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'A giant, catastrophic hit': COVID-19 could alter Canadian retail landscape forever, analysts say

Calgary Herald logo Calgary Herald 2020-03-18 Amanda Stephenson, Calgary Herald
a parking lot: The parking lot at Chinook Centre was mostly empty as Calgarians heeded advice to socially distance themselves to help prevent the spread of COVID-19 on Tuesday, March 17, 2020. Gavin Young/Postmedia The parking lot at Chinook Centre was mostly empty as Calgarians heeded advice to socially distance themselves to help prevent the spread of COVID-19 on Tuesday, March 17, 2020. Gavin Young/Postmedia

For Calgary’s malls and shopping centres, COVID-19 is an existential threat that has the potential to change the retail landscape forever, analysts say.

While malls in the Calgary area remain open for now, most — including CF Market Mall, CF Chinook Centre, Southcentre Mall and CrossIron Mills — are operating with shortened daily shopping hours. Cadillac Fairview, which owns Market Mall and Chinook Centre, announced Tuesday it is shifting its food court operations to takeout only and eliminating seating until further notice to reduce the spread of the virus.

“The situation remains fluid and we are committed to ensuring the essential needs of the community are met, while supporting public health and their efforts,” Cadillac Fairview spokeswoman Janine Ramparas said in an email.

In a statement on its website, Ivanhoe Cambridge — which owns CrossIron Mills — said while reduced operating hours are in effect, store hours may vary and access hours to the property remain unchanged.

“We understand there are some services, including essential services, and tenants that may or must operate as per their usual hours of business,” the statement reads.

Many individual stores within Calgary’s malls — including Nike, Apple, Aritzia, Laura, Lululemon, Sephora and Hudson’s Bay — have closed their doors completely for at least the next two weeks.

a group of people in a room:  A lone shopper looks into the closed Chinook Centre Apple Store as businesses and Calgarians heeded advice to socially distance themselves to help prevent the spread of COVID-19 on Tuesday, March 17, 2020. Gavin Young/Postmedia A lone shopper looks into the closed Chinook Centre Apple Store as businesses and Calgarians heeded advice to socially distance themselves to help prevent the spread of COVID-19 on Tuesday, March 17, 2020. Gavin Young/Postmedia

Craig Patterson, founder and editor-in-chief of retail news magazine Retail Insider, said in an interview that more will likely follow, and he wouldn’t be surprised to see entire malls across Canada shut their doors soon.

“People are already starting to ask why malls are open at all,” Patterson said. “I think that there’s going to be a social pressure amongst retail chains, and eventually probably landlords, to shut their stores down.”

The pandemic “couldn’t have come at a worse time” in Canadian retail history, Patterson said, adding Canadian retail chains are already under intense pressure due to the rise of online shopping and changing consumer trends. He estimates that even without COVID-19, Canadian malls were set to permanently close up to 1,000 individual store locations countrywide by the end of March. Bankruptcies and closures of chains with Calgary locations announced since the end of December include well-known brands such as Carlton Cards, Bench, Papyrus and Things Engraved.

The pandemic will ultimately result in the death of even more chains this year, said retail analyst Bruce Winder.

“This is just like one big, catastrophic hit,” Winder said. “Retail’s changing, and every year we’re seeing some of the weak retailers get purged. Well, there are some retailers that are right at the margins, right now, they’re barely making it, and this (COVID-19) is going to put them under.”

a group of people standing in a library:  Chinook Centre Mall was mostly quiet as Calgarians heeded advice to socially distance themselves to help prevent the spread of COVID-19 on Tuesday, March 17, 2020. Gavin Young/Postmedia Chinook Centre Mall was mostly quiet as Calgarians heeded advice to socially distance themselves to help prevent the spread of COVID-19 on Tuesday, March 17, 2020. Gavin Young/Postmedia

The pandemic may also alter the retail landscape long term by contributing to an even faster acceleration of the online shopping trend. Many retailers with bricks and mortar locations began offering free shipping this week to boost their online sales during the COVID-19 pandemic.

“It’s probably going to help online penetration long term, because people are being forced to try it for at least some things, like grocery and food delivery,” Winder said.

“People who are bored and at home may go onto their phones and computers and shop as a form of entertainment,” said Patterson. “But those retailers who don’t have a robust e-commerce platform, they stand to lose quite substantially.”

In a news release Tuesday, credit ratings agency Moody’s Corp. identified drug stores, convenience stores and gas stations, and discounters as examples of retailers that will remain resilient in the face of COVID-19. However, Moody’s said those whose products are less essential — including department stores, home goods stores and electronics retailers — are heavily exposed to financial risk in the face of the outbreak.

A new report from the Conference Board of Canada on Tuesday said COVID-19 has pushed the country to the “brink of recession.”

“Fortunately, the economic impact of COVID-19 on consumption will be temporary,” the Conference Board said. “Overall, we expect growth in real consumer spending to ease to 1.0 per cent in 2020 but then rebound to 2.3 per cent in 2021.”

astephenson@postmedia.com

Twitter: @AmandaMsteph

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