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December 06, 2021 - Blog Article
3 Key Factors Canadian Retail is Stabilizing


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Around the world, retailers experienced a lack of stability and numerous changes in shopping patterns due to the pandemic. However, with both retailers and shoppers are learning how to operate in the new and unfamiliar environment, retail centers across Canada have started to experience a certain level of stability once again.

Colliers, an international investment management and real estate services firm, surveyed more than 300 retailers in various industries and business fields. Here are the key takeaways from the survey.

Key #1: Retail Vacancies are Stabilizing

Retailers experienced countless changes over the last two years – from how consumers shop to how stores finalize orders.

Now that retailers and shoppers have gotten used to the new shopping environment, retail vacancies are stabilizing. The much-needed stabilization now allows retailers and landlords to continue to the next phase.

Although we have yet to see the return of pre-Covid shopping practices, retailers and shoppers have become used to the new shopping customs, which indicates that the period of uncertainty is in the rearview for Canadian CRE Retail properties.

Key #2: Canadian Shoppers Prefer to Shop in the Store

Although the popularity of e-commerce is growing everywhere, Canada continues to be one of the developed countries with the lowest success in e-commerce. 

The high transportation costs, the location of consumers, and low population density could be among the top reasons many Canadians prefer brick-and-mortar stores.

In-person shopping continues to be their most profitable business model, according to 77% of Canadian retailers surveyed, which indicates shopping centers are not going anywhere anytime soon. Canadian retail continues to be an attractive investment.

Key #3: Grocery Anchor Retail is the Key to Success

Despite numerous challenges and obstacles that have marked the last couple of years, total consumer spending saw the slightest decline compared to pre-pandemic forecasts. It only goes to show that retailers can keep up with the most disrupting changes.

Moreover, tenant diversification could be a potential solution to increase shopping center traffic even further. Namely, foot traffic at enclosed shopping centers with a grocery store is 7% higher than at centers without similar tenants.

Even with the growing trend of e-commerce, grocery shopping is something most people will continue to do in person. Therefore, supermarkets and grocery stores will continue to be responsible for attracting consumers to the neighboring retailers too.

Conclusion

While retailers in Canada cannot ignore e-commerce efforts, Canadian retail CRE continues to be a great investment opportunity. Alberta, Saskatchewan and Ontario provinces are especially important, as retail CRE continually grows across these provinces, despite the challenges the pandemic brought with it.