U.S. premium outlet malls to try Canada on for size

Wed Jul 25, 2012 3:15pm EDT
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By Claire Sibonney and Andrea Hopkins

TORONTO (Reuters) - With hungry Canadian shoppers flocking to U.S. outlet malls every weekend in search of deals, it is perhaps no surprise that U.S. developers have plans to bring a dozen or more premium outlets to Canada in the next few years.

The strategy is simple: coveted brands at below-retail prices - and no long lines to cross the border.

"What Canadians are looking for is the kind of outlet experience they get in the United States," said Edward Sonshine, chief executive of RioCan REIT (REI_u.TO: Quote), which has partnered with Tanger Factory Outlet Centers Inc (SKT.N: Quote) to bring one of the first premium outlet malls north of the border by 2013.

Between RioCan and its competitors, Sonshine expects 10 to 15 such malls over the next few years.

But with Canada's once exceptional economy showing signs of U.S.-like fatigue and a strong Canadian dollar still fueling cross-border shopping, some experts think the splashy premium mall premise may not live up to the hype.

"The steam is coming out of our economy a little bit, and I have maintained for a while that I think a lot of U.S. manufacturers and retailers and developers frankly may be miscalculating to some extent the voracity of our economy," said Doug Stephens, president of consultancy firm Retail Prophet.


The RioCan/Tanger plan to open one mall near Toronto next year, and then more near places like Ottawa, Montreal, Edmonton, Calgary and Vancouver, is just half of a retailing juggernaut headed for the relatively untapped Canadian market.   Continued...