March 19, 2018

A Tale of Two Different Bottom Lines~McArthur Glen Mall at YVR & Tsawwassen Mills

It is an interesting time for regional malls in Metro Vancouver, and two new entrants in the market, McArthurGlen in Richmond by the Vancouver International Airport and the hugely overbuilt 1.2 million square foot Tsawwassen Mills Mall tell different tales.  Glen Korstrom reports in Business in Vancouver on the proposed 84,0000 square foot expansion to the existing 240,000 square feet at McArthurGlen, which its general manager claims is “the No. 1-performing outlet centre in Canada…citing $1,220 in sales per square foot per year from his mall’s more than 70 tenants.”
That amount of $1,220 sales per square foot means that the airport’s mall which focuses on sales as an outlet is number three in British Columbia after Oakridge (which makes $1,579 per square foot) and Pacific Centre (which is making $1,532 per square foot according to the Retail Council of Canada. Why is McArthur Glen doing so well? It sells discounted merchandise, its customers are locals as well as tourists from the airport, and it is well serviced by the Canada Line to the airport.
It’s been a different story at Tsawwassen Mills, which opened in October 2016. Based upon the two other mega malls (CrossIron Mills in Calgary and Vaughn Mills in Toronto) in the Ivanhoe Cambridge stable , this mall was built with  over 6,000 parking spaces  on the most arable land in Canada. Without a close ring of density and with poor public transportation connections from the region, this mall has faltered, with Retail Insider Media owner Craig Patterson saying that he has heard the mall has consistently been struggling. On Ivanhoe Cambridge’s website they confirm that retail sales are only $345 not per square foot, but per square foot of a retail unit, almost a quarter of the sales reported by McArthurGlen.
The CBC has been investigating the fact that “technological advances” have lowered consumer demand for many products, and while online shopping is still only 3.4 per cent of retail sales, online trading platforms have lessened the need to buy new things. Canada may have maxed out on the square footage of retail that can be supported, and Millennials~those born in the 1980’s and 1990’s  don’t gravitate to car ownership as much as their parents did, making them less likely to drive to a mall and more likely to shop online or stick to local stores.”
An older mall in Toronto, Yorkdale has continued to draw in customers by offering high-end shops and appealing food spectacles and stores. While retailers try to create “experiences” for their shoppers, the appeal of outside settings and main streets with a blend of shops and services seem to be setting the trend. The most successful retailers are not bundled in a mall but are independent standalones, such as Winners, Costco and Walmart.  Meanwhile many malls look at redevelopment and increasing density in the form of mixed use development  to generate much-needed income to sustain their retail operations.  A survey conducted in the winter of 2017 suggests that 7 out of 10 executives believe that aggressive adaptation to e-commerce is necessary for retail survival. But the bottom line differences at  McArthurGlen Mall and Tsawwassen Mills Mall also suggests that discounted goods offered close to consumers with access to public transit choices are important as retailing moves into a 21st century adaptation.


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