This article appeared in the 1996 Spring edition of The Strategic Solution, the newsletter of The Strategic Edge.

CANADIAN RETAIL

As U.S. retailers continue to find development opportunities becoming scarce, they have begun to search for alternative markets. One of the areas that many companies have headed, particularly big box retailers, is north of the border to Canada. While there are parallels between Canadian and U.S. retail, there are many differences that any retailer looking to Canada should be aware of. These differences include the presence of thriving downtown retail nodes, variations in regional mall composition, and more homogeneous market demographics in mid- and small-sized markets.

 

One of the most striking differences in Canadian retail is the strength of downtown retail. While made up of mostly smaller specialty shops, this is still a viable shopping alternative for customers. Many downtowns, particularly in Southern Ontario, are further supported by Eaton Centres. As the name suggests, all of these enclosed centers are anchored by Eaton’s Department Store. While some of these centers show signs of stress, they do serve as a centerpiece for the smaller specialty shop retail.

 

Although downtown retail in Canada is strong, this has not stopped the development of the regional center. Regional centers, however, tend to have fewer anchors than those in the U.S., often no more than two. Of the anchors present in Canadian malls, there is usually a mix of traditional department stores, mass merchants, and discount department stores - few malls have strictly traditional department store anchors. Another unique factor of Canadian centers is the predominance of enclosed community centers. Many strip-sized centers try to present themselves as having a regional mall "aura". Development of community and regional centers is also affected by strong land use regulations and a more extensive approval process than is present in most U.S. cities.

 

One of the factors influencing the differences in downtown and regional shopping centers between U.S. and Canada is the demographic make-up of Canadian society. Outside of the major metro areas, Canadian society is predominantly white and middle class. Mid- to small-sized cities have few areas of extreme wealth or poverty, reflective of the more socialist policies of Canada. This market "equity" has allowed for stronger downtowns, and at the same time has limited the development of highly upscale suburban retail in many markets.

 

Canadian retail, while having its differences, does provide U.S. retailers with potential opportunities. Knowing the market currents in Canada can pave the way for expansion success, while a failure to understand them may leave a retailer wondering why a format successful in the U.S. does not prevail in Canada.

 

 

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