Canadians will continue to shop in 2008 - but not necessarily until they drop.

With forecasts for this year calling for cash registers to continue to ring up respectable sales growth, Canada is expected to avoid the doom and gloom being predicted for retailers across the border.

And this country's shopping-centre industry - shunted aside earlier in the decade when power centres accounted for the bulk of Canadian retail expansion - is back in vogue.

Considerable amounts of money will be invested in new shopping-centre construction, renovation and expansion, delegates to the recent International Council of Shopping Centres (ICSC) Western Canada Business Forum held in Kananaskis, Alta., were told.

Peter Sharpe

"Where I would predict a significant downturn in retail sales in the U.S., I don't see that here. We have a pretty vibrant retail industry," says Peter Sharpe, president and CEO of Cadillac Fairview, which owns malls and shopping centres across Canada and the United States.

Average mall sales are about $450 a (square) foot across the country, says Sharpe, who notes that amount can climb to as much as $1,100 a square foot.

"Malls are doing well and I think generally, retailers are doing well. The strength of the Canadian dollar is helping them with their imports, they have stronger margins."

Retail sales in Canada should grow by between four and five per cent this year, as opposed to their 5.8-per-cent rise in 2007, says Sharpe, who was a speaker at the ICSC forum.

With inflation expected at about 1.8 per cent, Sharpe says that would still provide retailers with approximately two-per-cent real growth, a figure he qualifies as a good performance.

The Ottawa-based Conference Board of Canada - a participant in the ICSC event - is also predicting a good year.

"We think retail sales will grow by 5.6 per cent for 2008," says Pedro Antunes, director of the Conference Board's national and provincial forecast.

"Our sense is that the strength will be in other durables, which tends to be furniture and electronics."

The Conference Board numbers tag inflation at 1.4 per cent, which translates into a real consumer spending increase of 4.2 per cent.

"Real consumer spending of four per cent is very good growth," says Antunes, who notes that consumer spending, business investment and government spending have been driving economic growth since 2003. "There is no sense that it will slow down in 2008," he says.

Sharpe attributes industry optimism to several factors, including the cut in the federal Goods and Services Tax, employment and wage growth, low interest rates and a housing market that has generally ignored predictions of a substantial slowdown.

"Despite the softening of the Canadian economy in recent months and the very weak outlook for U.S. economic growth, I believe that our industry is in good shape to withstand the challenging environment that we may face this year," says Sharpe.

While Ontario's and Quebec's economies may not fare as well due to falling U.S. demand for manufactured products, retail sales in those two provinces still should eke out gains of between two and three per cent, Sharpe says. Atlantic Canada should perform to or above the Canadian retail growth average, while Alberta, Saskatchewan and B.C. will be higher.

Statistics Canada says Canadians spent $413.4 billion on goods and services in retail stores last year, 5.8 per cent more than in 2006. Almost a third of retail purchases - $31 of every $100 spent in retail stores - went to automotive-related products in 2007.

More than half of spending in retail stores focused on transportation, food and beverages.

Of every $100 spent in retail stores in 2007, consumers spent about $21 on food and beverages, $21 on motor vehicles, parts and services, $10 on automotive fuels, oils and additives, $9 on furniture, home furnishings and electronics, $9 on health and personal care, $8 on clothing, footwear and accessories, $7 on hardware, lawn and garden products, $3 on sporting and leisure goods and $2 on non-electric housewares.

The remainder, about $9, was spent on all other goods and services such as tobacco and pet food.

Shopping centre-inclined sales (total retail sales excluding the automotive sector) started on a positive note this year with a solid 5.1-per-cent gain in January. Last year, they rose by 5.6 per cent.

Regional malls are also getting a facelift, says retail consultant Anthony Stokan, another ICSC conference speaker.

"There's a renaissance, a rebirth of these mature centres all over North America," says Stokan, a partner in Toronto-based Anthony Russell Inc., who has worked with more than 100 shopping centres around the world.

"In a nutshell, customers ... aren't looking for a better product as much as they're looking for a better shopping experience - the degree of comfort in their shopping experience is going to be just as critical as the quality of the product offering," says Stokan.

"Malls have a future. I personally believe regional shopping centres across North America have never been in a more enviable position in catering to a shopping experience. There will be more renovation, more remodelling and better comfort zones."

However, Sharpe doesn't expect to see a lot of new malls being built in Canada over the next few years.

New arrivals include Crossiron Mills, just outside Calgary, which is now under construction and will be home to 175 stores and about 12 anchor tenants. Maple Leaf Square, a mixed-use development next to Toronto's Air Canada Centre, will include a sports and entertainment-themed boutique hotel, condominiums as well as retail space.

Edmonton's Currents of Windermere, a combination of retail, entertainment, hotel and residential surrounded by a semi-circle of big-box offerings, is also in the works.

Mall Trends

Here’s a glimpse of what tomorrow's mall could look like:

* Expect to see older regional centres getting more than just a facelift with a renewed focus on tenant mix as well as a greater emphasis on going green - all geared toward putting the bang back into the shopping experience.

* Focus will be on mixed-use projects that combine retail, residential and
office space and even hotels.

* Retailers should target the Boomer generation with new offerings, says James Dion, president and founder of Chicago-based retail consulting firm Dionco Inc., and a keynote speaker at the ICSC Western Canada Business Forum.

"Consumers really are looking for special things today," says Dion.

"People have enough shoes, coats, pants, pretty much everything. Stores today are about exciting people. It's really about emotion. Shopping today is very much an emotional endeavour."

* Retail used to be about "stack it high and watch it fly," says retail consultant Anthony Stokan. Today's modern reality of shopping is "Now you see it, now you don't" - smaller collections of merchandise coming into the store more frequently.

* Expect to see more U.S. and international retailers set up shop in Canada. Crate and Barrel, and Restoration Hardware are two American houseware, furniture and home accessories chains that are now entering Canada while Brooks Brothers - American casual clothing for men and women - is said to be considering its options on this side of the border.

- with files from The Canadian Press
(Laura Severs can be reached at laura@businessedge.ca)