No market has been tested quite like retail. With a shift to online shopping, the influence of social media, and the increase of consumer expectations, many haven’t been able to weather the storm. Sears, Mexx, and Jacob, who were once prominent Canadian players in the market, have permanently shut their doors.
The Current Market
According to Anthio Yuen, Senior Manager of Research Services and Strategy at GWL Realty Advisors, Vancouver has led the way in overall growth, with 10% in 2017 and 5% in the first quarter of this year.
“The growth in retail is reflective of economic growth, housing, and consumer confidence,” said Yuen. “It all bodes well for the retail market in Metro Vancouver.”
However, Canadians are opting to spend their money in different categories, most notably groceries, dining, and event and travel. These sections saw an overall increase, ranging from $371 to $603 per month per household.
The bottom three categories where we’re spending the least is in personal electronics, reading and print, and home electronics. Yet despite this dip, online retail is still a small portion of how we consume, making up just 4% to 7%. Canadians are primarily driven to in-store experiences.
“The Canadian retail market is young and immature. It’s only in the last couple years that grocery stores have started to add an online shopping platform. This is much different than the U.S. and U.K., who are global leaders in this area. They’re seeing 10% to 20% in overall online sales.”
What’s Driving Retail?
With most traditional retailers feeling the pressure brought on by shifting consumer patterns, there are a few outside factors that are driving Vancouver’s healthy market. According to Yuen, this is due to international tourism. With the Canadian dollar lower, we’re having an influx of American and Asian visitors.
“International retailers are choosing to open in Vancouver over Toronto and Montreal because of the high range of Asian tourists to the city,” said Yuen.
The Omni-Channel Difference
Yuen notes that the brands that survived and thrived are those that have embraced Omni-Channel Retailing. This is when the customer has an integrated experience that seamlessly connects online with in-store, and puts the power in the hands of consumer.
“Omni-channels allow for connection points at all areas of a consumer’s life. For example, I was watching a YouTube video on how to do lawn work by Home Depot. After it played, I was then shown links to purchase the products that were used in the video.”
So What’s Next?
Yuen predicts that retail destinations will be driven by food and community experience. In addition, there will be a bifurcation between luxury retail and needs of life retail. The first offering strong experiences both on social media, mobile, online and in-store. The latter, such as Costco and dollar stores, will continue to benefit from demand for value and convenience products. Those that are caught in the middle of this bi-furcation—notably mid-market retailers with limited experience or value benefits—will face challenges ahead.