IKEA Canada announced this morning it’s closing its Scarborough Town Centre location in early 2026, just over two years after the store opened as the company’s second small-format “city store” experiment in Canada. The closure affects 130 employees, and the store will remain open until a final date is determined.
If this sounds familiar, it should. Decathlon closed its five GTA stores this past summer—including the STC location—after a similarly short run. Both retailers moved into the old Sears space, both promised a new kind of shopping experience, and both are now heading for the exits.
But here’s where it gets interesting: with both retailers leaving, Oxford Properties now has nearly 100,000 square feet of contiguous space available in one of Toronto’s busiest malls. Decathlon occupied about 46,000 square feet, and IKEA’s footprint adds significant additional space on the lower level. This kind of availability in a regional powerhouse mall doesn’t come around often.
Scarborough Town Centre is Canada’s fourth-largest mall with 200+ stores and 1.6 million square feet, and it serves as the primary shopping destination for Scarborough and the eastern GTA. The former Sears box has been a challenge to fill since the department store chain collapsed, but the right tenant or mix of tenants could turn this into a major win for the mall and the community.
The question is: what goes there?
Let’s be honest about what happened with IKEA and Decathlon. Last year IKEA Canada had 33.8 million store visits but 162.6 million visits to IKEA.ca—that’s almost 5:1 online versus in-person. When people are shopping online anyway, a small store with limited inventory just pushes them to complete the purchase on their phone, possibly from a competitor.
“Shifting consumer behaviour towards online shopping combined with a limited range of products that could be offered within the smaller footprint have resulted in lower-than-expected performance,” CEO Selwyn Crittendon said in today’s announcement. Translation: people came in, didn’t see what they wanted, and ordered it online.
Both IKEA and Decathlon are now talking about “evolving their strategies” and “staying agile.” Decathlon’s downtown Union Station concept store, which opened in September 2022, also shut down in April 2025. Even IKEA’s Yonge Street location—the first city store that opened before STC—is the same format, and while it’s survived longer, it faces the same fundamental challenge of limited inventory in a world where customers can see everything online. That store underwent a “IKEA Toronto 2.0” campaign in 2024, which saw renovations and reorganizing the layout.
The timing of these closures matters. E-commerce went from 6.9% of Canadian retail in 2019 to an expected 13.4% in 2025—nearly doubling in six years. And furniture and sporting goods are categories where people are increasingly comfortable buying sight-unseen, especially with often easy-to-use return policies.
We’re also still dealing with the aftershocks of Hudson’s Bay closing every store in the country this past June. That wiped out Canada’s most iconic retail brand and left massive holes in downtown Toronto, along with Vancouver, Montreal, Calgary and Ottawa. The common thread across all these closures? Retailers that don’t give people a compelling reason to come in person are getting crushed by online competition and rising costs.
But here’s the thing: 67% of Canadians still prefer shopping in-store. The demand for physical retail hasn’t disappeared—it’s just that the old models don’t work anymore. The retailers winning right now are the ones offering experiences you can’t get online, or using their stores as fulfillment hubs that make omnichannel shopping seamless.
What Could Actually Work Here?
The former Sears box at STC has been a puzzle since the department store closed years ago. Oxford Properties tried to solve it by bringing in international retailers with proven concepts from other markets, but that approach clearly didn’t work. So what’s the play now?
The mall still has strong fundamentals. STC features flagship stores from Sephora, H&M, Aritzia, Zara, lululemon, plus newer food concepts like Chick-fil-A and Jollibee. It draws from a massive catchment area in the eastern GTA and serves a diverse, growing community. The space is there—someone just needs to figure out the right use for it.
A few possibilities come to mind. First, Oxford could break up the space into multiple mid-sized retailers instead of trying to find one anchor. The days of 100,000 square foot anchors might be over, but there are plenty of brands looking for 15,000-30,000 square feet in strong malls. You could fit three to five solid retailers in that footprint, create some variety, and reduce the risk of losing one massive tenant.
Second, they could go experiential. Think entertainment concepts, fitness, education, or food and beverage. These are categories where people still need to show up in person, and they drive consistent traffic that benefits other mall tenants. The space is already split across two levels, which could work well for concepts that need different zones or experiences. A climbing gym, an entertainment complex, a culinary market—these are things that actually get people off their couches.
Third, and this might be the smartest play: find a tenant that uses the space as an omnichannel hub. Not a scaled-down store trying to be everything, but a showroom and fulfillment center that lets customers see, touch, and test products while offering same-day pickup and easy returns. Retailers like Canadian Tire and Lululemon have embraced omnichannel strategies with AR-powered virtual try-ons and AI-driven customer service, and the right tenant could use this space to create something that actually complements online shopping instead of competing with it.
The reality is that finding retailers willing to commit to big spaces in suburban malls isn’t as easy as it used to be. But STC isn’t just any mall—it’s a regional powerhouse in one of the fastest-growing parts of the GTA. The opportunity is there for Oxford Properties and for whichever retailer is smart enough to see the potential instead of just seeing vacant space.
The IKEA and Decathlon failures teach us something important: don’t half-ass your physical presence. If you’re going to open a store, make it worth the trip. A smaller version of your regular store with less inventory isn’t compelling—it’s just inconvenient. And bringing a format that worked in Europe doesn’t mean it’ll work here. Eastern GTA customers have different needs, different shopping patterns, different competition to deal with.
The retailers that are going to survive in Toronto in 2025 are the ones that understand why someone would drive to their store instead of clicking “buy now” on their phone. Right now, with nearly 100,000 square feet about to hit the market at one of Toronto’s biggest malls, someone has a chance to show us what that looks like.
Dustin Fuhs is the founder and Editor-in-Chief of 6ix Retail, Toronto’s premier source for retail and hospitality industry news. As the former Editor-in-Chief of Retail Insider, Canada’s most-read retail trade publication, Dustin brings over two decades of expertise spanning retail, marketing, entertainment and hospitality sectors. His experience includes roles with industry giants such as The Walt Disney Company, The Hockey Hall of Fame, The Canadian Opera Company, Starbucks Canada and Blockbuster.
Recognized as a RETHINK Retail Top Retail Expert in 2024, 2025 and 2026, Dustin delivers insider perspectives on Toronto’s evolving retail landscape, from emerging brands to established players reshaping the city’s commercial districts.