Northern Exposure

With the U.S. economy faltering and catalogers still reeling from last year's severe postage increases, mailers could do worse than consider Canada, the market at their doorstep that's more similar to the United States than some may think.

Laurene Cihosky, Canada Post's senior vice president for direct marketing, explains why mailing there now may be a good idea since the U.S. dollar's value is so low.

DIRECT: Why do you think Canada is so attractive to U.S. catalogers and other direct mailers right now?

CIHOSKY: I would say because it's a market of 33 million underserved shoppers.

DIRECT: How do you mean that?

CIHOSKY: Canada Post spent a lot of time researching the attitudes of Canadian shoppers and one of the top things we found was a lack of choice. The Canadian market is much smaller than the United States', and as a result Canadians are underserved.

DIRECT: What are some problems marketers might encounter in Canada?

CIHOSKY: Historically, some of the big barriers have been [related to] price. The exchange rate for many years has not worked in Canadians' favor. That's gone away. We hit a peak last October when the Canadian dollar was trading at $1.10 U.S. That was like the floodgates opening. Those numbers were escalating over the Christmas shopping period last year and we're seeing growth — the volume of U.S. mailers coming into Canada has been increasing.

DIRECT: By how much?

CIHOSKY: Between 5% and 10%, year to date. My northbound mailing pattern is about 8% higher than it was this time last year. Parcel shipments coming from the United States are also up. I don't have those numbers but they're significantly stronger — they really carried through from Christmastime.

DIRECT: Are there other issues that might give mailers pause about Canada?

CIHOSKY: A lot of companies perceive Canada as a foreign market but it's not all that different from America when it comes to shopping habits and media consumption patterns. [In fact,] it's very similar. But there are some language barriers. And the Canadian market is weak compared with the United States in terms of lists. In Canada, depending on who you talk to, there are fewer than 3,000 lists available, whereas I've heard there are more than 55,000 in the States. The lists in Canada are a lot smaller and the options for selects are a lot fewer. Because we're not a well-developed direct retailer, the mail-order buyer files are limited. On the flip side, when Canadians do buy they spend more and shop frequently.

DIRECT: Do you have statistics on this?

CIHOSKY: In the catalog sector the average order value tends to be 20% higher than American purchases per transaction.

DIRECT: How much more stringent are Canadian privacy laws than those of the United States?

CIHOSKY: We have very strong privacy laws in Canada. The Canadian government has issued the Personal Information Protection and Electronic Documents Act. (Editor's note: Among other things, this measure mandates that list owners obtain consumers' consent before disclosing personal data such as names, addresses, gender, telephone numbers, income and credit records, and identification numbers, as well as provide the means to opt out of lists.)

DIRECT: How large is the Quebec market, and do you treat it differently?

CIHOSKY: There's a big population but there are language laws about marketing into Quebec. So if you're prospecting to somebody you don't have a prior relationship with and they've [indicated] they won't accept communications in English, the [message has to be sent] in French. Other things, like geodemographic tools, can also help targeting.

DIRECT: How much would it cost a cataloger or other DMer to make these accommodations? And is it worth the expense?

CIHOSKY: It depends. It's a hard question for me to answer. I think it's a lucrative [opportunity]. Quebec responds much like the Latin-based U.S. markets to DM campaigns. [Quebec's consumers are] very emotive. You use a different messaging strategy there. [Elsewhere in] Canada you'd tend to market on a more rational basis. For a lot of mailers, translating their catalogs into French is [something they'll hesitate to do] until they've built up a [following].

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