The Ever-Changing Retail Landscape of Canada - WINSTON
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03 Feb The Ever-Changing Retail Landscape of Canada

Photo: synd.yardi.com/Sofia Grimm

By Alex Mazelow and Brian Winston, WINSTON Collective

As we enter the third month of 2015, it is clear that the has undergone major changes in the last year, particularly in the back half of 2014 and the first few months of 2015. We have seen major casino , but are now overrun with news of new international brands on the road to expansion north of the boarder, or across the pond. It’s with good reason that the average Canadian player is increasingly confused.

Canada, traditionally, has been missing many of the world brands that we see advertised so often in our favourite magazines, but more and more these brands are poised for an international expansion, which includes Canada as part of that strategy. The question is why?

 

First and foremost, Canadians have become very savvy and sophisticated shoppers, that are increasingly creating demand for European, Asian, and US-based brands which previously did not have footprint here. Second, our major cities are increasingly wealthy and have a higher disposable income, fuelling that demand. Third, with a downturn in the Asian economy and trouble with the Russian Rubble, brands are looking to offset prior growth in those markets with a new economy, and are looking to Canada and the US to fill the void. With this in mind, it is no wonder that Canadian retail experienced 4.9% growth in 2014 and is set for similar growth in 2015.

With this mostly positive outlook, Canadian retail is in a state of flux. The now-famous Target Canada debacle reminds foreign retailers that new entrants must be sophisticated, as does their strategy for Canada. They must not underestimate the Canadian consumer, who in most cases is familiar with the company in the US or in other international locations. And as such, the Canadian experience must mirror the foreign one, or risk disappointment with the Canadian shopper.

So what should we expect to see in 2015 and beyond for Canadian retail?

Bloomingdales, as many may know by now, is on a search for locations in Toronto and Vancouver, to begin with, of about 120,000 square feet each. We should see their first stores opening in 2018.

Holt Renfrew is in a rapid state of change,closing three of their underperforming locations in Ottawa, Winnipeg, and Quebec City, but expanding to new locations in Mississauga at Square One Shopping Centre, and in Montreal, taking over and expanding the Ogilvy space and the adjacent hotel property for an impressive 220,000 square foot store. We can expect that the future experience in that store will be far less disjointed than it once was.

La Maison Simons, of course, is on the course for a major national expansion, which includes future locations in Vancouver, Ottawa, Gatineau, Mississauga, and Edmonton, with more unannounced locations to be revealed shortly.

Nordstrom, now planted firmly in Calgary, is opening it’s second Canadian location on March 6thin Ottawa, and will continue to expand in Canada, opening three locations in the Toronto area over the next several years, each in the 138,000 – 213,000 square foot range.

Hudson’s Bay Company’s newly acquired Saks Fifth Avenue will be opening 150,000 square feet within the Hudson’s Bay Flagship Queen Street location, with its main entrance at the corner of Yonge Street and Queen Street. Not to mention the Saks food hall, currently under construction in the lower level of the store in partnership with Pusateri’s Fine Foods. Saks is also set to open in Sherway Gardens in 2016, and in yet-to-be confirmed locations in Vancouver and Montreal.

It was recently made public that Fast Retailing’s Uniqlo will be opening two Toronto locations – one at Toronto Eaton’s Centre, and the other in Yorkdale Shopping Centre – in 2016.

Toronto’s “Mink Mile” is also undergoing massive change. Pottery Barn and Williams-Sonomaare exiting their locations on Bloor Street in search of some less expensive real estate. TheManulife Centre at the corner of Bay St. and Bloor St. is being reconfigured in a quest to drive more traffic inside. Hazelton Lanes is in the process of a major restructuring, since being bought by First Capital Realty, and will be re-named “Yorkville Village” once the transformation is complete. In addition to luxe retailers TNT, Andrews, and Via Cavour, we can expect an impressive tenant mix to take hold. Last but not least, look out for Italian shoemaker Tod’s to open their first freestanding Canadian location on Yorkville’s Cumberland Street.

With all the news of foreign retailers entering Canada, we do think it’s worth paying homage to a few of the fantastic Canadian retailers for those of us who may be feeling slightly disloyal.

Hudson’s Bay Co., though taken over by US investment firm NRDC Equity Partners, is traded on the TSX and much of its operations remain in Canada. Its long and fruitful history in this country still resonates strongly with many Canadian shoppers, and led an impressive turnaround in the Canadian market with Bonnie Brooks at the helm.  With Liz Rodbell in her second year as President, we can continue to expect greatness from the Canadian retailer who is well known for fortifying the Canadian cultural and historical experience, while at the same time taking shoppers in to the new millennium.

We would be remiss to not mention another incredible Canadian retail success story – Sporting Life, who has enjoyed four decades of success in Toronto, and now, after selling a majority stake to Fairfax Financial are on the path for expansion, recently opening in Markham, and soon, adding stores in Richmond Hill, Ottawa, and Calgary. Aside from a fantastic selection from a true general merchant, Sporting Life boasts an impressive record of great service. The staff is youthful and routinely takes suggestions from customers as to new brands the buyers should look in to in order to  meet the demands of their customer.

Canada, it seems, will be at the forefront of global retail, boasting most of the world’s most coveted brands. While we are certainly excited for the changes, what will define the staying power of these brands is whether or not they take the time to properly assess and understand the Canadian consumer and the experience that we expect.