By Mario Toneguzzi

Retail sales growth across the country continues to build on the positive performance of 2016, with national retail sales predicted to grow by seven per cent to reach close to $590 billion by the end of 2017, says a new national report by Colliers International.

“The main drivers of strong retail growth appear to be population growth, employment growth, and consumer confidence. The main drivers for a national retail market are B.C., Ontario, and Alberta. In order for Canadian retailers to do well, we need our thoroughbreds to pace the field and certainly in 2017, the big four (including Quebec) are running hard,” says James Smerdon, vice-president and director of retail consulting for Colliers in Vancouver.

“Looking ahead to the holiday season, Prince Edward Island (9.6 per cent growth), Ontario (9.4 per cent), and B.C. (9.2 per cent) can expect the busiest malls. For 2018, if we look back at the fundamentals, B.C., Ontario and Alberta will continue to outperform. Much of Alberta's growth could be tempered with an interest rate hike, as auto sales account for so much of their growth. Likewise, a stronger Canadian dollar would result in increased cross-border shopping which could take the wind out of the sales in B.C. and Ontario.”

*(Photo: Colliers International Canada - Facebook Profile)*

For 2017, Colliers is projecting B.C. to see the biggest annual increase in sales of 9.5 per cent to $84.2 billion, followed by Prince Edward Island at 8.7 per cent and $2.4 billion, and Alberta at 8.2 per cent and $81.3 billion. Ontario’s retail sales growth rate is forecast to be 6.9 per cent for $216.2 billion. Quebec is expected to see a 6.1 per cent hike this year to $125.7 billion.

“One of the more interesting retail development trends going forward will be the quickening pace of more mixed-use, lifestyle destinations incorporating residential, office, civic, and institutional uses,” says Russell Whitehead, planning consultant with Colliers in the Calgary office. “The exit of Sears will provide regional shopping centres - particularly those located in central and accessible locations near transit - with the opportunity to redevelop this empty space to incorporate higher density uses above a retail podium consisting of smaller footprint, specialty retailers.

“Consumers now more than ever are choosing to shop for unique goods found at smaller boutique retailers rather than from national chains. Some of the fastest growing retail categories are specialty food stores - think butchers, bakeries, olive oils, cheeses, etc. - health and personal care, high-quality fast casual restaurants, lifestyle brands (H&M, Uniqlo, etc.), and athleisure. We are also seeing more e-retailers opening small bricks-and-mortar stores which has helped to expand their exposure and sales (Indochino, Warby Parker, etc.). Despite the rise of online retailers, there will always still be the need for bricks-and-mortar space. The real question is how much retail space per capita will be needed in the future compared to today.”

The Colliers report says that over the last six years, several intriguing retail sales trends have emerged throughout the country. First, there has been a general decrease in the relative importance of December retail sales, as consumers take advantage of Boxing Day sales that extend through much of January, and an increasing number of Canadian Black Friday sales in late November.

“In terms of total annual retail sales, the ‘Big 4’ provincial markets have consistently dominated, with Ontario leading the pack followed by Quebec, British Columbia, and Alberta,” says Colliers.

It says 2017 marks the first year this decade in which positive overall retail sales growth is expected in all provinces. Some of the factors that are positively affecting national sales include:

The weak Canadian dollar resulting in less spending out now to the US;
The Liberal government’s proposed increase to the Child Benefit Grant;
Continued strong residential real estate values in major markets which give homeowners the confidence to leverage property value for home improvements or even to pay off consumer debt; and
Rising equities markets leading to feelings of job security and consumer confidence.

*Top Photo: Downtown Calgary, via the Colliers report, which you may download here.

Mario Toneguzzi, based in Calgary has 37 years of experience as a daily newspaper writer, columnist and editor. He worked for 35 years at the Calgary Herald covering sports, crime, politics, health, city and breaking news, and business. For 12 years as a business writer, his main beats were commercial and residential real estate, retail, small business and general economic news. He nows works on his own as a freelance writer and consultant in communications and media relations/training. Email: mdtoneguzzi@gmail.com.