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Ottawa retail resurgence in store for 2017

After a flurry of activity in 2016 that saw the Rideau Centre unveil a $360-million expansion and Costco open a new outlet in Barrhaven, the Ottawa retail sector is set to experience steady if unspectacular growth over the next 12 months, a prominent analyst predicts.

Nordstrom opened in Ottawa at the Rideau Centre on March 6.

Mid-range retailers such as clothing chain Gap and Sears department store have been steadily losing market share to discount and luxury stores for the better part of a decade, noted Barry Nabatian, director of market research at Shore-Tanner & Associates.

However, he thinks the sector could see a bit of a turnaround in 2017 driven by public servants who feel their employment is more secure and consequently are more willing to open their wallets.

“They know that their jobs are not going to be cut and they’ve begun to spend money,” Mr. Nabatian told OBJ, adding the sports and recreation sector in particular stands to benefit from an increase in discretionary spending.

Steady growth in the tech sector – fuelled by the continued rise of Shopify and other good-news stories such as BlackBerry’s recent announcement that it expects its QNX subsidiary in Kanata to hire more than 500 workers over the next few years – is also giving the local retail economy a boost, he adds.

“There is a certain level of confidence that is building up,” Mr. Nabatian explained. “That’s very important. Basically, the news is positive, and positive news attracts (retail spending) growth.”

Discount stores such as Costco, Value Village and Winners will continue to flourish in 2017, he predicted. On the other hand, he said, much-ballyhooed new entries on the higher end of the retail spectrum, including Nordstrom and Michael Kors, still need more time to establish themselves in the Ottawa market before making the kind of impact they’d hoped for.

“They are not doing as well as had been expected,” Mr. Nabatian said. “I think the expectations were a bit too ambitious. They are not promoting themselves much. I think they are sort of taking for granted that people will come.”

Venerable Canadian retailer Simons is one newcomer to the Ottawa scene that has lived up to its advance billing, he said. The Quebec-based chain opened its first store in the nation’s capital – a 100,000-square-foot space in the Rideau Centre’s new wing – in August.

“Based on what I hear, Simons is doing better than Nordstrom,” Mr. Nabatian said, explaining the Canadian retailer offers a larger selection of goods at generally lower prices.

In an e-mail to OBJ, CEO Peter Simons said the chain is happy with the performance of the Rideau Centre location so far.

“There are still many people discovering who we are, but sales are exceeding our expectations,” he said, adding the company is doing particularly robust business on its website in Ottawa. “We can see that there is incredible synergy between the store and e-commerce in this market.”

Though fewer headline-grabbing retail debuts are in the works this year than in 2016, Canadian sporting goods giant Sport Chek is opening a new flagship store in the downtown mall later this month, and Rideau Centre general manager Cindy VanBuskirk said several more “first-to-market” retailers will appear in the shopping centre throughout 2017.

The influx of millions of tourists expected for the city’s Canada 150 celebrations will also create “tremendous opportunities” for local retailers this year, Ms. VanBuskirk said.

However, the outlook isn’t as rosy for Ottawa’s restaurant scene, Mr. Nabatian said. Rising hydro rates and escalating food costs are making what is already a challenging industry at the best of times even more cutthroat for eatery owners, and he expects another spate of restaurant closures in 2017.

“How can these people make money?” he said.

source: David Sali, Ottawa Business Journal, 10 January 2017