Retail Insider is streamlining its Canadian retail news from around the web to include a handful of top news stories that can be viewed quickly during the day. Here are the top stories from the past few days.
The retail sector in Canada continues to face challenges as it embarks on a new year.
Retail Insider asked three well-known experts in the industry to discuss what 2023 was like for retail in Canada and what we can expect in 2024.
Here are the thoughts of George Minakakis, author of The book, The New Bricks & Mortar, Future Proofing Retail, who also leads advisory firm Inception Retail Group; Gary Newbury, Strategic Advisor and Delivery Executive, RetailAID.ca; and Bruce Winder, author of RETAIL Before, During & After COVID-19 and President, Bruce Winder Retail.
1. How would you describe what happened in the retail industry in 2023?
George Minakakis
Minakakis: “Something had to give in 2023; it has been a journey of returning to somewhat normal competitive retailing. Yes, inflation and higher interest rates have had their impact, and a gradual consumer pullback has played out as I forecasted in mid-2021 when I referred to 2023 and 2024 as the rebalancing period. 2021 and 2022 saw phenomenal growth in sales and transactions driven by inflation, pent-up demand, and considerable savings accounts. 2023 has been the polar opposite; most retailers may have experienced negative to flat transaction growth. And, of course, as no surprise, we saw a shift with consumers conducting more bargain hunting probably by the beginning of June.
“Between 2021 and 2023, inflation has increased by 15 per cent, which was not economically sustainable for consumers. Hence, there is a shift to being more cautious and rebalancing their household spending. We should not be surprised if the last quarter of 2023 shows us an increase in shopping with debt, specifically with buy now pay later. I can’t ignore the layoffs in 2023 being indicative of doubt about the immediate future, so companies have been making changes from marketing to human resources.”
Victoria’s Secret Pink at CF Toronto Eaton Centre Closed to relocate inside Victoria’s Secret across the hall (Image: Dustin Fuhs)
Gary Newbury
Newbury: “When I think about 2023 I cannot look at this year in isolation without looking at trends which explained much of what has happened, emerging during 2022. As 2022 opened it became clear supply chain challenges from the previous two years and significant government borrowings had led directly to inflationary pressures. The Bank of Canada, slow to realize this, needed to put the brakes on this situation. Tiff Macklem started ratcheting up interest rates late Spring, catching out many folk renewing their fixed interest rate mortgage arrangements. The Ukraine war and its effects on energy prices, and disruption to trading patterns certainly impacted on consumer wallets. The public became very aware of how countries are interconnected globally through complex supply networks designed to chase the lowest price, often without provision for risks, as we found out. And remember, for parts of Canada, restrictions, vaccinations, masks etc were still being mandated. There was also a transition back from temporary saving to resuming spending on debt towards the end of 2022 (e.g. BNPL programs), resulting in the raising of debt-to-income ratio. During this time, some employers were mandating return to office arrangements (boosting short term sales of apparel), which continued to gather pace during 2023.
“Given this background, many retailers seemed to rush back to processes and thinking they knew prior to the pandemic, thinking the worst was over. The tome of “the new normal”. The only certainty we can rely on is increasing uncertainty (and disruption) and this means long range planning has to be approached thoughtfully and with the support of Boards and key stakeholders. However, this is tough to negotiate, so it seems the game has resumed and it’s back to “quarter to quarter” reporting cycles, with few lessons learned.
“There were clear winners (and losers) during the pandemic, consumers seem to adapt quickly to changing conditions, and for many, the rails started to creak as reality set in with rumours spreading of cutbacks and consumers experiencing, first hand, seriously rising prices in core elements of shelter, energy and food, leading to an anxious consumer mindset.
“2023 had many different signals, from headline figures of 1000s of open retail positions forcing restricted opening hours at some retailers, repayment of “pandemic relief loans”, excess stockholdings coupled with high levels of real estate occupancy/rates and, from the consumer side, the advent of ChatGPT and the promise this, in the hands of the consumer, was heralding a substantial change in the consumer – retailer dynamic.
“The economic threat of recession plagued 2023, however, more and more people were being caught in the accelerating interest rate drive, often finding their shelter costs had doubled, if not tripled, energy costs up 50 per cent + and food around 20 per cent, with wages remaining pretty static. So basically, consumers started to defer their spending and were on the hunt for better value, hence dollar stores, Walmart, Costco saw increasing sales, and mid-priced retailers were forced to run more frequent promotions, however, interestingly, seeing Canadian Tire, a good bellwether of consumer confidence, laid off staff just as peak trading started in Q4. This was quite telling of how they saw the short term. Another notable challenge was Mastermind Toys heading into trouble during their busy season. Plus many mid sized retailers (e.g. Indigo, Roots) reporting losses. Visibly, just travel around some of the smaller towns and cities and see the number of empty stores. “Space for rent”. The Canadian retailing industry is not particularly well set up for success as we look forward to 2024.
Future lululemon at 2 Bloor W (Image: Dustin Fuhs)
“2023 has really been a mixed bag and for some retailers, with strong brand advocacy, a clear market proposition and remarkable experiences, continue to run ahead of the pack (e.g Lululemon), with many other chains showing signs of leadership teams not innovating, not differentiating, not appealing to the new mindset of their consumers, not deploying technology to enhance their brand experience, and basically being caught with holding too much inventory investment and not being prepared to erode margins to convert this excess into cash for investment in their branding, technology or their in store design. It remains quite a surprise that retailers continue to put their gray tail items on their website, rather than consolidate their assortment into a focused proposition and mirror stores and online with a consistent and comprehendible “product”.
“I personally was watching Putman Investments moves during 2023, however, it looks like their enthusiasm for taking on a good proportion of the former Bed Bath and Beyond real estate and rebranding as rooms + spaces has not necessarily set the consumer alight, but it is early days. More recently the moves of Unity are extremely encouraging with taking on Kit + Ace and progressively revitalizing that brand, and now adding Mastermind Toys into the portfolio. So there remains encouraging, let’s call them sub trends, however, overall, the market, if one strips out inflation, looks pretty flat as a pancake.”
Winder: “2023 proved to be a year of reckoning for retail as the spending hangover from the pandemic finally took hold during the second half of the year.
Bruce Winder
“2021 & 2022 were positive years based on government subsidies and heightened household savings, leading to revenge spending at retail. 2023 is when spending finally slowed as the full impact of higher interest rates, sticky inflation in some categories like food and housing, recession worries, geopolitical issues and increased household debt were felt.
“As supply chain issues faded, consumers transitioned from chasing inventory and buying at full price to scouring the internet for super sales and finding creative ways to save money such as making holiday gifts, thrifting for some and even cutting back on the number of people to buy for during the holidays.
The Post in Vancouver (Image: Amazon)
“E-commerce enjoyed a renaissance of sorts. After a surge during the pandemic, online shopping took a back seat to brick and mortar shopping from a growth and interest perspective in 2022. With customer’s flight to value in 2023, e-commerce gained back popularity as a tool to find the best deals. Amazon released their 2023 impact report on December 20th (https://www.aboutamazon.ca/news/company-news/5-highlights-from-the-amazon-canada-impact-report) and with over 20 fulfillment centres and 60 shipping facilities in total, 4,500 Canadian cities are now able to buy 20 million items under Prime and receive them in one to two days in many cases. Online shopping has never been easier, more convenient and more comprehensive in Canada.
“We also witnessed some retailers bowing out in 2023. From Nordstrom to Bed, Bath & Beyond to Bad Boy and Mastermind Toys, we lost some big names. At the same time some of them were reincarnated as rooms + spaces or bought as a smaller version of themselves (Mastermind bought by Unity). In retail when the going gets tough, the weak get going. There are also many new-to-Canada retailers who either announced plans to open here or opened. A retail circle of life sort of thing.
“Generative AI took centre stage in retail (and the world) as the next panacea through ChatGPT and similar solutions that offer advanced search features and customer service capabilities. But this is just the tip of the iceberg for how AI can enable retail.”
Mastermind Toys at Bayview Shopping Centre (Image: Dustin Fuhs)
2.What are your thoughts about the industry in 2024 and how it will fare?
Minakakis: “We will remain in this rebalancing period throughout 2024. That will mean more cautious spending as consumers will face larger mortgage payments. In other words, the damage of inflation has yet to be felt by everyone or every retailer. There are several shifts that I see happening in 2024, and they will be investments to be ready for the following six years. Personalization will be the low-hanging fruit for retailers focused on retaining their customers. More will invest in an omnichannel evolution as there is a need to collect meaningful data to stay connected with customers and attract new ones. With larger retailers looking at Artificial Intelligence as business enhancement and even as a technological predictive partner, there will be changes to how we compete. We will see hyper-competitive behaviours, which means real-time actions to grow sales and market share. You will need a higher level of market intelligence to deliver that. And finally, this will call for corporate reinventions in their operating structures. 2024 will be the beginning of organizations embracing AI Factory structures. Retailers should also be mindful of sustainability and environmental and climate change risks. 2024 will be the preparatory year for 2025-2030, a strong growth cycle. This means the right people, skills, and strategies must be in place.”
Newbury: “2024 will be tough, very tough. Of course, the winners from the last few years will likely continue to drive distance between themselves and their competition. What of the fabled “middle’? Those retailers using a high/low pricing model, not clearly differentiated and sitting in a discretionary spend category (like apparel, electronics or other general merchandise categories)? They’ll have their work cut out. We will likely see a few notable withdrawals from the market (during 2023 we saw Nordstrom finally cut their losses and Lowe’s pull out of Canada via a PE buyout) and many store closures as part of “right sizing” fleets, availability shortfalls (through ongoing supply chain disruptions, as well as suppliers saying enough is enough, pay up now!) and assortment reduction as retailers focus on cash preservation.
“This is the playbook from the Great Recession. Back then it was driven by calamity in financial markets, which lasted around 18-24 months. We’ve already been subject to monumental disruption for 48 months, and we are not through it yet. 2024 starts with the Red Sea disruption (and Panama Canal’s low water mark) and the escalation of container prices, once again. What changes have we made in the supply chain? I would propose, not as many as the narratives around resiliency and sustainability will have us believe. If we add in US, UK and other EU general elections, the geopolitical situation, plus the War in the Middle East can not be ignored. We may even have to contend with a snap election here, troublesome for longer term planning and investment.
“Key to survival will be leadership/brand self reflection and a clear definition of “what problem are we really solving for our target segment?” and “Is the target segment big enough to warrant investment” and “can we develop competitive strategies to be a market leader/trend setter?”
“Taking bold decisions of how a proposition can be presented more clearly to the market to drive more value both to the consumer and to the bottom line is vital during 2024. Gaining a perspective on this will be key in moving from barely surviving, to thriving, and laying the bedrock for 2025 when our key trading partners will have their governments in place for the next four to five years and strategic plans can be developed.
“I wish all our retailers the best of luck. 2024 will not be for the faint hearted as it will require a new management vision for each business, and often needing different leadership skills, styles and org design, together with a clear focus on its purpose and roadmap to success, without distraction.”
50% Off Sale Signage at Saks Fifth Avenue CF Toronto Eaton Centre (Image: Dustin Fuhs)
Winder: “The first half of 2024 will mirror that of the back half of 2023. Tighter spending, more store closings. We will probably see a number of small and medium sized retailers close down in January or February due to a soft holiday in 2023. Some big names may leave Canada or sell to Canadian investment companies.
“The second half of 2024 could see some improvement as the Bank of Canada may start to carefully and slowly lower interest rates. It will take time though for the economy and consumer spending to pick up again. Don’t count on seeing cheap money again like we did previously. That was an anomaly. Hopefully fall 2024 will be better than fall 2023 as Canadians gain more confidence.”
Walmart Canada has launched “My Assistant,” an internal AI-powered chatbot, helping with efficiency and creativity for its home office associates. Sabrina Ratheekan, the technology leader at Walmart Canada, and Michon Williams, the chief technology officer at Walmart Canada, discuss My Assistant, benefits, and the future of AI at Walmart.
Sabrina Ratheekan
“My Assistant is a product my team worked on. It helps associates do things like draft a first email or a presentation plan – doing the first draft often takes the most time, so My Assistant will help speed up activities and serves as a collaborative partner,” says Ratheekan.
The internal tool, not yet implemented in stores, focuses on streamlining routine tasks and workplace innovation. As a secured platform approved by Walmart, associates can use My Assistant to help with creating drafts, help manage daily workload, summarize large documents, and will serve as a collaborative partner. Ratheekan and Williams say the change aligns well with Walmart’s commitment to being a people-led, technology driven organization – encouraging associates to use the platform for creative and complex work tasks.
Image: Walmart Canada
Ratheekan and Williams ensure My Assistant will not be taking over the human element, but is intended to complement employees’ tasks, enhancing productivity, and allowing associates to focus more on creative and strategic tasks. This highlights Walmart’s commitment to maintain a balance between technological innovations and human elements of decision making and customer service.
“As we work on tools like generative AI, it is not really about a replacement to human thinking, but it is really about complimenting and helping us with our day-to-day tasks. So it is improving the quality of our work and it also has the potential to continue to evolve and shape the way we work … AI cannot replace human thinking and creativity, but we will continue to use it as a complementary tool and it will continue to evolve,” says Williams.
Michon Williams
Similar to many Canadian businesses, Walmart is already incorporating AI into its operations. The company has been integrating AI technologies in various aspects of operations for a while now including for inventory management, optimizing supply chain processes, and enhancing the customer service experience within stores. AI helps Walmart understand future demand, helps with routing deliveries effectively, and helps manage its store inventory.
“AI is not new to us and we are embracing AI in a lot of different ways. We are very focused on accountable, robust, and secure use of technology, but we have been leveraging it for things like supply chain, stores to optimize inventory, and routing our trucks and deliveries in optimized ways,” says Williams.
Looking ahead: Walmart’s expansion with AI
Image: Walmart Canada
With the ongoing evolution of AI, Walmart will continue to explore new ways of using AI across its Canadian operations – both for office use and on the floor.
Ratheekan and Williams say Walmart is focused on enhancing different operations and customer service with using AI and they plan to integrate AI more deeply and possibly extend My Assistant to store level employees.
“This is the first generation of My Assistant, and we think that it could be more broadly applicable to people in stores once we have been able to integrate it with the company and human resource platforms. As we continue to innovate and adapt this technology, our goal is to make it a versatile tool – not just for our corporate team, but also for our store associates, enhancing the ability to serve customers and manage store operations more effectively. As we continue to learn more from home offices, I think that would be a good first step after we have integrated it with more information that is contextual to Walmart’s policies and procedures,” says Williams.
AI will also play a role in areas such as personalizing customer experience, logistics, supply-chain, and improving decision making processes. This will become a larger strategy to become an omni-channel retailer, blending online and in-store experiences.
“We will continue to build it and we will continue to discover new use cases as we go. We are introducing a lot of change in trying to become an omni-channel retailer, so associates are naturally curious about ways to make their jobs easier and how to optimize their tasks – we love to see that,” says Ratheekan.
“I think people are really excited that Walmart is taking this step. They are very curious about generative AI and how it can make their work better and we have a lot of positive excitement when people start to use the tool. I think they are pretty amazed at how it helps and people are starting to discover what My Assistant can do,” says Williams.
Lagoon Seafood, a leader in the distribution, import, export, and processing of fresh and frozen seafood, has opened its new $10-million facility in Granby, Quebec.
The new 63,000-square-foot facility houses more storage space, new production rooms, and state-of-the-art technology.
Michael Cheaib
“The completion of this project propels us forward in ways we could only dream of a few years ago” said Michael Cheaib, business resource manager at Lagoon Seafood. “Our expanded Granby facility is at the core of our company’s expansion into Ontario, Western Canada, and the United States to meet our new levels of customer demand. The renovated and expanded facility will support our commitment to bring new product lines across our market to respond to our customers’ needs most effectively.”
Image: Lagoon Seafood
The company said the new production and packaging facility mainly supplies Blue Tide branded and private label products. It has also significantly increased Lagoon Seafood’s storage capacity and centralized its logistics and storage process. It houses a freezer capable of accommodating more than 2,500 pallets of frozen products, includes new production rooms to support the company’s product innovation ventures and expand its capacity, and accommodates a new spiral freezer, a high-efficiency piece of equipment that shortens the time required to freeze products, maximizing freshness.
Founded in 1992, the family-owned and operated Lagoon Seafood specializes in distributing, importing, exporting, processing, and curing fresh and frozen seafood. Based on more than three decades of experience in the food industry, the company sources various products from South America to Asia, Europe to West Africa, and the Mediterranean, including local selections from Quebec and North America. Its catch comes from fishermen and fish farmers, allowing the company to better control its products’ origin and quality, grouped under the Blue Tide and Royal Harbour brands. Headquartered in Montreal, Quebec, the company moves its products to market with the help of select distributors, wholesalers, and direct-to-grocery and retail chains in Canada, the USA, Europe, and Asia.
The company also has facilities in Lachine in Montreal and in Nova Scotia.
Tony Vartivarian, Director of Marketing for Lagoon Seafood, said the new facility is specialized to create value-added products.
“We feel there’s a huge demand in the market and the competition lacks value-added products. Our clients want it. We feel there’s a huge opportunity for innovative fish and seafood products. We receive a lot of demands from clients and from customers about new products they can’t find in grocery stores.”
Image: Lagoon Seafood
Vartivarian said in the last two or three years, especially during COVID, the demand increased.
He said demand has always been consistent for fish and seafood throughout the years.
“Canadians love fish and seafood. They prefer Canadian products over any other products. They value their products, their own local products. It’s consistent. It’s steady,” added Vartivarian.
Lagoon Seafood said it has exclusive access to specific species of fish sought after in the industry. This is due in part to its strong partnerships with manufacturing facilities and fishing vessels in Nova Scotia.
A short video on Lagoon’s facility expansion is available on the company’s YouTube channel.
Grocery retailer Calgary Co-op continues to grow its business.
It announced Tuesday that one of its wholly-owned subsidiaries has entered into an agreement to become the majority shareholder in Care Pharmacies, with the transaction expected to close in the first quarter of 2024.
Care Pharmacies, founded in 2013, is headquartered in Vaughan, Ontario and has 56 drug stores in five provinces and it is currently the largest group of independent Canadian retail pharmacies controlled by licensed pharmacists.
“We believe that Care Pharmacies will be a tremendous fit with our focus on growth in health and wellness, led by Pharmacy and supported by Natural Foods and Home Health Care,” said Ken Keelor, CEO of Calgary Co-op.
Ken Keelor, CEO of Calgary Co-op
“This acquisition will follow enhancements we’ve made to our own pharmacies over the last few years, the earlier acquisitions of Beacon Pharmacies and Community Natural Foods, and continued growth and enhancements to our Home Health Care business. We are pleased to diversify our investment in communities across Canada.
“Our strategy is focused on health and wellness. It’s a growing trend. We’ve seen a lot of health care moving from hospitals and doctors over to pharmacists over the years and it’s a trend that’s going to continue as the health care system is more and more under pressure. So focusing on health and wellness, especially led by pharmacy but also supported by home health care as well as natural foods and Community Natural Foods, is clearly an area that we see as long term supporting the population locally and across the country.”
Keelor said the company’s number one commitment is to Calgary and area but it has been taking the opportunity to grow beyond Calgary’s borders in order to de-risk its members’ investment.
“It’s hard to grow by just staying in one city alone. And it’s hard to provide de-risked returns if all your eggs are in one basket . . . We’ve been growing geographically using some of these subsidiary companies that we acquire. They’re strong brands. They know their business. They come with an existing management team. So as we go along we have been looking at pharmacies . . . Pharmacies in general are a broad and exciting space for us to grow both in Calgary as well as beyond its borders.”
Image: Calgary Co-op
Calgary Co-op has more than 400,000 members and 3,850 employees with real estate assets of $700 million and annual sales of $1.3 billion. It is one of the largest retail co-operatives in North America, and is home to food centres, pharmacies, gas stations, car washes, Home Health Care centres, Wine, Spirits and Beer locations and cannabis. In addition, Calgary Co-op operates and is the beneficial owner of Beacon Pharmacies, Community Natural Foods, The Organic Box and Willow Park Wines & Spirits.
“Care Pharmacies has come from a bunch of different pharmacies getting together over the years and growing. It’s basically an independent pharmacy network. In many cases, the operator was wanting to retire or wanting to fold into a bigger business as long as he or she trusted that business,” said Keelor.
“So Care Pharmacies has built this culture of caring and being trusted much more so than the Shoppers Drug Mart and other companies that are very large and corporate in nature. Care’s values fit with Calgary Co-op’s values. It’s about caring. It’s about local community. In many cases, their stores are like a local community hub. It’s not just the only pharmacy in town but in some cases it’s the only retail store.”
After the closing of this transaction, Care Pharmacies will continue to operate as a separate entity. Ali Reyhany, CEO of Care Pharmacies as well as the rest of the Care leadership team, will continue in their positions.
Ali Reyhany
“We saw a strong alignment of values between Care Pharmacies and Calgary Co-op. As hubs within our communities, we know that Care Pharmacies will continue to be strong beacons of trust and service for Canadians and their health and wellness. We have found a great partner in Calgary Co-op and we look forward to continuing to grow our business across Canada,” said Reyhany.
Calgary Co-op used CIBC Mid-Market Investment Banking as its exclusive financial advisor in the transaction.
Care Pharmacies used BMO Mid-Market Mergers & Acquisitions as its exclusive financial advisor.
Image: Calgary Co-op
Keelor said Calgary Co-op will continue to grow its business by acquisitions.
“We have had some rapid growth over the last five years especially . . . We will continue to look at opportunities but obviously we have to steady the ship and grow what we have. Our focus is very much growing our business in pharmacy and our current business. It’s in growing our home health care business, our liquor business,” he said.
“It’s not all about acquisition. A lot of it is about growing the business that we have today but we never say never because opportunities come and go and you can’t time them. That’s why the strategy is very important. And the strategy is all about health and wellness growth, geographic expansion prudently with good governance and of course serving Calgarians as our primary focus but managing their investment in us in a way that we de-risk it and build sustainably.
“Pharmacy if you look at it, in 20 or 30 years is going to be an even bigger business. When you look at some of the other lines of business, we may not have the same opportunity for growth or stability over the next 20 or 30 years.
“So we’re also looking at our businesses and thinking ‘well this is a business that is on trend for the next 30 years’. Regardless of who is running our business in 20 years, they’ll have a solid foundation that we built for them as a management team and as a membership.”
Retail Insider’s Top 23 Most-Read Stories of 2023 [Feature]
In 2023, the Canadian retail industry adapted and shifted throughout a year of uncertainty. Major trends included growth in omni-channel, challenges with supply chain, marketplaces and inflation among other topics.
Canada also saw a number of brands enter the country through expansion and had a number of brands unexpectedly exit the market. We will be talking about the lasting impacts of 2023 for many years to come.
In 2023, Zellers relaunched, Nordstrom exited Canada, and Bed Bath & Beyond’s real estate was snapped up for new concepts. Retail leasing remained robust with shopping centres adding new tenants.
Over the course of the year, some articles published in Retail Insider saw many thousands of readers, and we’ve listed the top ones below in descending order. See them all below, starting with number 23:
The luxury-heavy Toronto shopping centre saw higher sales per square foot last year than ever, while surpassing two billion dollars in sales for the first time.
The 10,000 square foot premium sports-inspired dining experience celebrating the National Basketball Association will be unlike anything in the city to date, and will be within walking distance of Scotiabank Arena.
Hudson’s Bay at Eglinton Square in Toronto, 2019. Photo via Google Street View
The department store retailer’s new location features outlet pricing, following the shuttering of a previous Hudson’s Bay Outlet concept during the pandemic.
Bed Bath & Beyond at South Edmonton Common (Image: South Edmonton Common)
New tenants will have to be found for spaces vacated by the retailer following court filings last week that will wind down the Canadian retail division.
Promenade Shopping Centre (Concept rendering – subject to change)
The transformational mixed-use development will include new retail to serve the area, amenities, and thousands of multi-family residences for the rapidly growing community.
Mastermind Toys at Upper Oakville Shopping Centre (Image: Upper Oakville Shopping Centre)
Unity will acquire the majority of Mastermind Toys store locations following a bankruptcy filing, with a significant number of employees continuing with the business.
Calgary’s first Uniqlo, Nike flagship store, and Jo Malone will be among new retailers while others are expanding or relocating in the city’s top mall.
Zellers at Scarborough Town Centre in Toronto, March 21, 2023. Photo: Craig Patterson
The new Zellers stores at Hudson’s Bay launch tomorrow, featuring Kmart Australia-developed brand Anko which is expanding globally after seeing commercial success in that country.
Lutfy says that he aims to make Royalmount a world-class destination with a mix of retail, foodservice and attractions that will be unlike anything in Canada.
Future KIT + ACE at CF Toronto Eaton Centre (Image: Dustin Fuhs)
The Vancouver-based retailer will open two locations this fall in Toronto and Calgary, with plans for a substantial expansion into 2024 says CEO David Lui.
Nordstrom at CF Toronto Eaton Centre (Image: Dustin Fuhs)
Following the announcement of Nordstrom’s exit from Canada, Retail Insider interviewed a panel of experts about why various retailers from the US have struggled here.
Ottawa recently witnessed a dramatic scene, especially during the proceedings of the Parliamentary Committee on Agriculture, where a few witnesses chose to prioritize their agendas over assisting our elected officials in comprehending the complexities of food prices and the necessary actions to be taken.
One particular individual, an economist seemingly more interested in grabbing headlines and camera attention to boost fundraising and personal interests, made bold claims about “record and excessive profits” in the grocery sector for 2023. The term “excessive profits” has become a favourite slogan for those seeking to foster animosity towards businesses. However, it’s crucial to note that his argument relied on Statistics Canada data, which encompasses convenience stores and specialty stores in its dataset, not solely the major grocers. The sensationalized “$6 billion” figure quickly circulated in the news, causing considerable harm. The facts indicate that gross margins, a valuable metric for assessing whether a company overcharges for its goods, will remain at 3.4 percent, consistent with the 5-year average for Loblaw, Empire, and Metro.
Regrettably, we shouldn’t expect an apology from this economist. He seems intent on misleading Canadians, insisting that profits should continue to rise due to inflation, all the while resorting to attention-grabbing headlines and fearmongering tactics, which regrettably prove effective. This was a reprehensible misuse of a platform to advance a political, anti-corporate agenda—utterly disappointing and disingenuous.
Loblaw also made some questionable claims during their visit to Ottawa concerning the potential impact of a grocer’s code of conduct. The company admitted on December 23 that the Australian example cited by its CEO, Galen Weston, to justify their refusal to sign the code of conduct was inaccurate. At that time, Loblaw’s CEO expressed concerns to federal officials that the current code of conduct could potentially increase food prices by $1 billion, arguing that, in Australia, the third-party responsible for enforcing the code favoured suppliers seeking higher prices, which would harm consumers. None of these claims held.
Inside a Loblaw Grocery Store (Image: Dustin Fuhs)
At least Loblaw eventually acknowledged its error, albeit on December 23 when most of us were preoccupied with holiday preparations.
Leaving aside Loblaw’s failed attempt to obstruct the industry’s efforts to implement a more disciplined and fair code of conduct, Ottawa’s primary focus should be on fostering competition. Providing consumers with more choices and making the Canadian food market more attractive to external investors is essential. The code of conduct should be a non-government, third-party-led mechanism enabling companies to resolve disputes related to contractual terms rather than pricing per se. Currently, as grocers unilaterally raise listing and marketing fees imposed on suppliers, manufacturers, in turn, increase prices to offset these higher fees set by grocers. This results in a cycle that ultimately impacts consumers, often without their awareness.
This is the only way food prices can become more stable over time. In countries like Ireland, Australia, and the United Kingdom, where such a code exists, food price increases, adjusted for inflation between 2013 and 2023, have been negative, whereas Canada’s food price increase adjusted for inflation over a decade was 8.9 percent. While a code of conduct may not entirely curb food inflation, it will help the industry coordinate vertically and address market turbulence, which is often triggered by factors like climate change and geopolitics, leading to price volatility and sticker shocks.
Photo: Loblaw Companies
Ottawa should compel all parties, including those who oppose the code like Loblaw and Walmart, to adhere to the code of conduct. That should be the shared goal of all Canadians for 2024.
Black Friday at Yonge Dundas Square (Image: Dustin Fuhs)
2023 Black Friday shopping in Canada reflected the economic climate and was an indicator of what we could expect for the rest of the holiday shopping season, according to the 2023 Canadian Black Friday & Holiday Shopping Report by DIG360 and the Angus Reid Group.
Current economic factors and financial concerns for the future have been dampening consumer spending in the second half of 2023. This has been creating a focus on household budgets not seen in recent memory. Black Friday deals seem to be benefiting from this macro climate. Almost all (93 per cent surveyed) stated they were being more careful with expenses this season. Half (53 per cent) were shopping for items that provided best savings while 29 per cent sought best quality for a preset budget, all prioritizing buck over bang. There are also those who are not as impacted and are freely spending. There is not one consumer story,” said the report.
David Ian Gray
David Ian Gray, Founder and Strategist with DIG360, said the spike in Black Friday this year was significantly higher than any time in its tracking since 2010.
“And not just from those who reported they are watching their expenses more closely,”
Black Friday Sales at Thomas Sabo (Image: Dustin Fuhs)2023 Canadian Black Friday & Holiday Shopping Report (Angus Reid Group – DIG360)
He said it was fascinating to see the proportion of people buying at least one Black Friday deal outside Canada, mostly online and how the percentage of people who buy at least one Black Friday item is creeping up, but more notably the number of people only using stores has plummeted in this deal season.
“Black Friday deals focus intense shopping pressure and we have seen over time it tends to drive online activity out of proportion to the rest of the year. Yet, shoppers are continuing to report friction in the online experience, particularly timely delivery. The continued impact of Amazon and continued virtue-signaling in other social discussions and surveys that buying local is important, while we see the actual use of local independents remains relatively low.”
Black Friday at DavidsTEA (Image: Dustin Fuhs)
Gray said the bump in activity centered on the week of Black Friday and especially the weekend through Cyber Monday seems to align with its observations that many Black Friday advertisers seemed to delay their push on promotions until that time.
“We also observed abundant direct messaging of deals to subscribed customers through the month, suggesting a customer retention focus as opposed to acquiring new customers. This reflects retailers hunkering down in a down demand era,” he said.
“The fact is that more were buying despite a record dissatisfaction with Black Friday deals. On the one hand, this shows me a discipline across the sector to stay firm on margins. On the other, I suspect this shopper activity reflects a shifting of purchases, perhaps even from August and September, rather than an incremental surge in demand. This might leave the season active on promotional buying but still down from last year.”
Black Friday at Best Buy Canada (Image: Dustin Fuhs)
Gray said how people act in holiday shopping is not the norm for everyone all year.
“That said, the striking number of people saying they are at least somewhat more focused on controlling household expenses might well be setting in as a habit. Since Black Friday deal hunting is often for buying items for oneself, might we see a bigger trough than usual in January?,” he said.“Jason Allsopp at Angus Reid Group added a question about paying for expedited shipping if delivery timeliness is a concern. The result shows how absolutely resistant shoppers are to shipping charges and by extension I would assume the same for restocking or return fees. The industry has its work cut out in 2024 to reframe consumer expectations around free options that are increasingly untenable for the retailers.
“Not all shoppers are cut from the same cloth. Some are relatively well off, also partaking in deal hunting. There is a sizable minority, typically higher income and/or not watching expenses more this season, who were very active deal hunting across many channels. There are those at lower incomes who were sitting it out altogether. Interestingly, 16 per cent are not planning on holiday gift giving.”
Here are the report’s key results:
Proportion of Canadians targeting Black Friday Deals jumped in 2023
“The proportion of adult Canadians buying at least one Black Friday deal reached 49 per cent, the highest since DIG360 tracking began in 2010. This does not mean all retailers did well. It does mean there were more Canadians than past years who tactically sought Black Friday deals or reacted to promos. We believe there was an influx of shoppers this past November who had avoided Black Friday hype in past years.”
Timing of purchases continues to flex
“Amidst the long-run shift away from buying on the day of Black Friday, the increased 2023 activity was centred on the last half of the month, with a strong final weekend and Cyber Monday (spiked to 30 per cent compared to 18 per cent in 2017). Unsurprisingly, shoppers told us they see Cyber Monday as basically the same as Black Friday. Almost half (43 per cent) felt they spend no more time deal hunting than in 2022.”
Shoppers were not seeing great deals
“While more Canadians were actively pursuing ”Black Friday” promotions this year, many retailers were dialing back their mass advertising of deals and the depth and breadth of offers. Another spike this year was the proportion who rated deals to be poor (at 61 per cent, compared with a stable mid-40 per cent from 2017 to 2021). Only four per cent this year rated the deals as great. A full 80 per cent cited seeing higher prices. Of note, 66 per cent are still reporting in-stock challenges and 63 are experiencing shipping charges for online orders.”
Stores are important but eroding for Black Friday. Amazon was a big winner
“Canadians are leveraging online shopping for Black Friday deals. Specifically, 90 per cent of deal buyers purchased at least one item online and 46 per cent only used the internet for their Black Friday buys. This has been consistent and gradual since 2017 (e.g., 82 per cent bought online in 2018). More notable is the drop in physical store deal buying. In 2018, 80 per cent of Canadian deal-buyers purchased at least once in-store, with 18 per cent only using stores; in 2023, 53 per cent made at least one store purchase and only nine per cent exclusively used that channel). Notably, 48 per cent of buyers bought at least one item from a website outside of Canada, which industry trade statistics fail to capture, and 57 per cent of buyers bought at least one item from Amazon.”
Local independent stores fight for share
“Good news for the local, independent store owners who are often challenged to stand out during this promotional period. At 41 per cent, more Canadians are browsing or buying local independent stores; in 2018, 32 per cent of Canadian Black Friday deal seekers were browsing or buying local stores and 35 per cent in 2021. However, only 19 per cent of buyers ultimately purchased from a local independent store. Main reasons for not buying were higher prices, lack of selection, and inconvenient locations.”
Black Friday is for ‘self-gifting’ but gift buying for others has started
“By the end of November, 55 per cent of all Canadians said they had begun Holiday gift buying and 29 per cent were waiting until December. Yet of Canadians hunting Black Friday deals, 37 per cent mostly or only sought items for themselves. This is somewhat down from past years, perhaps reflecting the more disciplined approach this year. Many retailers have missed this fact in their promotional Black Friday messaging. Historically Black Friday has cannibalized Boxing Day/Week buying, with the latter benefitting from the spike in redemption of gift cards. Interestingly, 16 per cent of Canadians are not planning to give gifts (we have not asked this previously).”
Outlook for Holiday purchases is muted, with some exceptions
“Only about five per cent of Canadians plan to spend more on gifts this year, which does not vary much by income nor those who are not watching expenses more than in 2022. A bigger difference-maker is age; 10 per cent of those 18-34, the traditional core shopping cohort, expect to spend more. BC (eight per cent) and Alberta (seven per cent) are slightly more optimistic than the rest of Canada. Just under half (46 per cent) of adult Canadians expect to maintain the same level of purchasing on Holiday gifts this year compared to 2022, and 41 per cent plan to spend less. The latter is skewed by those who are being more careful with overall expenses; 51 per cent from those who are watching their expenses more than in 2022 compared with just 13 per cent of those who are less concerned about expenses. Again, there is no one-size fits all definition of shoppers and this is about intention not prediction: those more impulsive may fail to follow their plans.”
Canadians are concerned about timely delivery of Holiday gifts in December yet are reluctant to pay more to expedite shipments
“Heading into December, over half of all Canadians (57 per cent) were concerned about on-time delivery of their ecommerce gift purchases – 21 per cent were ”very” concerned. Of those buying online Black Friday deals, 55 per cent reported experiencing shipping delays. While retailers do offer expedited shipping options for a fee, 80 per cent said they “rarely” or “never” use that option; 50 per cent said they would not use this option when specifically asked about Holiday gift orders. For those who would, the average expedited shipping charge they would consider is $10, which falls below the Priority Rate set by Amazon. Retailers with physical stores have an advantage in December, with certainty of an item in hand, more so if in-store pickup is faster than home delivery. Shopper expectations around timely and free shipping for online gifting are clashing with retailer needs to control margins. Retailers will have to reset shopper expectations in the online channel.”
Cross-border shopping down, resale a factor and lost/stolen shipments impacting
“Here were some other notable observations:
About 1 in 10 (12 per cent) Canadians looked at Black Friday deals in stores in the United States in November. Half of those, or six per cent overall, purchased. In BC, 16 per cent looked and 10 per cent overall bought. This is down from past years, perhaps reflecting a pull back in travel or poor exchange rates;
FB Marketplace and other resale sites were occasionally (26 per cent) or frequently (15 per cent) reviewed during Holiday shopping. We will continue to track this in future;
17 per cent of those who bought Black Friday deals frequently or occasionally experienced lost or stolen shipped items.”
DIG360 has been tracking the Canadian Black Friday experience and its impact on Holiday retailing since 2010. The Angus Reid Group has returned to collaborate on the survey. This study of 1,506 adult Canadians is unique in that it was conducted November 28-30, 2023 – after Cyber Monday. It is balanced and weighted to Canada’s general population on age, gender, and region. For comparison purposes only, samples of this size yield a margin of error of +/- 2.53 percentage points, 19 times out of 20.
Toronto’s Yorkdale Shopping Centre has recently seen several retailers open, with more to come in 2024. That includes a newly dedicated luxury wing which is currently under development.
The shopping centre is the most productive in Canada in terms of sales per square foot, and it also boasts the most comprehensive clustering of luxury brand stores anywhere in Canada.
That clustering of luxury brands continues to expand with new entrants. A couple of months ago, Kering-owned luxury jewellery brand Qeelin opened its first store in North America at Yorkdale in a 715 square foot space in the mall’s under-construction luxury wing. Construction on the jewel box-like boutique took months, with a challenge including sourcing black marble for the store’s facade that features two white streaks running through it. Construction firm Elevate Build carried the project to completion.
Chinese-focused jeweller Qeelin opened its first store in North America this year at Yorkdale. Photo: Craig Patterson Women’s fashion brand Anine Bing opened its first Canadian store recently at Yorkdale. Chinese-focused jeweller Qeelin opened its first store in North America this year at Yorkdale. Photo: Craig Patterson
US-based women’s fashion brand Anine Bing recently entered the Canadian market with its first store being at Yorkdale. Included is Bing’s range of women’s apparel, footwear, bags and accessories. The store’s design and interior appear rather minimalistic compared to some of the more lavish luxury brand storefronts nearby. Anine Bing opened in a retail space recently vacated after the exit of TWG Tea, who’s Canadian owner passed away.
Sleep Country Canada recently opened its upscale concept ‘the rest’ at Yorkdale. Photo: Craig Patterson
Sleep Country Canada-owned luxury concept ‘the rest’ recently opened in Yorkdale’s 2017 west wing. The lovely new store features a range of premium mattresses, including one at the back of the space priced at about $50,000.
New Lego store in the north wing at Yorkdale. Photo: Craig Patterson
Several brands have also recently relocated at Yorkdale and all were formerly in the central wing of the mall that is now being re-tenanted exclusively for top luxury brands. That includes toy retailer Lego, men’s fashion brand Untuckit, streetwear retailer Plus, and Michel’s Bakery. Lego recently moved into a space in the north wing of the centre, which is very busy with pedestrian traffic. Untuckit relocated to a retail space next to Mango and across from Harry Rosen. Plus will soon open in the north wing of the mall. And Michel’s Bakery next year will move into a space recently vacated by Tristan in the north wing of the mall — Michel’s Bakery has been located in the central ‘spine’ corridor of the mall for decades, so this is a major change for them.
Men’s retailer Untuckit recently relocated at Yorkdale. Photo: Craig Patterson Streetwear retailer Plus will soon open in the north wing of Yorkdale. Photo: Craig Patterson Michel’s Bakery, one of the oldest tenants at Yorkdale, is relocating after decades in the central corridor of Yorkdale. Photo: Craig Patterson
Vancouver-based outdoor brand Arc’teryx just relocated its Yorkdale store from the mall’s 2016 expansion wing to a 3,600 square foot space that was created for a pop-up area called CONCEPT. The new Arc’teryx features a dramatic facade with a video screen showcasing snow sports, which can become mesmerizing for someone passing by.
New Arc’teryx store at Yorkdale where CONCEPT had been since 2017. Photo: Craig Patterson New Starbucks at Yorkdale in the 2017 west expansion wing. Photo: Craig Patterson New Delysées cafe in a former Starbucks spade at Yorkdale. Photo: Craig Patterson
The west Starbucks at Yorkdale relocated to a much larger 2,300 square foot space in the mall’s 2017 expansion wing, near Restoration Hardware. Starbucks will increase foot traffic into the area, which has been a bit quieter than other parts of the mall. A Delysées cafe moved into the former 775 square foot Starbucks space next to Rolex.
Pop-ups are part of the mall as usual in December — that includes a Lululemon pop-up for its Wunder Puff jacket in the north wing, as well as an elevated concept for liquor label Johnnie Walker in the mall’s 2017 west expansion wing. Dior sponsored this year’s Christmas tree near the mall’s TTC entrance, and the tree is beautiful.
Lululemon pop-up in the north wing for the brand’s Wunder Puff jacket. Photo: Craig Patterson Johnnie Walker pop-up in the 2017 west expansion wing at Yorkdale. Photo: Craig Patterson Wonka interactive installation at Yorkdale – a Nordstrom store had been located behind this until the retailer’s exit from Canada earlier this year. Photo: Craig Patterson Dior Christmas tree/display at Yorkdale. Photo: Craig Patterson
As we head into January, more luxury will be coming to Yorkdale. Italian luxury brand Brunello Cucinelli is building a 3,250 square foot store in the mall’s new central luxury wing that opens in January, and construction hoarding is also up for Canada’s first location for Spanish luxury brand Loewe. No other construction hoarding is up for luxury brands opening in the new wing, though sources say some standalone stores will include relocated brands currently operating concessions at Holt Renfrew.
Opening in a few weeks: Standalone Brunello Cucinelli store at Yorkdale. Photo: Craig Patterson Spanish luxury brand Loewe will open its first standalone store in Canada at Yorkdale. Photo: Craig Patterson Chanel will be expanding its concession at Holt Renfrew Yorkdale. That includes annexing space occupied by Brunello Cucinelli in this photo, while also taking space upstairs. Photo: Craig Patterson
One brand staying at Holt Renfrew is Chanel, which will significantly expand its concession at Holts. The 4,000 square foot Chanel concession will annex the adjacent Brunello Cucinelli concession space, and will also expand upwards by taking a significant amount of space on the second level of Holt Renfrew where women’s contemporary fashions are located. This move will coincide with a partial renovation to the Holt Renfrew store, according to sources. The expanded Chanel concession will likely become the largest Chanel boutique in Canada, and possibly the largest shop-in-store concession for Chanel anywhere in the world.
We’ll be reporting more on Yorkdale in 2024 as new retailers open in the mall. Happy holidays to you from everyone at Retail Insider.
Pusateri's at Bayview Village (Image: Dustin Fuhs)
As we approach 2024, Canadians are confronted with a landscape profoundly altered by the surge in food prices. The most recent survey, conducted by the Agri-Food Analytics Lab at Dalhousie University in partnership with Caddle, provides valuable insights into these shifts. It reveals the resilience and adaptability of Canadian consumers while also shedding light on the underlying economic pressures that could reshape the food industry. These findings suggest that 2024 will bring about noticeable changes at the grocery store.
Canada’s Food Price Report 2024, released a few weeks ago, predicts a more moderate increase in food prices, with the average family expected to allocate up to $700 more for groceries in 2024. This projection represents over 30% less than last year’s forecast. As a follow-up, this new survey captures the perspectives of 5,000 Canadians, offering us a glimpse into their expectations for the coming year concerning food in general.
Prices at Shoppers Drug Mart in Toronto (Image: Dustin Fuhs)
A staggering 80.3% of Canadians anticipate further price hikes in the upcoming year, which is hardly surprising. This expectation is driving significant shifts in shopping habits, with 43.3% of respondents planning to focus more on promotions, 34.6% on using coupons, and 33.6% on loyalty programs. Additionally, 30.6% are contemplating switching stores to secure better deals in 2024. These trends signify a heightened consumer sensitivity to prices, which will likely exert pressure on retailers and food producers to maintain competitive pricing structures. This is why Canada’s Food Price Report 2024 suggests that price wars might be a strategy to regain consumer loyalty – good news for consumers, something we all need.
The survey also uncovers a shift in product preferences. Only a small percentage of Canadians (14.9%) plan to purchase more organically grown products in 2024 and 12.0% intend to buy more fair-trade products. This highlights a nuanced balance between ethical consumption and financial constraints.
One of the most remarkable aspects of the survey is the emphasis on reducing food waste. The average Canadian household generates 140 kilograms of food waste annually, equivalent to more than $2,500 in wasted food, representing a significant expenditure. In response, 48.0% of Canadians intend to enhance their meal planning and shopping strategies in 2024, 36.2% plan to consume leftovers more frequently, and 32.7% aim to employ better preservation methods.
While things are projected to improve at the grocery store in 2024, restaurants are not expected to have it easy. The survey further reveals a decline in dining out, with 38.3% of Canadians planning to eat out less frequently in 2024, and 12.2% not at all. This could have substantial implications for the restaurant industry, potentially leading to reduced revenues and necessitating shifts in business models. However, considering the increasing costs of shelter and other essentials, this trend is not surprising. As a result, we anticipate a growth in ready-to-eat counters, with “dining in” becoming more popular in the months to come.
Sobeys in Nova Scotia (Image: Field Agent Canada)
The survey also inquired about Canadians’ New Year’s resolutions for 2024. It’s always interesting to learn what Canadians intend to do in the new year, especially when it comes to food. Health appears to be the top priority for Canadians in 2024, with 14.9% planning to make healthier food choices. This is followed by cooking more at home (13.7%). Drinking more water and staying hydrated ranks as the third most popular resolution, followed by exercising more to complement a balanced diet.
The findings from the Dalhousie University survey reveal a broader economic narrative: Canadians are increasingly concerned about rising food prices, leading to a shift in their food consumption habits. From relying more on promotions and loyalty programs to placing a greater emphasis on reducing food waste, Canadians are adapting to manage their food expenses in diverse ways. This change goes beyond economics; it represents a cultural shift in how we approach our food choices and consumption patterns.
The survey paints a picture of a population proactively adjusting to economic realities. Canadians are becoming more savvy about food and food expenditures. The implications of these changes are far-reaching, affecting everything from household spending to industry practices and policy decisions. As we enter 2024, it will be crucial for all stakeholders in the Canadian food economy to comprehend and respond to these evolving consumer trends.
