Canada’s retail landscape rapidly evolving

By Tracey Arial

Walmart has shown that the Canadian market can outperform other regions while forcing traditional Canadian retailers to right-size and evolve to keep their market base. Now other international players are moving in too.

These forces are radically changing the retail landscape across the country, says large-scale retail specialist Ian F. Thomas.

Thomas has a front-row seat on how Canada’s retail market is evolving from his Vancouver office, where the shopping landscape is the most advanced. Mall sale productivity in British Columbia has outpaced the rest of the country year-on-year since 2003. British Columbia mall sales reached almost $700 million in 2013, whereas those in the rest of the country were barely above $600 million.

We’re seeing things happen at opposite ends of the spectrum,” he says. “On the one hand we’ve got the luxury stores, the Nordstroms and Saks and then Yorkdale in Toronto is adding more luxury specialty stores. I think we’re going to see a lot more of that.”

Thomas sees Yorkdale’s latest evolution as something that will continue across the country as European luxury fashion houses enter suburban markets.

On the opposite side of the luxury spectrum is the discount,” he says. “We’re going to see this proliferation of outlet centres. Already, there’s strong competition with RioCan and Ivanhoé Cambridge and others rushing to develop outlet malls. That’s where the retail landscape is really going to change quite a bit.”

Thomas believes that Target’s entry into Canada will eventually be profitable even as strong Canadian operators rapidly change how they do business. “You have stores like Canadian Tire that have revitalized themselves very successfully. You have regional stores like London Drugs in Western Canada that sell a lot of products at a Target. You have the Canadian Superstore.”

Best Buy and Future Shop are closing stores and downsizing to meet contemporary demands. Chapters Indigo is focusing on turning bookstores into cultural retail centres, with toys, hobbies, home décor, food, beverages and in-store demonstrations.

It will become a totally different experience from what we’ve expected from a bookstore in the past,” says Thomas. “Our landscape is going to change substantially in the next five years.”

Note: This report appeared on page 42 of the Spring 2014 issue of Canadian Real Estate Magazine.

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