Is Canadian retail finally on the path to redemption?
Tuesday, April 16, 2019
The past few years have made it seem as though retailers haven’t been able to catch a break in Canada. Another month, another shutdown, or so it’s seemed.
Retailers and commercial landlords in the country have experienced a wild ride, with Target opening and closing; Future Shop shutting down; and Sears, Black’s, and Gymboree closing — to name a few. Although some chains continue to experience financial turmoil, the dust has begun to settle, and perhaps clear, as landlords have begun to find creative ways to showcase shopping malls in a new light.
One of the most significant impacts on the retail landscape has been the proliferation of online shopping, especially for digital goods. This past decade has seen Blockbuster Video, Future Shop, and Target shutter, leaving gaping holes for landlords to fill.
Amazon and online shopping have continued to hinder in-store sales for goods and services, resulting in frequent “doom and gloom” headlines declaring that retail is dead.
And yes, the latest shutdowns involving bankruptcies for Payless ShoeSource and Gymboree are continuing to pose challenges for shopping malls. But with Q1 of 2019 behind us, it seems that there is finally a light at the end of the tunnel.
A Sears store in Toronto prior to the chain’s permanent closure in Canada.
While this is not necessarily the be-all, end-all of brick-and-mortar’s struggles, the diversity of new offerings speculated about in recent years has finally started to come to fruition. The Target Canada store that left Upper Canada Mall in Newmarket, Ontario, empty for over a year has been replaced with Market & Co., a 40,000-square-foot food hall. Similarly, in Mississauga, Ontario, the Square One Food District has opened, sharing similar specs and vendors with Market & Co.
With gourmet offerings that go beyond what one would normally find in a food court, food halls have been a great success, attracting both shoppers and foodies on social media. And not only for Canadians, of course.
In a 2017 article posted by Forbes, restaurants in the retail sector were celebrated for their use of social media in bringing diners to their establishments, even in unlikely locations.
David Chang, chef and founder of Momofuku, originally experienced pushback from landlords in 2004 when he proposed a restaurant in their retail spaces. At the time, they were concerned about smells and pests, assuming it would be bad for business.
What a difference a decade-plus has made: “There was just a general idea that a restaurant didn’t increase the value of an asset,” Chang said. “Now it’s the complete opposite.”
Today, increasing foot traffic with a diverse offering of shops and restaurants seems like a no-brainer. And it’s not just restaurateurs filling the void — foreign shops opening in Canada have introduced shoppers to a “new wave” of retailers. Japanese retail giants Muji and Uniqlo have both helped to fill empty spaces, according to Graham Silvera, Ivanhoé Cambridge’s vice-president of retail development.
He goes on to say that today, he would select five junior tenants over a major anchor, as newer tenants have been significantly driving foot traffic. His company currently plans to spend $500 million to upgrade several key properties. Ivanhoé Cambridge’s successful markets include outlet malls, luxury centres, and experiential shopping establishments.
If retailers have yet to adapt to experiential consumer demands or implement an online shopping platform, they may want to do so before it’s too late. While landlords have creatively begun to fill the empty spaces, a number of retailers are still at risk of bankruptcy, according to MoneyWise. Given the big names featured on the list, shopping malls will continue to be in for some major changes.
For now, it appears as though Canadian retail establishments are finally diversifying. Retail landlords have had to shift their priorities quickly over the years, and this is likely only the beginning.
Consumer demands will continue to sway preferences and tastes, and merchants must keep up or face a similar fate to their fellow shuttered retailers.
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