Big-box retailers plant rural roots

July 2, 2007
The Winnipeg Free Press
Written by: Murray McNeill

'You can't underestimate the power of convenience'

Brandon's Corral Centre, with 430,000 square feet of leasable space, recently singed up its 26th and final tenant

They've been all the rage in Winnipeg in recent years, and now retail power centres are proving to be a hit in rural Manitoba communities, as well.

Shindico Realty Inc./IC&I Properties Inc. launched four such centres in rural Manitoba cities in 2004, and all of them are expected to be fully leased by fall of next year, a spokesman for the Winnipeg-based commercial property developer/manager said in an interview.

John Pearson said the first centre to reach 100-per-cent occupancy is also the largest of the four -- the Corral Centre in Brandon. It boasts 430,000 square feet of leaseable space, and it recently signed up its 26th and final tenant.

John Pearson says Shindico/IC&I officials are so pleased with the response the cnetres have received they're planning to develop more.

The other three centres, located in Portage la Prairie, Winkler and Selkirk, range from 115,000 to 341,000 square-feet and are 72 to 91 per cent leased.

Pearson said Shindico/IC&I officials are so pleased with the response the centres have received they're planning to develop at least three or four more in rural Manitoba and Northwestern Ontario over the next two to three years.

"This is a current (market) niche our clients want to be part of," Pearson said, "and we've shown an ability to construct power centres that fit their requirements."

For competitive reasons, Pearson refused to say where the next wave of power centres will be located.

The "clients" Pearson refers to include mainly national and international "big-box" retail chains like Wal-Mart Canada, Home Depot, Dollarama, Real Canadian Superstore, Canada Safeway and Ashley Furniture HomeStore.

A decade ago, few would have expected these big-box retailers to be flocking to small-town Manitoba. Most were considered strictly big city players.

"There was a time when some people thought we'd be nuts to look at anything under 50,000 (people)," Kevin Groh, director of corporate affairs for Wal-Mart Canada Corp. admitted in an interview.

But now the granddaddy of all retailers looks at communities with as few as 5,000, he said.

So what changed? Well, consumer expectations, for one thing.

Groh said time is everything to today's harried consumers, and most of them don't want to travel long distances to shop. So retailers like Wal-Mart are trying to win them over by taking their business to them.

"We're trying harder to be relevant to local customers and the best way to do that is to have a local store," he said. "We know people tend to prefer to shop where it's convenient. You can't underestimate the power of convenience."

Sure, some of them would have continued to drive to a Wal-Mart store in Winnipeg if they had to, he said. But there are also plenty of other retailers to chose from in a larger city like Winnipeg, so you also run the risk of losing them to a competitor. But opening a Wal-Mart store in their community, or a community closer to where they live, reduces the chances of that happening.

Groh and Pearson said the rural centres where these big-box stores are being built tend to be retail or service hubs for their region. They're preferred because they attract people from surrounding towns and communities, which provides the retailers a much larger customer base from which to draw.

Winkler, for example, has a population of about 9,100, but a regional draw of about 60,000 people, Mayor Martin Harder said. That's because it's a retail/service hub for the entire Pembina Valley and even some communities in neighboring North Dakota.

Harder said that with the opening of two new retail power centres within the last three years, "most of them are coming to Winkler now instead of going to the city of Winnipeg."

Other reasons why Wal-Mart is opening stores in smaller rural centres is because there's a retail void to fill there, Groh said, and because it has developed a variety of store formats to suit different-sized markets.

In Manitoba, for example, its 13 stores range from 50,000 square feet in Dauphin, which also happens to be its smallest retail outlet in Canada, to 160,000 square feet at its store in St. Vital Centre in southeast Winnipeg. (Its other five Winnipeg stores are each about 130,000 square feet).

"If we were to drop our largest format store into a smaller community, it just wouldn't make sense," he said.

Pearson said Wal-Mart's willingness to open stores in these rural retail power centres is one of the reasons the centres have been so successful. Where Wal-Mart goes, other retailers tend to follow.

Also, most big-box retailers like to be clustered together because as a group, they can draw more shoppers to the area.

Whatever the reasons, Harder said he's glad these retail power centres and big-box retailers are springing up in Winkler because they create jobs and generate new tax dollars for the city.

"I know there are hundreds of jobs and hundreds of thousands of additional tax dollars. So it's significant."

Because they help draw people from the surrounding communities, other local businesses also benefit because people are spending their money in Winkler instead of Winnipeg, the major said.

Harder admitted that the arrival of these big-box retailers has led to the closing of some local retailers who felt they couldn't compete with national and international chains. While that's unfortunate, he said the positives still outweigh the negatives.

Also, having all of these major retailers in Winkler gives area residents one more reason to remain living in the community, he said, rather than moving to a larger city such as Winnipeg.

murray.mcneill@freepress.mb.ca

* Opening still to be determined
-- Source: John Pearson, Shindico Realty Inc./IC&I Properties

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