Opinion: ’Tis the season for mall expansions

The numbers are staggering in the battle of the giants between the Rideau Centre and Bayshore Shopping Centre as they move into the late stages of massive renovations and expansions.

When work is complete, Ottawa’s two leading shopping emporiums will have spent a total of at least $560 million on adding retail and parking space and, they hope, enhancing the shopping experience of their customers.

The total cost of the Rideau Centre redevelopment is about $360 million. For Bayshore, the sum is between $200 million and $225 million.

Combined sales of stores and businesses in the two malls already exceed $1 billion annually, according to retail analysts. When the expansions are both complete in 2016 this figure will probably exceed $1.5 billion a year, experts say.

Analysts track the retail industry by annual sales per square foot of leased retail space. Prior to expansion, the Rideau Centre and Bayshore each had about three-quarters of a million square feet of retail space. That number will increase to about one million square feet at each mall.

The Rideau Centre has the third- or fourth-highest retail sales per square foot in Canada, according to Barry Nabatian, an Ottawa retail analyst and director of market research for Shore Tanner & Associates.

The mall’s annual sales per square foot are more than $1,000, based on what the manager has publicly announced, he says. His estimate for Bayshore is about $800 and roughly $700 for St. Laurent Shopping Centre.

Rideau Centre and Bayshore have dramatically improved the appearance of their common areas – the hallways and walkways that connect the individual stores. Both have installed new flooring, lighting and furnishings and refurbished washrooms.

Both malls have also recently unveiled expanded food courts that are a huge improvement over the old ones. Besides offering a place to eat in pleasant surroundings, they offer much greater choice than before.

For the fashion-conscious, the Rideau Centre landed a huge catch by convincing trendy U.S.-based retailer Nordstrom to locate its one and only Ottawa store there. The Nordstrom store will open in March 2015 in part of the space formerly occupied by Sears, which was never a good fit in such an upscale downtown mall.

Rideau Centre general manager Cindy VanBuskirk is keeping close watch on the transformation of the former Sears space.

“The Nordstrom store is going to be spectacular,” she says. It will include such amenities as a coffee bar and a licensed restaurant with an outdoor rooftop patio when weather permits.

In a far less exciting development, Bayshore will have a Target store in place of the Zellers store that formerly anchored one end of the mall. Target will open in the spring of 2015, probably in March. The Minneapolis-based chain’s entry into the Ottawa marketplace as a middle-of-the-road competitor of Walmart has so far been less than spectacular.

Where Bayshore does have a clear advantage over its downtown counterpart is in parking. At Bayshore parking is free, whereas at the Rideau Centre it’s $3 an hour.

By the time the Rideau Centre’s expansion is complete in August 2016, the number of parking spaces will increase from the current 1,300 to about 1,650.

“The lion’s share of our customers come by bus or walk,” Ms. VanBuskirk says. “Fewer than 20 per cent come by car.”

Many of Bayshore’s customers, meanwhile, drive to the west-end mall. Bayshore is expanding the capacity of its indoor parking garages from about 3,400 to 4,000.

Bayshore general manager Denis Pelletier says that during this year’s busy Christmas period, there are slightly more than 4,000 parking spaces, including some at vacant outdoor space nearby. During the holiday season, Bayshore is also offering free valet parking, although users are encouraged to make a donation to the Ottawa Senators Foundation.

Bayshore has already added several hundred parking spaces during the expansion, but Mr. Pelletier says finding a parking spot is complicated by detours due to ongoing construction. The “functionality” of the parking areas will improve once construction is complete, he says.

While the Rideau Centre and Bayshore are arguably the top two fashion destinations in the Ottawa retail market, they now have a new competitor in Tanger Outlets, a collection of 80 name-brand designer stores that opened this fall across from the Canadian Tire Centre.

I like visiting outlet centres, but am suspicious as to whether they really offer bargains. Sometimes they do, says Mr. Nabatian.

“Outlet malls offer products from a large number of manufacturers in one place, some of which are at lower prices, some are lower-quality (minor defects), some are truly bargains, and many are not bargains but perceived to be due to advertisements,” he says.

Tanger Outlets would seem to pose more of a challenge to the nearby Bayshore Shopping Centre than to the Rideau Centre downtown. Bayshore’s Mr. Pelletier accepts the challenge, saying: “We’ve got to be at the top of our game.” He also puts a positive spin on the arrival of Tanger Outlets, saying it makes Ottawa’s western outskirts more of a shopping destination.

So, who will win this battle between the Rideau Centre and Bayshore to hold – if not increase – market share?

For now, it’s too close to call, I’d say.

Michael Prentice is the OBJ’s columnist on retail and consumer issues. He can be contacted at news@obj.ca