Our Studio recently hosted expert speakers and members of the retail industry for an evening of discussion surrounding themes of disruption, change and opportunity playing out in the urban retail landscape.

Moderated by the Eaton Chair in Retailing and Director of Ryerson’s Centre for the Study of Commercial Activity, Dr. Tony Hernandez, speakers also included Senior Director of Store Design and Construction Emily Robin of Saje Natural Wellness, co-founder of thisopenspace Adam Bent, founder of Regent Street Commercial Corp. Vanessa Oliver, SVP Urban Retail at CBRE Arlin Markowitz, SVP of Leasing at First Capital Realty Carmine Francella, and VP Development at First Gulf Corporation Derek Goring.

With an audience of over 100 attendees and an hour of exploratory discussion, here are five of the evening’s stand-out themes and discoveries.

1. Disruption is not new. It’s a constant in retail.

In the late 1990s, the big disruptor shaking up retail was the arrival of big box stores. At the time it seemed like they would decimate the industry, and the same anxieties flared again when power centres and premium outlets had their moment. Today it’s the internet that is causing uneasiness among retail industry onlookers.

Put perfectly by Dr. Tony Hernandez, “disruption has always been a part of retail.” Innovation has been the key to staying relevant in the evolving retail landscape since the days the Eaton family reigned supreme in Canada. The catalogue was a huge innovator that disrupted but did not destroy the industry as some thought it would. Eaton’s again came up with innovation in retail by installing the first elevators in their stores, which was so new at the time that people went to the Eaton store just to try out the elevator.

Change is not the kiss of death. It is an opportunity for retailers to test creative new ways to attract business.

2. The ghost of Target is still felt today.

Department stores have been struggling for years, making the recent shuttering of Sears no huge surprise to the retail community, but the departure of Target from Canada in 2015 was a shock. Though not technically qualifying as a department store, the failure of such a huge company was unheard of and the effects are still being felt. There remains 5.4 million square feet of former Target space sitting vacant. Now combined with the Sears space, building operators are tasked with finding ways to fill the voids left behind.

While some international brands may be cautious because of the precedent set by Target, Carmine Francella pointed to growing demand in micromarkets to bring in the tenants that the changing demographics of the area want to see in their shopping spaces.

3. We only hear the doom and gloom.

It always seems like the end is nigh- department stores dying, mom and pop shops getting crushed by the Wal-Marts of the world, online giants like Amazon will put us all out of business; these are the headlines that get a lot of play. Our speakers repeatedly bemoaned the lack of attention given to the success stories.

Carmine pointed out that many of First Capital’s clients are expanding by millions of square feet, and cited Miniso, a Japanese retailer that opened 200 new stores in one quarter. Other brands like Muji and Bailey Nelson have had huge success in recent years and as Emily Robin pointed out, Canadian retail in particular has seen major growth by brands like Herschel, lululemon, Aritzia, and Saje Natural Wellness. Shouldn’t we be celebrating our homegrown success stories more often?

Arlin Markowitz pointed out that fitness centres are also seeing a boom, having fewer qualms taking over traditionally less desirable space like basements. There are also 17 former Targets currently being converted into fitness centres.

Contemporary success in retail is due in part to how innovators respond to the challenges of the industry, leading to better store designs that push environments to be more thoughtful and memorable.


The Samsung flagship store opening soon in the Eaton Centre uses innovative design to enhance visitor experience

4. Online retailing isn’t necessarily the threat it’s played up to be.

A huge contributing factor to the doom and gloom mindset is the rise of online retail, with giants like Amazon reshaping the industry. But what the speakers conveyed was that the internet is more of a complement to retail than an outright threat to brick and mortar stores. Adam Bent made a good point, stating that when you start a store today you are going to start with an online store first. The goal is still to get that brick and mortar store open, but they don’t need to be in every municipality across the nation, instead brick and mortar stores are strategically opened in key locations where they will have the most impact and provide a memorable experience that enhances the existing brand.

Vanessa pointed to the statistics. In Canada 94% of sales take place in store, while a 3% rise in online transactions over the next three years is projected, meaning 91% of sales in 2020 will still be in store- not exactly industry destroying numbers.

The key to staying relevant in the face of the online convenience factor is to make your store a destination to be enjoyed rather than a storehouse for goods. It has to be an immersive, enjoyable experience, otherwise why would consumers bother?


Lululemon Queen Street West creates memorable experiences by incorporating a coffee bar, yoga studio and meeting space

5. The future will need more flexible leasing options.

Adam’s business thisopenspace exists to serve the short term leasing market, but he wasn’t the only speaker highlighting the benefits of flexible leases. Pop-ups have immense value for brands, be they international or from other cities, to test out the demand in a new market. It was also noted that you can see higher returns on shorter term experiences, and that pop-ups act as a new attraction driving traffic to the surrounding retailers as well.

Emily pointed out that many brands, Saje Wellness included, do huge sales in the six weeks surrounding the holiday season and that for those weeks opening extra stores becomes feasible, but it doesn’t always last year-round. Flexible pop-up style arrangements can appeal to even more traditional chains in this way.


The Yonge Sheppard Centre redevelopment will incorporate a diverse mix of tenants

The future will see a balance of both long and short term leases in shopping centres, with established brands providing financial security for the operators while the ever-changing roster of short-term leases attract fresh traffic to the space. In addition to lease lengths, retail will also evolve to be more flexible in terms of leasable locations. Derek Goring pointed out that larger scale shopping centres have the ability to support a more diverse mix of businesses and will need to provide a mix of tenant types to stay relevant and set themselves apart.

In conclusion, it is an exciting time for retail with many shake-ups reshaping the industry. How we respond to these challenges and opportunities will impact the next phase of retailing, setting the stage for even further innovation and evolution.

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