1. You will receive a recorded copy of this webinar within 24 hours.
2. Market Trends & Analysis for 2015
ISCS Professional Development Webinar
August 27, 2015
Andrew Garrett
Director, Development
3. Agenda
Canadian Outlook for 2015
Economic Outlook
Retail Outlook
Retail Trends
Category Growth
Luxury Expansion
Growth Markets
Growth by Region
Growth by Class
Q&A
5. Economic Outlook | 2014 in Review
Continued growth in housing market
Slower employment recovery than
anticipated
Low interest rates maintained
manageable debt levels
Record low interest to household-disposable-
income ratio of 6.8%
Real GDP growth, trade surplus, and
increased consumer prices due to
accelerated inflation
6. Economic Outlook | 2015 Forecast
Sinking commodity and oil prices
Record high household debt-income
ratio of 162.6%
Bank of Canada overnight interest rate
cut to 0.5%
Exports and investment outlays to increase as a
result
Cheaper Canadian dollar may curb
cross-border shopping
7. Economic Outlook | Real GDP Growth
Reduced pace of economic recovery in Canada
compared to other G8 nations
2.0%
0.3% 0.2%
-1.7%
1.6% 1.7%
2.2%
0.1%
3.4%
2.5%
0.4%
1.6%
-0.4%
-0.1%
2.6%
2.4%
1.4%
3.4%
2.2%
1.2%
1.6%
0.5%
1.0%
2.7%
3.1%
1.8%
3.5%
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
Canada France Germany Italy Japan United
Kingdom
United States EU Global
2013
2014
2015
8. Economic Outlook | Canadian Interest Rates
Overnight lending rate cut twice by Bank of Canada
down to 0.5% in 2015
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Bank of Canada Overnight Rate
9. Economic Outlook | Canadian Spending
Overall slower growth in consumer spending in 2015
Clothing and
Footwear
Leisure and
Recreation
Hotels and
Catering
Total Other
Consumer
Expenditure
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
ForecastYoY % Change in Canadian Expenditure Adjusted for Inflation
10. Shopping Centre Outlook | Supply
Total shopping centre GLA plateauing at 542M SF
525.6
532.6
541.8 541.9
515
520
525
530
535
540
545
2010 2011 2012 2013
TotalShoppingCentreGLAinCanada(millionsofSF)
Five Largest Canadian
Shopping Centre Owners
47,878,000 SF
28,100,000 SF
27,816,000 SF
24,564,000 SF
24,555,000 SF
11. Shopping Centre Outlook | Demand
Total Retail sales outpacing shopping centre sales
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$0
$100
$200
$300
$400
$500
$600
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
TotalAnnualCanadianSales($billions)
Shopping Centre Sales as a
Percentage of Total Retail Sales
Annual Canadian Total Retail Sales
($ billions)
Annual Canadian Shopping Centre Sales
($ billions)
13. Polarized Consumer and Retail Environment
Mid-range retailers losing market share to luxury and discount brands
Influx of Foreign Retailers
Incoming retailers looking to target the growing luxury market
Retail Trends | Growth Categories
14. Retail Trends | Luxury
Canadian luxury segment CAGR of 30% expected
between 2015-2018
Market can absorb an additional 2M SF of luxury retail
Saks, Nordstrom, Holt Renfrew, Harry Rosen and
others have announced 1.5M SF of new luxury space
Luxury brands moving from high streets to malls
Luxury Sales 2014 $6.0B $72.4B
Percent ofTotal Retail Sales 2014 1.2% 1.5%
16. Growth Markets | Growth by Region
Solid west coast retail growth and performance
BC
$861PSF
+15.3%
Prairies
$631PSF
+0.7%
ON
$725PSF
+8.5%
QC
$514PSF
+7.4%
Atlantic
$559PSF
+9.3%
Vancouver Edmonton Calgary Toronto Ottawa Montreal
+16.7% +5.7% +3.7% +8.8% +0.4% +8.1%
AB
$770PSF
+2.8%
Canada
$692PSF
+16.7%
18. Economic Outlook | Canadian Debt and Income
Household debt continuing to outpace total income
Total Debt
Total Income
Total
Disposable
Income
$0.00 T
$0.50 T
$1.00 T
$1.50 T
$2.00 T
$2.50 T
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Forecast
ANDREW’S NOTES
19. Retail Trends | Category Growth
Strong projected growth for Health & Beauty retailers
1.1%
0.6%
3.6%
1.2%
1.6% 1.6%
0.6%
-3.5%
2.2%
0.4%
0.6%
-1.1%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
Apparel and
Footwear
Electronics and
Appliances
Health and
Beauty
Home and
Garden
Leisure and
Personal Goods
Other Non-
Grocery
2009-14 CAGR
2014-19 Forecasted CAGR
ANDREW’S NOTES
20. Retail Trends | e-Commerce
80% of Canadians live in the country’s 15 largest cities,
making urban centres the hubs of retail activity
Canadian e-Commerce segment CAGR of 11.3%
between 2015-2020
Amazon.com Inc. commands a 10.5% market share of
all Canadian e-Commerce
Forecasted e-Commerce Sales 2015 $27.0B $347.3B
Percent ofTotal Retail Sales 2015 5.7% 7.0%
ANDREW’S NOTES
21. Retail Trends | Multi/Omnichannel
61% of Canadian online shoppers purchase
from foreign omnichannel retailers
Omnichannel retail defined as ways to “drive the
customer from click to brick and back again”
Engage with Email, CRM, & Loyalty
93% of Canadian internet users have opted into email
marketing. 44% have made a resultant purchase
Digital Marketing
Only 32% of consumers engage with brands via social media
Integrated Mobile Experience
IKEA allows consumers to project 3D images of IKEA
furniture into their homes using the company’s mobile app
ANDREW’S NOTES