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Bricks-and-mortar retail merges into omnichannel space

In-person shopping now an essential sector of total retail marketing environment
McArthurGlen Design Outlet in Richmond: upscale discount mall expanding after income increased 30 per cent year-over-year. | Chung Chow

Consumers are back in force at malls, but many are spending less as cost-of-living pressures bite, real estate agents and mall managers say.

“People are going back to the malls feeling more comfortable and safe shopping in person compared to last year,” said Madeleine Byblow, a senior associate specializing in retail with JLL Canada in Vancouver.

JLL expected 90 per cent of Canadians to visit shopping malls in December, up from 85 per cent a year ago. Approximately 43 per cent will shop for 30 to 90 minutes, an improvement over 37 per cent a year ago, JLL forecast in mid-December.

While holiday spending last year was driven by pent-up demand for in-person experiences, a spirit of restraint is now in play even as demand remains high. Byblow said the cost of living has always been higher in Vancouver than elsewhere in Canada, and the current environment will drive a greater percentage of consumers to brand-name discounters like Homesense, Marshalls and Nordstrom Rack in the year ahead.

Managers of designer-fashion discount mall McArthurGlen Design Outlet in Richmond expressed surprise at its performance last year.

Robert Thurlow, general manager of the shopping centre, described 2022 as a “spectacular” year.

“It was so much better than anticipated. I was very surprised by the rebound that we saw in 2022. It was remarkable. We finished the year 30 per cent ahead of our budget. And if anybody had told me that back in the first quarter, I would have told them they were crazy,” said Thurlow.

McarthurGlen will open three new stores in 2023 and two others will expand, including Versace.

“By the time we get to mid-year with the openings of the new stores and the stores that are under construction for the expansions, we’ll be fully leased,” Thurlow said. “A lot of our success is certainly down to the really strong leasing activity that we’ve had throughout the pandemic and leading us all the way into 2023.”

The overall impact of bargain-hunting consumers is expected to have a minimal impact on retail landlords, JLL noted. While consumer spending might be down, tenants aren’t necessarily leaving malls because storefront exposure is an integral part of the new omnichannel marketing environment.

The in-person shopping co-exists alongside online shopping, with close to 60 per cent of shoppers buying online and having products home-delivered. But even with lower traffic, Metro Vancouver malls will likely be more resilient than those in other markets given geographic constraints that ensure retail space doesn’t track with population growth.

“Vancouver malls always fare better because we’re geographically constrained in terms of how much retail space we can even have here,” Byblow said.