A one-two Canadian retail punch is powering up in Alberta and British Columbia.

Cash registers in the two provinces are ringing in sales at record rates as retail is becoming a strong driver of the economies of both Alberta and B.C.

Shoppers plunked down more than $50 billion in retail sales in B.C. in 2005, a record for the province, according to a new study by the Vancouver-based Business Council of British Columbia.

In fact, says Ken Peacock, a study co-author and a senior policy analyst for the Business Council, the total amount spent by British Columbians in retail establishments doubled between 1991 and 2005.

Bayne Stanley, Business Edge
Business Council of B.C. study co-author Ken Peacock says the retail industry is booming in this province.

Alberta is also no slouch when it comes to retail numbers, as the latest figures available show buyers have been snapping up goods at a rate of about $44 billion per year.

The Business Council study also shows that in 2004, British Columbians were outspending all Canadians - except Albertans - on a retail per capita basis.

The Business Council says per capita spending on retail - not including Internet sales, craft fairs and services such as hair salons, spas, travel agencies and restaurants, which are not tabulated in the Statistics Canada definition of retail spending used by the council - in Alberta is estimated to have reached $15,075 in 2005, while the corresponding figure came in at about $3,000 lower in neighbouring B.C.

Those figures point to a major shift in the Canadian retail scene, says Kevin Evans, vice-president of Western Canada for the Retail Council of Canada.

"It speaks to a much larger story, the emergence of the West as the economic centre of gravity in Canada. Certainly we're shifting that way," says Evans, who notes that for many decades Toronto was the regional axis for retail in Canada. "As we talk to national retailers and ask where they see the double-digit sales growth in Canada, it's in the West, and that's where they see the real potential for expansion."

That expansion will be evident for years to come, with strong economies and population growth expected in both provinces, says Blake Hudema, president of Hudema Consulting Group Ltd., a Vancouver-based retail consultancy firm.

There's a critical mass of seven million people between the two provinces, and Calgary and Edmonton are appearing on the radar screens of retailers who wish to enter high-density markets of one million-plus people, adds Hudema.

New retail developments are also on the drawing board.

The Mills Group, in conjunction with Ivanhoe Cambridge, has plans to build malls in Calgary and Vancouver that are similar to Vaughan Mills, its first Canadian project that featured a 1.2-million-sq.-ft. enclosed mall north of Toronto with 16 anchor tenants and more than 200 stores, restaurants and entertainment venues.

There's talk of a 2007 opening in Calgary for what is tentatively being called Alberta Mills, at a location likely in Balzac, just north of the city.

Its B.C. counterpart, to be located in the Vancouver area, is not expected to come online before 2010, at the earliest.

Deerfoot Meadows, Calgary's new power centre in the city's southeast, is planning to add a lifestyle centre, a concept that incorporates a clustering of stores such as apparel venues in an eye-pleasing pedestrian district with an emphasis on architecture, restaurants and sidewalk cafes.

"It would be a leading-edge, next-generation Canadian lifestyle component. What this will do is bring the leisure and entertainment value back into what otherwise have been utilitarian power centres," says Hudema.

In Edmonton, Hudema expects both Southgate and Kingsway Garden malls to embark on expansion programs and notes that in Vancouver, Costco will open its first downtown store in the next 12 months. It is now under construction at Expo Blvd., between the Dunsmuir and Granville viaducts.

Both provinces are expected to eventually get Wal-Mart supercentres (a combination of a typical Wal-Mart store with a full-scale supermarket all under one roof), and Hudema sees other new retailers coming into Alberta and B.C. such as H&M (fashion for men, women and children) and Sephora (cosmetics and fragrances).

"The whole concept of shopping is changing from getting your necessities," says John Wojcicki, president and CEO of Retail Alberta. "It's becoming an experience. The buying process is undergoing a paradigm shift. People see shopping now as a form of recreation."

Strong consumer confidence levels - where people don't feel guilty about buying things that they need or want - and a greater variety of products add to the appeal.

Long seen as an entry-level job in a career path, retail is also now the top employer in both provinces.

More than 250,000 British Columbians are employed in the retail sector, surpassing both health care (220,000 jobs) and manufacturing (200,000). In Alberta, 211,200 people work in retail, while health and social assistance employ 166,000 and oil and gas along with mining and forestry employ about 116,000 people.

But even with all these positive factors, some dark clouds are looming over the power centres and malls in Western Canada.

"In spite of an increase in total retail spending, which is great, on the other hand we have a huge challenge in that there is a significant shortage of entry-level and mid-level retail employees," says Mark Startup, president and CEO of Retail BC. "My view on this is that we've had a chronic shortage for the past 20 years. It is now moving from troublesome to a potentially crisis level."

Retail Alberta's Wojcicki is also concerned about a shortage of employees.

"Some retailers would like to add extra stores in Calgary or Edmonton," says Wojcicki. "They have the confidence in the economy to know the stores will do well, they have the financial resources to look after any capital outlay, but the one thing holding them back is the shortage of labour. Some are still going ahead anyways; they feel they still have to have that presence in the marketplace."

The Retail Council's Evans says he personally knows of a number of retailers who want to expand in both provinces, but are concerned about labour availability.

"The labour supply issue in retail is the No. 1 concern. It is the issue that keeps our members up at night," says Evans. "I don't think there are any short-term fixes on the horizon."

Even though he expects it to put a damper on expansion investment in Alberta and B.C., Evans says the Retail Council is again anticipating very solid sales growth this year, with Alberta and B.C. leading the way in 2006.

"It's become one of those nice-to-have problems if you can characterize it like that," says Peacock, referring to labour supply issues. "At this point, I wouldn't say it would derail or cause so many difficulties that it would stop growth in the sector, but at the same time it is a definite concern."

(Laura Severs can be reached at laura@businessedge.ca)