Why is Canada’s retail landscape so small?
Posted February 05, 2019 07:08:24Canada’s retail industry is small in comparison to the U.S., Europe and Australia, and it has a lot of growing to do.
The big question: How big is too big?
The answer is, “very small.”
The average Canadian store size is around 600 square feet, according to data from the Association of Canadian Retailers.
That’s about three-quarters of the size of a typical store in the U!
But the average Canadian retailer can’t even open that many doors per year.
“We have a small retail population, and we need to be much, much more engaged with that,” says Doug Smith, the CEO of The Canadian Centre for Policy Alternatives, a national policy think tank.
The Canadian retail sector is the fifth largest in the world, behind only Australia, Germany, Britain and France.
But as the country’s population grows and more people move in, the average size of the average store has increased from roughly 450 to 600 square-feet.
In some Canadian cities, like Toronto, the number of storefronts has risen from 200 in 2000 to about 1,500 in 2020.
But in other places like Ottawa and Vancouver, the ratio has fallen to about 100.
“The retail space that we have is very limited in terms of what we can open and what we’re going to be able to sell,” says Adam Sargent, a manager at the University of Toronto’s Urban Studies Centre.
The average retail store is about 1.5 kilometres (about 2.5 miles) from the street.
“That’s the limit of what our downtown is going to allow,” he says.
The result is that many small stores have been squeezed out of the market.
In 2015, more than 80 per cent of all Canadian-owned and operated retail stores were smaller than 50 square feet.
Many stores now rent space from online-only retailers like Amazon.com or Target.
“We’re in the midst of a very challenging economic environment,” says Rob McElroy, president and CEO of Retail Canada, the national retail lobby group.
The problem is not unique to Canada.
In the U, the percentage of small stores is even higher: In 2015 alone, there were nearly 100,000 smaller-store outlets.
In other countries, there’s been a similar trend.
Australia, for example, has had about 7 per cent fewer small retail stores in the past 10 years, while France has seen a decrease of nearly half.
Small stores have historically struggled to keep up with their online competitors, but the online-based retailers have become increasingly dominant.
In 2018, Amazon and Google overtook Amazon to become the top online retailer, and in the last three years they’ve taken over the majority of the Canadian retail market.
But smaller-format retailers are still struggling to make a dent in this market, says McElray.
“They’re not the fastest growing, but they’re the biggest competitors,” he said.
While the Canadian online-owned market is growing rapidly, the smaller-formulary sector has been hit particularly hard.
In Canada, smaller-type retailers have about 80 per the number stores in smaller-scale stores, compared to the US, which has around 200 smaller-stores, according the UBI Research Institute.
And while the majority is owned by small-format businesses, a significant number of smaller-to-medium-sized retail outlets are owned by online-style retailers.
“It’s been very difficult to sustain that growth,” says McEllroy.
The lack of investment in small stores means that they’re not always able to get the same quality of service they get from a larger chain, says Jeff Blais, the president of the Small Business Advocacy Centre of Canada.
The association has called for increased investment in local businesses.
“Small business owners have been struggling to survive, especially when you consider how much their revenues are affected by the growth of online shopping,” he told CBC News in March.
Blais is concerned that the trend of “shrinking and shrinking and shrinking” small businesses will lead to less investment in the industry, and more closures.
“Our community is getting squeezed,” he argues.
“And they’re being squeezed hard by a government that doesn’t seem to care about their needs.”
The Canadian Retail Consortium (CRC) has been working for years to change this trend, which it describes as a “disappointing reality.”
But while it’s encouraging to see small retailers getting some investment, it’s also important to remember that this investment doesn’t always go to the most innovative businesses, says Cheryl Hallett, executive director of the CRC.
“Some of the most important things for a small business to get into the mainstream are quality of life, good service, the ability to compete and that the business has the right brand recognition and can be trusted,” she says.
The CRC is working on a number of initiatives aimed at promoting small businesses in the community, including a national marketing campaign to encourage