listings are in place.
The primary reasons are:
- The majority of Canadian consumers are not yet familiar with Winning Colours Stain Remover. Most consumers purchasing the products at Home Depot, Lowes, Home Hardware, etc are responding to the product for the first time on the shelf, not responding to advertising. Therefore, the presumed advertising advantage that the brand would have in its home market is not a significant factor and allows other structural factors to be more important.
- One such factor is that the U.S. home improvement stores are, on average, larger and busier. Studies comparing the retail environment between Canada and the USA show a significant difference in the per capita expenditure both in relative and absolute terms in the home improvement sector, translating to average store sizes, traffic counts and per store sales. Americans spend far more at home centres in proportion than Canadians. The two primary contributing factors are considered to be the significantly shorter “season” for such activity in Canada due to climate, and the higher per capita income in the USA. The income GDP differential, depending upon exchange rate fluctuation can be as high as 30%, favouring the USA. Building materials, garden equipment and general merchandise related to home improvement (including paint and accessories) are amongst the categories with the greatest difference, considered to be up to a 74% differential depending upon how the comparisons are developed.
- U.S. homes are considerably larger – a trend that continues to the present day, despite a growing average size in both countries since the 1940’s. By the middle of the current decade, the average U.S. home size grew to approximately 2,330 sq. ft. (compared with 1,400 in 1975). During the same period, the average Canadian home size grew to approximately 1,800 sq. ft. from approximately 1,075 in 1975. This means that there are more surfaces, and larger surface areas in the USA residential setting to maintain.
- There is no competitive disadvantage of the product itself. Most U.S. products are available in Canada, and no other product has proven to be more versatile in its performance than Winning Colours Stain Remover, regardless of where it is sold or made.
- With an increasing proportion of Winning Colours to be made in the USA for U.S. consumers, Winning Colours Stain Remover will in effect be a “domestic” brand, and suffer no anti-import bias, thus being on a level playing field with any U.S. competitor.
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The implication for Winning Brands:
- When Winning Colours arrives into the U.S. home improvement retail channel in a big way, namely “nationally”, it will be sold in stores that are on average serving a larger number of consumers, with more money to spend, and a longer “season” of home improvement, looking after significantly larger homes. The advertising advantage in Canada is negligible because most Canadians have still not yet heard of Winning Colours, and thus shows long term growth potential even in Canada.
Many of the Canadian home improvement retail stores in Canada are smaller than their U.S. counterparts. The inventory turnover at these stores is affected by the smaller consumer population base to draw from, generally speaking. The Canadian in-store sales turnover may be a conservative version of the U.S. experience, once full scale distribution is attained.
Despite the smaller average size of the Canadian home improvement retailers, the competitive offerings include U.S. products which are no better than Winning Colours, having provided Winning Colours Stain Remover with evidence that it is competitive in head-to-head product performance and value with standard U.S. brands. With increasing U.S. production for U.S. domestic requirements in Michigan, Winning Colours Stain Remover will be a U.S. domestic brand from the standpoint of U.S. retailers and consumers.
Winning Colours Stain Remover delivers excellent performance and value compared with any of its U.S. national brand competitors, plus offers added advantages that are attractive in light of emerging trends. Winning Colours will gain increasing shelf space as positive consumer word-of-mouth justifies more prominent display and wider distribution.
