Retail adaptation: planning the future of shopping

NRU
Nov. 12, 2014
By Leah Wong

How Canadians live is changing. While in the past Canadians have had separation between where they live, work and shop, this divide is shrinking. As a result how Canadians are choosing to live is evolving, with condos located next to offices, on top of retail.

As lifestyles change and people rely more on digital technology to meet day-to-day needs, the retail industry is also changing. Both how people shop and where they live is having an impact on where retailers are located and the size of their footprints.

“Retail is about change, adaptation and evolution,” Ryerson University Centre for the Study of Commercial Activity director Tony Hernandez told attendees of the Canadian Urban Institute’s More Clicks. Less Bricks? event in Toronto November 7. “It’s an industry that actually has evolved and continues to evolve.”

Changing shopping habits are also having an effect on the type of retail required in cities. Retailers are oft en launching online shopping that operates in collaboration with the store.

People still want to be able to visit a physical store, but like the option of being able to shop at home.

Measuring the true effect of e-retail in Canada is difficult, mainly because of the lack of available data. While Statistics Canada tracks how much money is spent at Canadian e-retail sites, Canadians aren’t necessarily doing the majority of their online shopping at Canadian sites.

What is certain is that the segment of the retail industry most affected by e-retail is entertainment. Entertainment retail has become download driven; instead of buying CDs, people download songs at iTunes and instead of buying movies, they stream them through Netflix.

As consumers increasingly demand e-retail options, retailers are looking to implement omni-channel strategies. This is when retailers have multiple touch-points with consumers, such as brick and mortar stores, online shops and a social media presence.

“For retailers [omni-channel] is incredibly complicated,” J.C. Williams Group senior partner Maureen Atkinson told event attendees. “Retailers can’t get away without doing it, customers demand it.”

While there is a lot of buzz about the possibility of mobile retail, and certainly consumers are browsing on their phones, this hasn’t yet translated into people making purchases through their mobiles, said Atkinson. In the future Atkinson sees stores having a smaller physical presence, but becoming more high-tech to allow for an “endless aisle.” Consumers could go to the physical store to look at the physical products, but instead of taking them home they would place an order for future delivery.

One of the challenges of ordering products online is the delivery method. As the development of Canadian e-commerce is behind that of other countries, many retailers are offering free delivery as a way to generate interest. Delivery costs aside, another challenge with ordering products online is the frequent requirement that the consumer be at home to sign for a parcel.

SmartCentres is working on a solution through the creation of its Penguin Pick-Up program, said development and leasing vice-president Tom Smith. The pick-up locations will allow consumers to purchase products online and have them shipped to a depot located within a power centre. This eliminates the need for a consumer to be at home in order to sign for a delivery. The power centre already has the necessary parking for consumers who need to stop by to pick something up.

Having pick-up depots could also reduce costs for retailers as they could ship packages in bulk to the depot instead of delivering to individual houses scattered all over a community.

While demand for existing power centres continues, municipalities with limited greenfield space have no room for new centres. Instead municipalities are looking to intensify transit corridors with mixed-use buildings. The City of Mississauga, for example, is looking to incorporate retail into its intensification of transit corridors rather than building new freestanding retail developments.

“We’re moving away from greenfield growth and developing through intensification,” City of Mississauga planner Sharleen Bayovo told attendees. “We’re directing retail to the major corridors.”

The strategy of putting retail in places already used by people isn’t specific to municipalities.

“Our strategy is focusing on what properties we own in and around transit,” RioCan Management development engineering assistant vice president Andrew Duncan told attendees. “We can maximize properties by looking at adapting uses.”

Of the 15 projects RioCan is currently working on, only two are greenfield power centres. The firm has a new focus on re-development projects and making properties more income inducing, which is often achieved through mixed-use development.

The challenge with the new retail format will be meeting retailers’ needs.

“You have to respond to what retailers tell you they need in urban environments,” said Duncan. This includes dealing with the challenge of loading products into the store.

City of Toronto planning project manager Peter Moore said Toronto is looking to allow retail to evolve with minimal planning interference. He added this is an area where the private sector can really address the needs of the city.