| Behind The Store Front
Prepared for the Retail Council of Canada in partnership with Industry Canada By Jacobson Consulting Inc.
The Retail Sector |
The next figure (Figure 13) shows capital investment (including repair) by the retail sector and in structures related to retail. Retail expansion, seeing new stores, plazas and power centres, has been readily apparent in many parts of the country. Retail-related construction activity, defined by construction of stores, plazas and power centres, increased in 2000 and continued afterwards. Through the last actual data, 2003, compared to 1998, the average growth in construction expenditure on stores, malls, etc (8.4% per year) exceeded the all-sector (7.5% per year). The data shown for 2004 are preliminary actual estimates while those for 2005 represents estimates collected by Statistics Canada from the firms involved.
When evaluating investment in the retail sector, it is important not to forget investment for rather than by the retail sector. Investment in stores, malls, etc. by other sectors, notably finance is also significant. By 2003, the retail-owned share of total store construction had reached 59% compared to 50% in 1998. In other words, retailers were responsible for an increasing share of store construction. Retailers actually spend more money directly on machinery and equipment than in actual stores.7
In sectoral terms, shown below in Figure 14, food distribution and automotive (vehicle sales and gasoline) accounted for about half of capital expenditures in 2003. The General Merchandise stores sector, including department stores, warehouse clubs and other general stores, was the third most significant sector.
Details underlying this figure are shown in Table 19 in the statistical appendix. In 2003, capital investment, structures and machinery, by the retail sector amounted to almost $6.7 billion. Of this total, food and beverages accounted for almost $2 billion. Investment by the next most significant sector, general merchandise, amounted to just under $1 billion.
The next chart (Figure 15) highlights the relative shares of capital (new) investment and repair by major sector in retail trade in 2003. The addition of repair investment adds roughly another $1 billion in 2003 to expenditure on structures and equipment by the retail sector. One important point to note is that machinery and equipment investment is more significant than investment in retail-owned structures (construction) for most sectors. Food and beverage and furniture stores are the only sectors for which M&E does not exceed structures activity.
7We do not have data on retail-specific equipment purchased by store owners other than retailers.