On March 28, Best Buy shuttered all Future Shop locations in Canada. But according to the research team at CBRE, and contrary to comparisons with Target, Best Buy’s motivations are quite different. In an opinion piece released today, CBRE says the following:
While Target’s exit was a result of many factors, including misreading the Canadian consumer, the elimination of Future Shop boils down to an overlapping network of stores. This announcement is part of a long-held desire to consolidate and eliminate bad apples from the portfolio, as 66 locations pegged for closure and 65 for conversion to Best Buy outlets.This consolidation has loomed on the horizon for some time and is not a response to e-commerce or the health of the Canadian consumer.
When Best Buy acquired Future Shop, the intention was to evaluate and modify their retail footprint in Canada. Future Shop and Best Buy decreased their store counts marginally over the years, most recently in early 2013 when eight Future Shop locations and seven Best Buys were shuttered nationwide. With redundancy now addressed, Best Buy will continue to have 192 locations in Canada. Challenges to Best Buy’s bottom line do exist, including the continued growth of e-commerce; however, this lean operation will benefit from the announced $200 million investment in Canadian operations by the already omnichannel-proficient Best Buy over the next two years.
While this announcement is largely removed from retail fundamentals and consumer dynamics in Canada, there is no doubt that the Canadian retail market has experienced a shift in momentum. Retailers are coping with a lower Canadian dollar and landlords are adjusting to an increase in vacant space; however, the majority of retailers are recording solid sales. Vacant space will be seen as a welcome opportunity for some landlords who have had very little room to maneuver in recent years.
Make no mistake Canadians are still spending – 38 new retailers opened locations in Canada last year and there are a good number of retailers who are still looking to expand their real estate footprint in the country and capture additional market share.