"Top 12 Retail News Stories in Canada for 2012"
The year 2012 marked the 50th birthday of what has become the dominant category of the retail industry today. 1962 saw the introduction of “Big Box” format, discount retailing with the likes of Walmart, Kmart, Target and Woolco, all opening their first stores that year. In the United States, according to Consumer Reports, 87% of all retail activity in 2010 was done through discount retailers. "Black Friday" has grown to become the busiest shopping day of the year
Since discount retailing continues to be such a strong element of the retail trade, it is not surprising that many of last year’s top news stories in Canada had some element or connection to discount retailing.

Not to show our leanings for any particular segment of the retail industry, we present our Top 12 in alphabetical order for your review.

Amazon – E-retailer Amazon continues to expand their category and item offerings with an eye towards the fashion industry, all with free next day delivery and free returns, making a compelling combination for the consumer.

Black Friday & Cyber Monday – Canadian retailers, particularly those close to the US border towns, embraced the biggest US shopping period as a defensive sales strategy to compete for the sales launch of the Christmas selling period. Unfortunately, it also created big discounts, lower margins and a post-event sales lull as consumers held back, waiting for larger discounts leading to Christmas.

Canadian Duty Free Limits – In June, the Canadian government raised the duty free limits for out of country purchases. With limits being raised to $200 from $50 for an out of country stay of 24 hours or more and $800 from $400 for stays of 48 hours or more, Canadian retailers feared that consumers would be making more trips south in search of cheaper US consumer goods.

Foreign “All Stars” - International retailers continue their entry into the “fresh haven” of the Canadian retail scene. Last year saw a long list of new players such as Tory Burch, Ann Taylor, Loft, JCrew, Topshop & Topman, Kate Spade, Microsoft and Ted Baker London. These new players will make our home grown retailers either raise their standards of performance or fade away.

HBC – Iconic retailer Hudson’s Bay Company returned to the public markets with a launch of a $400 million IPO for 20%. The revenue raised will be used to pay down debt and also to continue the capital investments in upgrading the stores to fend off competition from the likes of Target and Nordstrom.

Joe Fresh – In a reversal of cross border retailing trends, Loblaws announced a joint venture with US department store JC Penney to open 700 Joe Fresh shops offering Joe Mimran’s fashion line. The spring 2013 launch is intended to help grow the Joe Fresh store count to over 800 locations and to compete with the cheap chic likes of H&M, Zara and Uniglo. The Canadian brand should give a boost to the JC Penney turnaround.

Leon’s – In a seemingly “David & Goliath” retail story, 76 store retail chain Leon’s acquired the Brick Furniture retail umbrella of 230 stores. The $700 million purchase is deemed to be a defensive move to fend off competition from potential US furniture players.

Lowe’s – The #2 US home improvement retailer made a $1.8 billion offer to purchase Rona and its 950 stores and franchises. Unfortunately for Lowe’s, the offer was strongly opposed by the Quebec government who see Rona as a home-grown strategic interest. Given the fact that 50% of employees, suppliers and sales come from Quebec, there was huge resistance for a foreign takeover.

Mobile Commerce - Consumers are using their smart phones and tablets to support the whole customer shopping journey, from discovery of new products and brands through to purchase. They can research and explore new product features, compare prices, read reviews, find store locations, take pictures of products, scan barcodes, download digital coupons, actually buy something and then, in the long term, expect the customer support needed to establish a long-term relationship. This will continue to be a top retail story for years to come.

Nordstrom – Cadillac-Fairview bought out the Sears leases in Pacific Centre, Vancouver, Rideau Centre, Ottawa and Chinook Centre in Calgary for $170 million. The announcement of the redevelopment of these locations was to accommodate the arrival in Canada of luxury US retailer Nordstrom starting in 2014. This has set off a “high-end” department store race with Holt Renfrew store expansion and new concept department store and HBC with their potential Bloomingdale’s shop addition.

Outlet Malls – Competition to develop outlet malls was extremely strong in 2012. RioCan REIT and US based Tanger Outlets purchased 2 centres near Montreal in Bromont and Ste. Saveur, Quebec, as well as announcing plans for new outlet malls in Mississauga and Ottawa. Meanwhile, Simon Property Group teamed with Calloway REIT in the development of the Toronto Premium Outlets in Halton Hills, a mere 10 minutes from the new Heartland Outlet Mall. It will be interesting to see the competition of the luxury brands in outlet formats in Canada evolve.

Retail Real Estate – Retail real estate has never been more valuable. Whether it is the Kingsett Capital hostile takeover bid of $4.4 billion for Primaris Retail REIT or Loblaws Companies creation of a $7 billion REIT, the re-development and re-positioning of real estate assets to accommodate both local and international retailers is at the heart of the competition to increase shareholder value.

Reflecting on the past year in Canadian retail and revisiting these stories gives a real sense of what a complex, dynamic and constantly evolving industry the retail segment truly is. As 2013 begins, the arrival of Target and other American and International companies to the Canadian retail scene will continue to challenge our home-grown retailers to change, adapt and thrive in a new retail landscape. Those that do will be the top news stories of 2013.

Happy New Year and best wishes for a healthy, prosperous and fun 2013.

 


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