Automobile retailers are increasingly opening showrooms in Canadian shopping centres. It’s part of a strategy to diversify the tenant mix in malls, as landlords seek to draw visitors at a time when e-commerce is growing faster than physical retail.

Last week, Mercedes-Benz opened a 5,600 square foot Mercedes me Store at CF Markville in Markham, just north of Toronto. The retail space has several vehicles on display as well as a selection of branded merchandise, acting as a satellite location for Mercedes-Benz Markham, located three kilometres away. It’s the second location for Mercedes me in Canada — Aberdeen Centre in Richmond BC was the first, albeit in a considerably smaller space.

Mercedes-Benz's display space in the busy Markham centre, which sees more than 12 million annual visitors, is a smart move. The new space gives Mercedes-Benz a presence in one of the Greater Toronto Area’s leading malls, in an environment where patrons are already thinking about shopping. Mercedes-Benz Markham is one of the top two dealerships in the country, according to the company, and the satellite location will only further drive sales.

Several other auto brands have established themselves in Canadian malls. Electric vehicle brand Tesla stands out, with three showroom locations in Canadian malls, with more to follow. Tesla’s first Canadian mall store opened in the fall of 2012 at Toronto’s Yorkdale Shopping Centre, followed by units at CF Chinook Centre in Calgary in 2015 and, most recently this spring, at Park Royal in West Vancouver. Tesla recently secured a retail space in another major shopping centre in Toronto, with more Canadian mall locations currently in negotiation, according to sources.

As well, Toronto’s Downtown Porsche opened its Fascination Porsche pop-up at Square One in Mississauga in the spring. The space, located next to Italian luxury brand Salvatore Ferragamo and across from Holt Renfrew, is a suitable location for luxury vehicles.

South Korea’s Genesis Motors, which launched its Canadian retail operations over the summer, is yet another brand opening retail storefronts in Canadian malls. In October, Genesis will open locations at Square One in Mississauga and at CF Carrefour Laval near Montreal. More will follow, according to brand director Michael Ricciutto.

*(Above and below: mercedes-benz branded merchandise for sale in the new cf markville space)*

We may see more vehicles being sold in Canadian shopping centres in the coming years, as mall landlords find ways to fill space vacated by struggling retailers. Some retailers doing business in Canada are seeking to downsize their operations, and replacing them with new tenants will be critical for landlords to maintain shopping centre productivity. If Sears Canada eventually shutters as well, there will be considerably more space to fill (Target’s Canadian exit in early 2015 is still a challenge for some landlords). Adding vehicles to the mix can also be highly productive — Yorkdale’s Tesla location, for example, boasts annual sales per square foot that are among the highest of any retailer in Canada.

Drawing-in shoppers, as well as increasing overall productivity, are goals for mall landlords. This fall, Retail Council of Canada will be releasing its second annual Shopping Centre Study, which will rank Canada’s top malls based on annual sales per square foot, foot traffic, and size. The study will also identify which of the top centres feature Tesla and Apple stores, both of which can significantly enhance overall productivity numbers. The study is seeking sponsors and for more information, contact Mary Markou at: mmarkou@retailcouncil.org.

*All photos were supplied by Mercedes-Benz Canada.

Canadian Retail News From Around The Web: September 11, 2017