Canada's shopping malls are filling their carts with new businesses as they reinforce their role as a major retail industry player.
Despite playing second-fiddle to surging power-centre growth over the last decade, shopping centres say they still want to be the primary place where customers shop 'til they drop.
Industry officials say that they expect the mall format to become popular once again, even though Vaughan Mills - the mega-mall north of Toronto that includes a mix of outlet and non-outlet retail along with entertainment features - is the only regional mall that's been built in Canada in the last 15 years.
"Over the next five to seven years, regional shopping centres should re-emerge as a growth centre of our business, probably on the peripherals of the cities - on main traffic arteries," says Bob Knight, retail vice-president for Western Canada for the Oxford Properties Group.
New enclosed regional shopping centres will also surface on a limited basis, he adds. But these newer malls may well be different than their earlier cousins, which were traditionally anchored by a number of department stores.
"They may well be unanchored, meaning there will be no department stores. You'll see some medium-sized box stores becoming the new anchors. That's the next best trend that will emerge in retail real estate," Knight predicts.
Knight is the Prairie provincial chair for the New York-based International Council of Shopping Centers (ICSC), which is holding its 2007 Western Canada Business Forum in Kananaskis, Alta., at the end of this month.
The ICSC is a not-for-profit trade association with more than 65,000 members in more than 80 countries, including 2,800 Canadian members.
While Knight says department stores need to reinvent themselves if they are to survive - many old stores need to be renewed, rebranded and improve customer service - he notes there are plenty of potential new mall tenants.
"One of the trends we are seeing as a result of our economy is that we've become a great destination for not only Canadian but U.S. and European retailers," says Knight, including American fashion chains such as Abercrombie & Fitch and Hollister, and European players such as H&M (fashion) and Sephora (makeup).
That trend is quite evident at West Edmonton Mall (WEM), which already is home to Abercrombie & Fitch and Hollister, and just recently announced 10 new stores, most of which will represent a retailer's first Canadian or first Western Canadian operation.
Italy's Mandarina Duck opens its first North American store at WEM in May, carrying backpacks, purses and luggage, while Sweden's Make Up Store has just opened its first Canadian retail store at the Edmonton shopping destination.
Meanwhile, Swedish-based H&M - already in malls in Ontario and Quebec - unveils its first western Canadian store at WEM in April and Sephora, a leading European retail beauty chain, and Miss Sixty (fashion) are eyeing June WEM openings for their first Western Canadian stores.
"In certain circumstances, existing tenants are coming up for renewal and we're not renewing them. In other instances, tenants are coming into the shopping centre and buying out my existing leases, subject to our approval," says Don Ghermezian, president and CEO of West Edmonton Mall Property Inc.
But not all is rosy in the shopping centre arena, says Peter Woolford, vice-president of policy development and research for the Retail Council of Canada (RCC), a not-for-profit association representing more than 40,000 stores of all retail formats.
"What we hear from our members is that power centres are extremely popular with Canadians, they continue to flourish and prosper. On the other side, we are hearing that malls are an increasingly disadvantaged way to do retail for many retailers," says Woolford.
Woolford says malls are drawing a younger demographic such as teenagers and those in their early 20s, leaving retailers who don't cater to that age group in a tighter spot. Couple that with high rents and the mall is a tough sell for many retailers, he says.
The exception are the better-positioned or stronger malls that are leaders in their market. Nor does it hurt, he says, if the mall is located in Alberta, B.C. or Saskatchewan where the economies are strong.
However, Knight believes malls can still be refreshed to succeed in today's marketplace. "What a market owner has to do is to reinvest in their property. If they let it sit, it will grow tired," he says.
"The consumer likes to go there and feel there is something new and exciting going on. If you don't keep the consumer stimulated, you're going to find yourself in trouble. It's a matter of keeping the (tenant) mix fresh and current, but it's not always easy to do."
Terry Napper, co-chair of the ICSC Western Canada Business Forum, says industry members need to stay abreast of what is going on, either through a regionalized ICSC event or the annual fall conference.
The Western Canada forum, now in its second year, "was designed as an educational program for people in the industry who operate shopping centres and/or are retailers who are interested in operating issues and how they can help better their property," says Napper, the general manager of Calgary's Chinook Centre.
Among topics at under discussion at the event are labour issues, specifically how to grow retail with a limited labour force - especially in Alberta.
Immigration is one answer, says Napper, who also mentions that the hot retail stores such as the H&Ms and the Sephoras usually don't have trouble drawing applicants because they are in vogue.
Another labour answer could come from the RCC. With the need for retail employees on the rise, it expects even more applicants this year for its annual Retail as a Career Scholarship Program (www.retaileducation.ca).
Designed to increase awareness of the diverse job opportunities that exist in retail, the program will award 20 $1,000 scholarships to post-secondary students across Canada.
(Laura Severs can be reached at laura@businessedge.ca)
