Canadian independent retailers have been disadvantaged by the retail Americanization of Canada.
But George Minakakis, Founder and CEO of Inception Retail Group, in a LinkedIn post, suggests now is the time for opportunity for those brands to grow.
“The Americanization of Canadian retail has had limited success. There is generally high turnover, few opportunities for career growth, and most only operate satellite offices for operational support. It is not the same as it is in their country of origin. The Americanization of Canadian retail has disadvantaged large and small Canadian brands,” he said.
“My recent visit to (CF) Sherway Gardens (in Toronto) revealed three prominent locations that will need new tenants. Sports Chek, HBC, and SAKS are exiting. This is an opportunity for developers and independent retailers.
Many Canadian retailers will never have the opportunity to be in malls less of course, they are tertiary shopping centre. The reason even the most attractive and appealing independent retail brands fail comes down to one thing: they can’t get into high-traffic locations. Low traffic means low sales and potential failure. That’s the reality and story for many retailers, he said.
“However, if we were to look at this differently and want to add support in helping redirect and make Canada’s economy more independent and resilient, smaller retailers with attractive business and consumer models need to be allowed to grow,” added Minakakis.
“If they can, they will operate in Canada, and their growth will create organizations to support them from offices to distribution centres. Retail in Canada can’t attract and retain talent because there are not enough career growth opportunities.
“I am not suggesting stopping foreign investment. I am suggesting that developers start looking for Canadian retailers with growth potential. We need more Canada in Canadian retailing. And independent retailers may be more exciting as tenants than pickleball tenants.”
Bruce Winder, a retail analyst, said Minakakis’ argument is an interesting one and comes down to whether you believe in globalization or not.
“With globalization, borders are open and consumers are free to choose retailers as they wish. International retailers are free to expand with little in the way of economic barriers. The same goes for Canadian retailers who can open stores abroad. With a more protectionist view, local retailers have less competition but consumers have less choice. Which scenario is better? It depends on your perspective,” he said.
“I think Canada can be a hard market for all retailers. One just needs to look at our vast geography, high tax rate on individuals, higher regulations and relatively low population. We have seen independent as well as retail chain stores fail all too often based on our unforgiving national footprint and economic reality.
“We have seen some independents grow into global brands such as lululemon and Aritzia. It is not impossible but it is improbable. It takes time but with the right stewardship and patient capital, the world is our oyster. It all comes down to having an incredibly powerful brand and value proposition that can compete on a global scale.
“We have seen consolidation in the retail market over the last 30 years as large companies, including Canadian and American brands, acquire their way to scale economies to try and make Canada profitable. We have formidable national champions such as Canadian Tire, Loblaw, Dollarama and others. We have seen several American retailers enter Canada only to leave (Target, Lowes, Nordstrom, etc.) while others have thrived such as Walmart.”
Because Canada is a relatively small market, economically, we will almost always see American retailers operate with a skeleton crew, at least at first, added Winder.
“They are hesitant to invest in overhead when our market is much smaller than their home country. The exception has been retailers like The Home Depot, Amazon Canada, TJX and others that realize that they need sufficient infrastructure in Canada in order to reach their full potential,” he said.
“I think we produce world-class retail leaders right here at home. Career opportunities are available in Canada, especially if you work for a large Canadian retailer. If you work for an American retailer, you usually need to move to their US office to attain the most senior roles. It all depends on one’s individual ambitions and desired lifestyle.”
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Walking through most malls in Quebec, I see a fair representation of Canadian retailers like Dollarama, Artizia, Ardene, Vie en Rose, Melanie Lyne, Reitmans, Sports Experts, Pharmaprix, Jean Coutu, Simon’s, Browns, Canada Goose, Kanuk and L’Equipeur. Also there and thriving are great foreign brands like Uniqlo, Decathlon, Yves Rocher and, of course, Zara. Westmount has Lululemon and French fashion brands like Sezane and local retailers make up most of the shops in Mile End and the Plateau.
In Vancouver, Commercial Drive and to a lesser extent, 4th Avenue all full of local shops. Maybe the secret to shopping Canadian is to head downtown or local commercial streets and keep clear of suburban malls.