Largely thanks to less competition, Canadian mall merchants ring up $568 per square foot of sales, roughly 45-per-cent more than their U.S. counterparts, according to ICSC data for the year up to the end of November.
American retailers are in a more solid position today than in the past few years, with cash to spare after having slashed costs and improving their profit margins during the downturn. They view Canada as an attractive launching pad for international growth, allowing them to test new logistics and regulatory requirements in relatively familiar foreign territory.
Landlords such as RioCan are chasing the potential new tenants with an array of mall expansions on their drawing boards. Yorkdale Shopping Centre in Toronto, one of the country's top malls with more than $1,200 of sales per square foot, will spend $220-million in the next two years to add 40 new stores, many of them expected to be filled by foreign players.
Morguard plans to almost double the size of one of its Ottawa malls - "it's got the potential to be the Yorkdale of Ottawa" - while developing an open-air shopping centre in Victoria, amid other activities, Mr. MacDonald said. "Will there be casualties? Absolutely," he added. "Older chains that lose their clientele, don't stay current, don't re-invest, are marginalized over time."
Already some retailers feel the heat. Montreal-based fashion chain Boutique Jacob Inc. got court protection from creditors in late fall, citing burgeoning foreign competitors. This month, Yorkdale general manager Anthony Casalanguida closed a struggling Jacob outlet. The space is being prepared for U.S.-based clothier J. Crew - a favourite of Michelle Obama - as the chain's first store in Canada, according to sources. Mr. Casalanguida wouldn't comment, only saying he's in talks with a number of foreign retailers. "We needed the space for a tenant."
Other revampings are playing out behind the scenes. The owner of Toronto-based fashion merchant Urban Behaviour is negotiating for concessions in rent with Morguard as the retailer tries to strengthen its operations, Mr. MacDonald said. Officials at the chain could not be reached.
And at Yorkdale last fall, Mr. Casalanguida shifted Fairweather into a vastly smaller site - 25 per cent of the size of its previous Yorkdale store - and moved Victoria's Secret, the popular U.S. lingerie chain, into Fairweather's former spot.
Still, amid the jockeying for space, some Canadian retailers - even Fairweather - are looking to spread their wings here. Isaac Benitah, the fashion retail magnate who owns multiple chains including Fairweather and Labels, is shifting his stores to new locations and in some cases converting them to new banners as he hunts down the best fit for each of his 10 or so concepts. Part of the shuffle is a move to open-air power centres in the suburbs that demand as little as half the rent of enclosed malls.
By far Mr. Benitah's most high-profile store expansion and conversions involve his Target Apparel. Mr. Benitah, who has aggressive plans for the five-store Target chain, gained North American attention recently in his legal tussle with U.S.-based Target over use of the name.
This year, Mr. Benitah plans to add 20 to 25 outlets to today's 300, including a new banner called Les Ailes Xpress, which is a downsized version of his Les Ailes de la Mode, said Harley Oberfeld of Oberfeld Snowcap, which advises Mr. Benitah on real estate. Among other re-jiggings: His weaker Randy River men's stores are being phased out in favour of his newer Stockhomme.
Existing retailers are rushing to prepare for the foreign assault. Loblaw Cos. Ltd. is stepping up its plans for standalone stores for its cheap-chic Joe Fresh Style fashion line, even eyeing a flagship store on New York's Fifth Avenue to create a buzz. Sporting Life, a sporting goods and fashion chain, is considering an expansion outside of its Ontario home base of four mega-stores, said co-owner David Russell.
|REI.UN-T RioCan Real Estate Investment||26.75||
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|TGT-N Target Corp.||60.05||
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