What a difference a year makes.
At the beginning of 2013, Canada was regarded as fertile grounds for new retailers to set up shop in, with Target Corp. readying for its widely anticipated Canadian launch while high-end chains like Nordstrom were making splashy expansion announcements.
This spring, with Target’s first-year foibles — and mounting losses — fresh in people’s minds, the country’s shopping malls and retail destinations seem to have lost much of their shine.
“Once the darlings of the retail world, Canadian cities now have to compete more aggressively for retailer expansion dollars,” a new report from CBRE Ltd., a commercial real estate company, said Monday.
READ MORE: Target’s biggest headache in Canada? Bare store shelves
At the end of 2012, Canada was No.6 among countries attracting new retailers. Now, “Canada no longer ranks among the countries attracting the most new retailers and did not have a city ranked among the top 20 most targeted markets,” the CBRE report said.
Target’s missteps are likely weighing on other retailers’ minds. Nordstrom decided in March to delay the Canadian launch of its discount chain, Rack, to 2017.
Target, a U.S. retailing giant, has opened 127 stores in Canada over the past 14 months, but has largely disappointed customers with inventory management issues resulting in bare shelves and prices perceived as being too high.
Another factor deterring new retailers: slowing consumer spending.
Canadian shoppers continued to open their purse strings through 2013, but high consumer debt levels are expected to deliver a hit to spending habits in the months and even years ahead, experts predict.
READ MORE: Is Canada’s record borrowing boom coming to an end?
“Our forecast calls for moderation in the pace of real consumer spending over the next two years as modest gains in employment and income are counterbalanced by the high debt loads carried by the Canadian consumer,” TD Economics experts said earlier this month.
Here’s how debt levels have trended over the the past decade to the end of 2013.
The top cities in the world for attracting new retail options for shoppers were Paris, Tokyo, Hong Kong, Abu Dhabi and Berlin. Interestingly, not one U.S. city made the Top 20, either.
The United States market “is considered highly competitive, and this is perceived as a barrier to entry,” the report said.
The recent failure of Tesco’s Fresh & Easy grocery chain has “reinforced the belief that even the most successful global retailers can fail in the U.S.,” the report said.
Here’s the top cities attracting retailers this year:
WATCH: Snobby retail staff boost luxury sales, new report suggests
Comments