Further disruption in online shopping expected: Canada can plan ahead by looking at U.S. experience

Report Highlights:

Disruption to Commercial Real Estate: Growth in online shopping reduces demand for retail space but creates strong demand for logistics space. Bricks and mortar stores can be successful with reinvention. Landlords should diversify their tenants by adding gyms, bars and restaurants, spas and sports facilities to the mix. A minority of traditional retail stores will also continue to serve a purpose.

"Selling primarily offline may still make sense for a few niche retailers that retain an edge by placing significant emphasis on the exclusivity of products, the shopping experience or the necessity of clients to 'try before they buy'," said Derek Burleton, Deputy Chief Economist, TD Bank Group.  "The vast majority of retailers should embrace the wave and invest in a competitive online presence."

NAFTA changes could shake up online sales in Canada: Less competition among retailers in Canada has meant less pressure to establish an online presence. An increase in the amount Canadians can buy cross-border without paying duty would provide greater access to online shopping in the U.S. while pushing local retailers to step up their online game.

Innovation in shopping will improve the customer experience: Drone delivery and virtual reality (VR) shopping are likely to shape the retail sector in the coming years.  Retail giants Walmart, Ikea and Swarovski are already experiment with innovative customer experiences.

For more information and analysis, click here for the full TD Economics report.