Canada’s retail industry is on the cusp of a transformative period, marked by a wave of construction and new brand entrants, according to Michael Kehoe, Broker of Record at Fairfield Commercial Real Estate.
Kehoe recently shared his insights, expressing optimism about the country’s evolving retail landscape.
“It’s an exciting time in the retail industry in Canada,” Kehoe said, describing a sector brimming with new developments and a distinct split in consumer demand between affordability and luxury.
“We see tremendous polarization, with strong growth in both the value and luxury sectors,” he explained. This divergence, he believes, reflects a clear response to shifting consumer preferences.
While retail giants are making strides by focusing on affordable, value-driven merchandise, the luxury sector is also flourishing. Canada’s high-end retail is no longer confined to traditional shopping districts like Toronto’s Yorkville, Vancouver’s Burrard Street, and Yorkdale Shopping Centre.
Kehoe noted, “We’re now seeing luxury clusters emerge at locations such as West Edmonton Mall, Calgary’s Chinook Centre, and Montreal’s upcoming Royalmount.” Additionally, Vancouver’s Oakridge Park is set to bring another robust luxury node to the West Coast.
In Alberta, Kehoe highlighted an impressive surge in the food service sector, particularly in sit-down and quick-service restaurants.
“With strong population growth and good disposable income in Alberta, full-service restaurants are thriving, and quick-service chains are expanding significantly,” he said.
However, Kehoe cautions that retailers without a clearly defined brand identity may struggle. He noted that the middle market, lacking a unique value proposition, could face significant challenges.
“If you’re in that ‘mushy middle,’ you’re vulnerable,” he stated. To succeed, Kehoe advises brands to “define your target market, dominate your category, and go after your customer with confidence.”
The mood among retail professionals has been largely optimistic, Kehoe observed, especially following the recent ICSC conference in Toronto, where leasing activity was strong.
“Deal sentiment was extremely positive, with active discussions on leasing transactions across enclosed malls, grocery-anchored retail centers, and main street retailing,” he said.
Kehoe expects new store openings to ramp up significantly by the second and third quarters of 2025.
Still, Kehoe acknowledged that retailers are navigating a landscape of rising costs, from rent and labor to utilities, contributing to heightened uncertainty. He predicts that as the holiday season approaches, affordability will remain a core concern for Canadian consumers.
“This year, I think consumers are going to be guarded, focusing on value-driven merchandise and experiences,” he said.
Ultimately, despite the challenges, Kehoe expressed optimism about the season ahead.
“There’s a lot of noise out there, and standing out is essential,” he emphasized. “Whether in retail or food service, you have to make your statement, differentiate, and capture consumer attention.”
As Kehoe sees it, Canada’s retail industry has solid momentum, bolstered by a steady influx of young talent, ongoing development projects, and an expanding luxury market. All signs, he said, point to a strong finish for Canadian retail as it heads into a competitive and promising holiday season.
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