How to expand into La Belle Province and tap into its market growth
By Mark Satov
Founder and leader, SATOV Consultants
Sometimes I wish I could live the Montreal lifestyle here in Toronto — the food and wine, late-night parties and Quebecois joie de vivre that make other Canadians look stuffy and boring. When it comes to having a good time, la belle province really is a distinct society. But doing business there shouldn’t be that different from anywhere else in the country.
Lachine n’est pas la Chine. So why do people treat Quebec like the Far East?
When North American companies consider broadening their geographic reach, they seem to take pains to bypass this large, attractive market right under their noses. What a wasted opportunity. Facing little outside competition, Quebec-based businesses have their way with the place, like Justin Trudeau at Ladies’ Night. They’re also using that valuable experience to grow aggressively abroad.
As a native Montrealer, I’m no stranger to Quebec’s linguistic, cultural, regulatory and other barriers. (Bill 101, anybody?) I’m also one of the first to criticize its government and some of its businesses for being parochial and insular. But it often feels like Canadian companies will set up shop in farther-flung places with equal challenges just to avoid translating their instruction manuals into French and paying a bribe or two.
Okay, I was kidding about the bribes. But truth be told, outside of a few industries, corruption in Quebec is no different from the rest of North America. And anyone who operates overseas shouldn’t fool themselves; from Austria to Zimbabwe sneaky stuff happens.
Although going into Quebec has its frustrations, we’ve seen companies achieve big successes there, especially in B2C. When scanning the Quebec market for a client that was considering nationwide expansion, we spoke to a local player who summed it up perfectly: “Of course an Ontario player can operate here! Quebec is different, but it is still the same country…People want to do business here.”
Quebec: Too big to ignore
Quebec is home to roughly 8.2 million people. The province accounts for about 22% of the nation’s retail spending, according to real estate services company Colliers International. Royal Bank of Canada forecasts that Quebec retail sales will top $108 billion this year.
Benefiting from the scale of their home market and drawing on lessons learned there, Quebec retailers are expanding outside the province. For example, Montreal-based footwear conglomerate Aldo Group now operates in more than 80 countries.
For the rest of the world, Quebec is becoming less of a secret. In 2011, although Quebec had 23% of the Canadian population, it had only 13.5% of the country’s foreign-owned retail organizations. That’s changing. An international push by the likes of Starbucks Corp., Target Corp. and Wal-Mart Stores Inc. is dramatically boosting that foreign presence.
One knock against doing business in Quebec is unwanted attention from the language police, but thanks to recent court decisions favouring English companies, local businesses will have less of an advantage. This spring, the Quebec Superior court ruled that companies using their trademarked names don’t breach the province’s Charter of the French Language.
How to conquer Quebec
I know I’ve been selling you on Quebec, but don’t rush in. Treat the question of whether it’s worth expanding there like any other business decision. Be pragmatic. What is your competitive advantage, and is it sustainable in that market? Can you displace the incumbent local competitor?
Once you’ve decided that Quebec is right for you, here are three rules that will help improve your odds.
Rule #1: Remember what brought you success in your home market
Think Quebeckers have much different tastes than other Canadians? Think again. Don’t give your company’s value proposition an expensive overhaul; decide whether to adapt your product to local preferences, and to what degree.
Tim Hortons displaced Dunkin Donuts as the top Quebec doughnut retailer, even though it did almost nothing to change its product offering. Between 1995 and 2005, the company went from 60 to 308 stores in Quebec, a fivefold increase, while Dunkin Donuts’ market share plunged.
Rule #2: Adapt your message so it resonates with Quebeckers and your brand
As they never tire of letting the rest of us know, Quebeckers take great pride in their heritage and culture. Simply translating your English marketing and messaging into French won’t cut it.
Connect with Quebec consumers by hiring a marketing agency with local expertise. It worked for Volkswagen, which turned to Montreal-based Palm Publicité Marketing when expanding into Quebec.
Rather than translate its “Drivers wanted” slogan, VW chose a new one that resonated with recreation-loving francophone car buyers: “Êtes-vous fait pour Volkswagen?”, which means “Are you meant for a Volkswagen lifestyle?”
Rule #3: Make the right investment in local talent early
When companies skimp on local talent, they often stumble out of the gate and incur bigger costs in the long run. Although you’ll save money by keeping resources centralized, you won’t be able to respond effectively to specific market needs.
Ask yourself how important local talent is to your value proposition in the Quebec market. If you’re a fashion retailer, for example, it makes sense to have a contingent of local buyers with a feel for provincial trends.
By shying away from Quebec, Canadian companies are ignoring a huge market opportunity on their doorstep. Canadian businesses with international ambitions should also recognize that the province can serve as their pilot project: from language to contract law, it presents many of the same surmountable challenges as foreign markets. So put aside any negative impressions and give Quebec another look.