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July 08, 2019 - Blog Article
Luxury Retail in Canada Is Thriving

The luxury retail market in Canada is thriving in spite of the tough times seen throughout the market over the past 12 months. This is especially true of the upper echelon, as they continue to build out extravagant stores, while others are still showing interest in breaking into the Canadian retail market.    

 

 

Canada is considered by many to be one of the most stable international retail marketplaces in the world. Although the retail markets in the United States and the United Kingdom are currently facing some difficulties, industry experts are more optimistic about the outlook in Canadian retail, as favorable laws have sparked an influx of luxury retailers and buyers alike.  

 

 

Influences on Luxury Retail

 

Retail experts state that the luxury retail market will continue to grow, due to affluent Canadians appreciation for European fashion along with a steady flow of wealthy Chinese tourists who also embrace the high style of fashion, especially when purchased abroad.  

 

The reason why Chinese tourists shop abroad for luxury goods is due to several reasons; including, lack of trust that they are buying an authentic brand when they are in the mainland, luxury goods are sometimes 50% cheaper when purchased abroad, and for social status reasons. Buying branded goods while traveling is more important than staying in a 4-star hotel for many of these travelers. Therefore as long as they continue to travel to Canada, there is strong likelihood they will continue to influence the Canadian luxury retail market. 

 

 

Luxury retailers flock to condense markets 

 

The major cities of Canada are primed for luxury retailers, as many of the residents have high per capita incomes and a large consumer base that appreciates luxury retail.  

 

A luxury retailer generally has a location strategy in their plans, which includes the requirement of being in areas with a high-density population. From a logistical point of view, a store that is located in condensed areas allows for efficiency in the supply chain, better visibility and access to their consumer base. 

 

The locations where you can find luxury brands; include, Yorkdale Shopping Centre, the upscale section of Bloor Street West, and Yorkville Village. These shopping areas in Ontario are attracting strong interest from multinational luxury retail shops. In addition to Ontario, the other Canadian provinces where luxury retailers are opening up shops include the downtown section of Vancouver, Calgary, Edmonton and Montreal.  

 

 

 

Retail Real Estate Opportunities  

 

Opportunities to invest in retail commercial real estate “CRE” are increasing as strong interest to do business in Canada from multinational corporations continues to increase. 

 

By way of example, the luxury Italian retailer Bottega Veneta, recently opened their first location in Yorkdale Shopping Centre in the province of Ontario. In addition to Bottega Veneta, there are other brands like Holt Renfrew, Gucci, Fendi, Dior and other big names are opening their own stores and will go after the best retail locations for their expansions. 

 

Furthermore, many are also optimistic about the future of luxury retail due to low market penetration and there are still more international players that are turning attention to Canada. This includes the LVMH Group and Kering Group of luxury brands. They are both investigating the Canadian marketplace. Each with their own set of luxury brands.  

 

 

 

Summary 

 

Luxury retail has been experiencing some remarkable growth in recent years and doesn’t look to be slowing down anytime soon. With a stable banking system, an affluent local consumer population and a magnet for luxury tourists, it’s no wonder why Canada is gaining in popularity as an international luxury retail destination.  

 

 

These luxury multinational companies will continue to need a team in Canada to help them analyze the marketplace, while occupying the best retail spaces in high density locations throughout Canada. It’s truly a great time to invest in retail CRE as the demand from the luxury tenants are expected to continue for some time. 

 

 

Contact ReDev today to gain more insight about retail CRE investing in Ontario, Alberta and Saskatchewan provinces.