Retailers are bracing for a year of fast paced change

The Canadian retail industry is rapidly transforming, and 2018 will be a pivotal year for our sector.

To start, Sears closed all of its stores in recent months, releasing 15 million sq ft of retail space nationally. Yet overall year-to-date retail sales to the end of October 2017 were up 7% year over year, according to Statistics Canada. At this pace, 2017 may be poised to be one of the strongest years for Canadian retail in recent memory. While grocery struggled, categories like automotive, building material and garden equipment, electronics and appliances performed well to the end of October, with early reports indicating that many retailers had a good Christmas season.

And while we’ve all read more than our fair share of articles discussing the “Retail Apocalypse”, there has been little media coverage of the record breaking 50 international retailers that entered Canada by opening stores or shop-in-shops in 2017. The majority of these brands are now in the process of seeking real estate in order to expand into new markets.

There will be additional competitive pressures in 2018. The already competitive off-price sector is about to see unprecedented competition as Nordstrom Rack enters the market in the 2nd quarter of this year. Legalization of marijuana and the rapid opening of public and privately run stores will drive sales in a brand new category. And Amazon continues to make moves that could see it further gain market share.

We know that along with new competition, structural change brings additional challenges to established retailers who don’t stay ahead of the brand cycle and continue to reinvent themselves. In addition to the new competition described above, to say that consumer shopping habits are redefining our bricks and mortar environment is an understatement, and the future of NAFTA and duty free rules are pressing concerns. Given these key structural challenges, there will no doubt be more store closures in 2018.

But innovative retailers and their partners are moving to respond. For instance, with a larger share of the customer’s wallet dedicated to online shopping, entertainment, food and travel, shopping malls will be setting up their game to attract and retain customers and drive foot traffic to stores.

There are challenges – but there are also opportunities. Retail is neither easy nor boring!

 

What’s in store for the Retail job seeker?

Canada's job market surprised the experts in December by adding a solid 79,000 jobs, and the unemployment rate is now at a record low of 5.7%, led by the retail and wholesale industries.

Along with the positive national picture for job seekers, there are still challenges. As Sears shutters their stores, we anticipate there will be an impact in the unemployment numbers over the upcoming months though we sincerely hope that all of those affected by downsizing, restructuring or closing land quickly. According to the Retail Council of Canada’s Holiday Conditions Report, the substantial increases in minimum wage in several key provinces is keeping executives up at night. Will they pass on the costs of these increases to the price sensitive consumer, or reduce costs by reducing head count and planning to increase productivity? We will soon find out.

While investments in automation like self-checkout will impact the hourly workforce, we also know that there is still strong demand for skilled store, district and regional operators. With the significant increase in ecommerce, many jobs in transportation, warehousing and fulfillment are retail jobs taking the place of brick and mortar operations. Just last October, Amazon announced plans to open a new fulfillment centre in Calgary and hire 750 people, building on the 5 fulfillment centres the ecommerce giant already has in Canada. As retailers continue to build out their total omni-channel retail strategy to compete, we continue to see increase in demand for roles in digital marketing, analytics, consumer insights, inventory management and logistics.

These are just a few of the key trends we see coming to the fore in 2018. Overall, we know this will be a complicated year for retailers in terms of staffing and labour management, and we anticipate a conservative hiring trend for non-essential support roles the 1st quarter of the year.