Challenges and Opportunities in Canadian Retail Ahead of 2020

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By Jasmine Glasheen

It’s been an interesting year for Canadian retail. From the closing of big box stores such as Williams Sonoma, Payless ShoeSource, and Home Outfitters, to an influx of Chinese luxury consumers (50 percent of all luxury purchases will be to Chinese consumers by 2025), the retail landscape is experiencing a complete overhaul.

Contrary to popular belief, all of this change doesn’t foretell the death of retail, but it is the harbinger of a retail renaissance the likes of which few of us have ever seen. Several Canadian retail chains will recede into obscurity in 2020, while others––such as Apple and Lululemon––will continue to grow. So, what is the difference between the chains that succeed and the chains that fail?

Let’s take a look at the contributing factors that will make or break Canadian retailers in 2020.

Strip Malls Make a Comeback

Strip malls have gotten a bad reputation due to poor upkeep and sparsely attended retail locations. But these once abandoned retail centres are making a comeback, largely due to the fact that they’re finally getting the renovations (including new fitness centres and restaurants) that they’ve been in need of for so long.

Consumers are once again seeking convenient locations from the brands they patronize, and Canadian consumers place a high value on shopping local. As Kruti Desai, Manager of National Research Insights With Data Solutions told Retail Insider, retailers and shopping centres are turning their spaces into “destination” and “convenience”-based retail concepts.

Fitness centres and modern eateries are bringing new life to tired strip malls and consumers are taking notice. In the coming year, many of the malls that Canadian retailers had once written off for dead will see new life as vibrant hubs in their communities.

Increased Expansion in Health and Wellness

The global health and wellness market is currently valued at over $4.2 trillion USD and it shows no signs of slowing down. Health and wellness has, unsurprisingly, become more experiential in recent years. Just take a look at the Canadian native yoga apparel retailer Lululemon Athletics Inc.

Through experiential retail concepts such as in-house yoga classes and eateries, along with an expansion into the self-care and cosmetics market, Lululemon has managed to grow net revenue from $747.7 million in 2018 to $916.1 million this year. But Lululemon isn’t the only major player in the Canadian health and wellness industry. Large and small format retailers that cater to the health and wellness sector are popping up all over Canada––everything from quick-service organic restaurants to conscious aging healthcare platforms are expanding with market share from health-conscious consumers.

However, wellness and cause-based shopping go hand-in-hand for modern consumers: sustainable, Fair Trade, and philanthropic initiatives add to the appeal of wellness-based retailers.

Direct-to-Consumer Brands Love Toronto

Cultural diversity and comparatively low tax rates make Toronto a popular launchpad for young brands. DTC startups such as Smile Direct Club and women’s underwear brand Thinx find the Canadian market is a welcome testing ground to gauge how their brand will perform in the world at large. (In fact, Canada is a top five market for Thinx.) But it isn’t just startups that are drawn to Canada by the appeal of a diverse customer base.

Large scale DTC brands also stand to benefit by establishing a brick-and-mortar brand presence in Canada. Lululemon’s DTC revenue increased 29 percent this year alone (and yes, I’m using Lululemon as an example twice… but can you blame me?) Canadian customers look to like when it comes to local brands. In fact, 85 percent of Canadian consumers think it’s important to buy from a retailer within Canada this holiday season.

New Ways to Identify Consumer Sentiment

Consumers demand a personalized shopping journey and, beyond the day-to-day tasks of running a successful retail business, proper use of customer data is the key to retailers being able to achieve this personalization. But relevant consumer data isn’t only found in a customer’s online click path and purchase history. It can also be found by aggregating and studying data from customer returns.

Most businesses struggle to assign accountability for the returns problem. According to the Returns Reduction Calculator developed by retail commerce optimization firm, Newmine, every $1 million in returns reduction can add roughly $500,000 to a retailer’s bottom line. And mining consumer return data can help retailers identify the not readily apparent factors that can contribute to their business losing out on profits.

The retail industry has never been more competitive. However, Canadian retailers have the advantage of a customer base that’s hyper-focused on shopping local. By identifying issues as they arise, staying abreast of retail trends, and tapping into the potential of a ready and willing customer base, Canadian retailers can achieve and maintain success well into the new year… and beyond.

Jasmine is a writer, thought leader, and content strategist. She is CEO of the millennial think tank, Jasmine Glasheen & Associates, and a frequent contributor to The Robin Report, IBM, Sourcing Journal, the Vend blog, and many others. Formerly contributing editor at RetailWire and content lead at Retail Minded, Jasmine knows how to create top-ranking retail thought leadership that makes an impact. 



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