Skip to main content
subscribers only

The holiday spending numbers are trickling in and online retailers are the clear winner. Amazon.com's third-party online vendors saw U.S. sales jump by 40 per cent during the holiday shopping season compared with 2011, while overall spending for both online and bricks-and-mortar retailers grew by an anemic 0.7 per cent. The continuing shift from traditional retailers to their Internet competitors is a seismic change in consumer behaviour, one that threatens to make the shopping mall obsolete.

The Internet has already wreaked destruction on record stores and video shops. The giant Sam the Record Man sign, once a fixture on Yonge Street in Toronto, is gone, a victim of the revolution that Apple and iTunes brought to the music industry. Blockbuster has suffered a similar fate.

According to Jeff Jordan from venture capital firm Andreessen Horowitz, technology is now exerting a downward pressure on results beyond the media sector. Mr. Jordan writes that for America's top 100 retailers "same-store sales growth – arguably the key measure of retail health – is mixed and a quarter of the sample is negative. Many of these sales include the retailers' online segments, so the picture for their physical stores is even worse."

To date, the online shopping revolution in Canada has proceeded more slowly than in other developed nations. According to a study by Boston Consulting, online sales account for 3 per cent of Canadian gross domestic product compared with the G20 average of 4.1 per cent. Nonetheless, sales growth for prominent shopping mall anchor tenants – the biggest stores at the corners of the major malls – is already suffering.

Sears Canada is among the largest retail victims of modern technology. Same-store sales growth has been abysmal for Sears in recent years, declining by an average 7 per cent year-over-year every quarter since June of 2011. The company's shares have cratered, falling from $30 to under $10 since early 2010.

Reitmans, another prominent mall tenant, has endured an average 3.7-per-cent decline in same-store sales for the same period. November's initial public offering of The Hudson's Bay Co., one of Canada's biggest anchor tenants, met such widespread market apathy that underwriter Royal Bank of Canada was forced to purchase millions of shares in the open market to support the deal.

Credit card data show that Canadian shoppers are moving online. At the end of November, Mastercard Canada reported, "E-commerce sales continued to see positive growth above the 20-per-cent threshold for the eleventh consecutive month, posting at a rate of 26.4-per-cent growth compared to the same period in 2011."

At this pace of growth, online shopping in Canada will quickly catch up to the developed world norm and retailers that depend on mall traffic will increasingly struggle to maintain profits. It may not be long before Canada has its own version of the U.S. website www.deadmalls.com.

Report an editorial error

Report a technical issue

Editorial code of conduct

Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:00pm EDT.

SymbolName% changeLast
AAPL-Q
Apple Inc
-1.06%171.48
AMZN-Q
Amazon.com Inc
+0.31%180.38
MA-N
Mastercard Inc
+0.76%481.57
RY-N
Royal Bank of Canada
+0.48%100.88
RY-T
Royal Bank of Canada
+0.29%136.62

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe