Bernie Bayer is senior partner with the Taurus Property Group in Calgary.
What’s the retail scene like in Calgary these days?
Bayer: The retail scene in Calgary right now is best described as challenging. Retail businesses by their nature evolve over time as tastes change and economic conditions change. In the past few years, a combination of factors has accelerated the pace of this change and created a dynamic environment where new businesses open and close over a much shorter time period than in the past.
The difficult economic environment has resulted in more business failures and hence more retail availabilities. This has created opportunity for local entrepreneurs to secure locations that would have been unavailable a few years ago. Fitness studios, cannabis stores, restaurants, craft beer stores, amongst others, have opened where national retailers and franchises used to operate.
How has the downtown retail market been impacted in the past few years with the economic downturn?
Bayer: The retail market downtown has undergone a severe and prolonged downturn as a result of the depressed economic climate. This can be attributed to three main factors:
First, the daytime population in the downtown core has fallen by about a third – between 30,000 and 40,000 fewer people are working downtown; this translates directly into lower retail sales throughout the downtown.
Secondly, there has been a psychological shift away from spending in the downtown. This can be attributed to some consumers not wanting to be seen to be spending frivolously during difficult economic times, as well as uncertainty about future employment and business opportunities.
Finally, macro trends in retail such as online shopping and a decline in mid-priced fashion sales have augmented the effect of the economy on downtown retail.
What impact has the growing interest in e-commerce had on bricks and mortar locations?
Bayer: Online shopping or e-commerce has impacted retailers in different ways, depending on the type of business they are in. The most negatively impacted have been the mid-priced fashion retailers whose business model essentially involved purchasing the next season’s fashions based on intuition and then providing those products in a static in-store display.
Consumers now have instant access to the fashions of tomorrow and can browse and purchase what they want at their leisure. European retailers such as Zara and H&M have been successful by vertically integrating and producing garments in response to trends at a very accelerated pace and making them available in store within a few weeks as opposed to months.
Other retailers have responded to e-commerce by developing a very robust online store and creating a great customer experience at their physical locations. Canadian Tire is an example of a retailer that has developed a successful model that combines both online as well as bricks and mortar shopping experience.
What do you expect for the rest of the year in Calgary’s retail market?
Bayer: The rest of 2019 will be challenging for retailers in Calgary.
I’m an optimist by nature and my medium to long-term view for Calgary is very positive. However, until our economy starts to create new full-time jobs with above-average salaries, the retail market will continue to be a challenge.
Consumers need to be confident in the future and optimistic before they start to spend discretionary amounts on retail purchases. Once Calgarians regain their swagger, the retail market will follow.
What part of the retail sector is the strongest in the city?
Bayer: The suburban shopping nodes of Crowfoot, Westhills/Signal Hill, Shawnessy and Southtrail continue to be the best performing retail nodes in Calgary. Chinook Centre also has maintained strong average sales as compared to other enclosed malls in Calgary.
Other sub-markets in Calgary that are performing well include Marda Loop, some northeast communities (i.e. Savannah), Britannia, Mission and Inglewood.
It’s important to put the current retail environment in Calgary in context: the market performs well as compared to many other markets in Canada with above-average sales and relatively low vacancy.
While we are experiencing difficult times right now, I’m confident that we will see economic growth and a strengthening of the retail market in Calgary in the near future.
– Mario Toneguzzi