Canada Retail Investment Forecast 2019
Special Research Report
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Retailers Adapting to Transforming Consumer Shopping Preferences
E-commerce rewiring the Canadian shopping experience.
While the retail sector undergoes a major transformation in the digital age, physical stores in Canada have been quick to adopt new strategies to remain relevant and competitive, supporting positive demand fundamentals. Online shopping increased substantially over the past year as consumer preferences evolved, leading to a 20 percent increase in internet-based retail sales. E-commerce comprises just 4 percent of all retail activity, though, a much smaller fraction than the roughly 10 percent in the United States. One factor keeping Canadians more active in brick-and-mortar stores comes from the slower growth of Amazon Prime across the nation. It was not available until 2013, much later than in many other countries. Nonetheless, retailers are preparing for a wave of change in the sector, enhancing omnichannel approaches and focusing on the customer experience to drive sales. The discount and luxury retail segments will remain two of the most active this year, offsetting challenges faced by the mid-market category as recent store closings by Sears, Lowe’s, Gymboree and others weigh on vacancy in the near term. A healthy jobs outlook, increased immigration and strong tourism trends will keep retail sales on an upward trajectory through the coming year, maintaining investor confidence.
Arrival of global retailers creates new investment opportunities.
Retail expansions by discounters Dollarama, UNIQLO and Miniso, along with a wave of luxury brands establishing a foothold on Canadian markets, have bolstered property metrics across many metros. Numerous international retail brands have plans to boost Canadian store counts again this year, with new entrants such as Chick-fil-A, Casper, Nordstrom Rack and UNTUCKit filling vacant space with high-credit long-term leases. Strong tenant demand will fuel investor activity across a variety of retail segments in 2019.