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Shopping Centers Today -> December 2001
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CANADIAN DELEGATES MULL A SLOWING ECONOMY
By Susan Thorne
TORONTO — When, back in the boom days of 2000, organizers picked the title for this year’s ICSC Canadian Convention — “Shifting Gears: Strategies for Survival” — they were thinking of a shift to a higher gear. But by the time the conference rolled around this past October, in the wake of an economic slowdown and the Sept. 11 atrocities in the United States, the focus was on shifting down.
“The world is a very different place since Sept. 11,” said Michael Whelan, convention co-chairman, following the opening of the three-day event here. “These are uncertain times.”
Consumer confidence and the value of the Canadian dollar have declined, and Whelan suggested that industry members will need to develop new strategies to meet these challenges.
The atrocities have not so much precipitated a recession so much as aggravated one that already was evident back in May or June, according to Jeff Rubin, chief economist with CIBC World Markets, a Toronto financial consultancy. He cited the decline of investment in information technology, a drop in manufacturing output and the loss of 35,000 jobs nationwide in the last three months (compared with 325,000 jobs lost in the United States in five months).
“Everybody’s cutting inventories, trimming jobs, and this is placing consumer spending at risk,” Rubin said, predicting that recovery might not start until the second half of 2002.
In the coming months, discounters and value retailers will benefit at the expense of full-price retailers — a trend similar to that of the early 1990s recession, observed fellow panelists Ian Thomas of Thomas Consultants, Vancouver, and Irene Nattel, merchandising analyst with RBC Dominion Securities, Montréal.
While retailers such as The Bay — and even Zellers — have been seeing flat sales, companies with a strong value proposition such as Future Shop, Real Canadian Superstore, Costco and Canadian Tire will be the winners, panelists said. Thomas speculated that with spending on travel down, consumers will instead open their wallets for home improvements and accessories, entertainment and small indulgences such as going to a cafe.
But despite renewed interest in the home, people won’t be cocooning, he said, contradicting speculation by many observers. Rather, they will go out to see others in, among other places, shopping centers, which will become community gathering places.
Shopping centers should establish themselves as entertainment destinations, Nattel counseled, because “people want to have fun, to feel good, especially in a recession.”
But, she added, with widespread insecurity about jobs, consumers will probably avoid high-ticket spending on frivolous items.
Despite the many gloomy forecasts, Canada remains a market where well-executed retail concepts can thrive, delegates heard. Laura Tisi, president of American Eagle Outfitters Canada, described the fast growth of her company, which has opened 46 Canadian stores selling its casual, youth-oriented apparel since May — roughly one opening per 60 hours during the summer.
Annette Verschuren, president of Home Depot Canada, chronicled her company’s expansion to a total of 70 stores, and its ongoing investment to enhance in-store design and shopper convenience. And Roots Canada, a 28-year-old Toronto-based leisure wear retailer with sales of close to C$700 ($447) per square foot, is upbeat about inking agreements to outfit Canadian, U.S. and British athletes for the Salt Lake City Olympic winter games in 2002, its president, Marshall Myles, told delegates. He also announced his company’s plans to enter the Chinese market next year through a partnership venture, with a target of 100 stores by 2008, the date of the Beijing Olympics.
Retailers weren’t the only ones displaying confidence; delegates did, too, just by attending the convention, despite a sharp decline in air travel since Sept. 11: Overall attendance at the convention and participation at the trade exposition were both higher than in 2000, delegates were told.
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