If you’ve read any Canadian business headlines lately, you could be forgiven for thinking the country’s retail sector is headed off a cliff.

In just a couple of years, established clothing chains like Smart Set—owned by Reitmans (Canada) Ltd.—Jacob and Mexx Canada have left the scene entirely, while Danier Leather is in the process of shuttering its 76-store chain.

Elsewhere, Sears Canada is scrambling to ditch weak outlets and slash costs. Then there’s Target’s Canadian misadventure, in which the retail giant opened then abruptly closed its 133 northern stores between March 2013 and April 2015.

Numbers Don’t Tell the Whole Story

There’s no doubt Canadian retail sales have taken a hit as the oil-price crash ricocheted through the economy. In December, retail sales fell 2.2% from November, on a seasonally adjusted basis.

But there’s more to those numbers—and the store closures—than meets the eye.

First, the numbers. Even though December sales declined month-over-month, they were still up 2.6% from December 2014. Plus, sales jumped more than expected in November, with big gains at clothing, electronics, book and hobby shops, suggesting Canadians hit the malls early, instead of not at all, to jump on Black Friday deals.

For the full year, retail sales edged up 2.2%, to C$516 billion.

All in all, these numbers tell a pretty middling tale: not spectacular, to be sure, but not a disaster, either, given the whack the country’s economy has taken from the oil rout. So why the shuttered stores?

Canadian Retailers: Surrounded on All Sides

There’s plenty of evidence to suggest what we’re seeing is mainly the fallout from three huge trends: a massive influx of foreign competitors, the shift toward online shopping and a swift change in consumer tastes.

Brands that have recently made a beachhead in Canada include Marshalls, Nordstrom and Saks Fifth Avenue, which opened its first location in Toronto in December. Causing particular headaches for Canadian clothing retailers like Reitmans are so-called “fast fashion” chains like Forever 21, H&M and Zara.

At the same time, more Canadians are shopping online, an area where domestic chains often have a tough time competing with deep-pocketed American challengers. According to MasterCard SpendingPulse, online sales accounted for 9.9% of all Canadian retail sales in December, up from 8.6% a year earlier.

“E-commerce platforms of the publicly traded Canadian brick-and-mortar retailers, such as Canadian Tire and Rona, continue to represent an immaterial share of Canadian web visits during this past holiday season relative to Amazon, Walmart, and eBay,” BMO Capital Markets analyst Peter Sklar said in a February 22 National Post article.

A Market Inside a Market

With all that said, it’s crucial that you don’t lump shopping malls in with retail chains. Malls are mainly owned by real estate investment trusts (REITs), the largest of which (in Canada) is RioCan Real Estate Investment Trust (TSX: REI.UN, OTC: RIOCF), which owns or has stakes in 305 properties with 46 million square feet of space. The units yield 5.1%.

Lower-risk retail REITs boast tenants that dominate their markets and sell things people need no matter what. In RioCan’s stable, such names include Loblaws, Canada’s largest grocery chain, Walmart, Canadian Tire (the dominant Canadian hardware seller) and Shoppers Drug Mart.

Working Through the Target Debacle

When Target skipped the country, RioCan was left sitting on 26 deserted stores. But last November, it came to a C$132-million deal with Target US to settle these leases.

However, the story didn’t end there. As The Globe and Mail reported on Tuesday, the closures have caused other problems for RioCan and other landlords, such as pressure from tenants that have co-tenancy rights—or the ability to renegotiate or break leases if an anchor tenant leaves a mall—in their leases.

These rights were suspended for 14 months while Target’s bankruptcy was sorted out, but on March 14, a judge agreed to a request from two retailers to lift the ban. However, he’ll wait to get more information at an April 26 hearing.

RioCan, for its part, set aside $1 million to deal with the co-tenancy issue last year, and CEO Edward Sonshine sees it as a short-term problem. “I think what you will see is we will suffer through a lot of this through the course of most of 2016,” he said in a March 8 Globe and Mail article. “But as we go into 2017 and the boxes [stores] are re-tenanted, or other action is taken over the course of 2017, it will largely disappear.”

Meantime, RioCan is making good progress renting out Target’s old digs: It recently said it has either signed or is in advanced talks on deals representing 115% of the rental revenue it got from the defunct chain.

A Reaccelerating Economy

The wider retail sector should also see stronger growth as the Canadian economy recovers. Right now, RBC forecasts 1.7% GDP growth this year, up from 1.2% in 2015, thanks in part to stimulus spending expected in the March 22 federal budget.

RBC is also calling for continued gains in consumer spending as the job market stabilizes and interest rates remain low, with the Bank of Canada expected to stay on the sidelines for all of 2016.

The low Canadian dollar should also bring some good news for retailers because it discourages Canadians from hunting for cross-border deals in the U.S. And higher retail sales mean higher rents—and higher demand for REITs’ floor space.

Our Super-Secret Stock Pick

In May, we’re holding our annual Wealth Summit–this year in Las Vegas. It’s a great way for us to meet you, our subscribers, one-on-one, and there are still spaces open if you’re interested.

Also this year, we’ll be making a special recommendation to those who attend the Summit, and to those who are part of our Wealth Society, whose members receive all the Investing Daily newsletters and other premium services.

It’s a fun exercise for us because there are no rules. We don’t have to pick a Canadian stock. In fact, our pick doesn’t even need to be a stock: It could be an alternative investment that isn’t traded on a public market.

Our publisher says we can’t reveal the pick in Canadian Edge, or even to him before the Summit. But in the weeks ahead, we’ll let you in on some of the research we’re doing to identify this exclusive pick.