New 'supercentres' may be the future of retail

July 28, 2008
Winnipeg Free Press
Written by: David Friend

TORONTO -- Traditional shopping malls and department stores are taking a back seat to a spruced-up version of the all-in-one customer experience as Canadian retailers pack multiple storefronts under one roof to drive more customer traffic.

In the past few weeks, Canadian Tire threw open the doors of two "test locations" in northern Ontario that plunk a Mark's Work Warehouse clothing store amidst home appliances and gardening tools.

And the incoming CEO of Hudson's Bay Trading Co. waxed poetic about revamping the look of some larger multi-floor Bay department stores to include Zellers discount centres, Fortunoff jewellery stores or Home Outfitters locations.

The concept diverts from the power-centre ideals that have driven retail growth over the past decade by encouraging shoppers to scoot from store to store in their cars.

But since the "big box" idea was introduced, some retailers have been looking for ways to keep shoppers inside their stores for longer, rather than encouraging them to take their business to another nearby competitor, or even out of the power centre altogether.

If it's all under one roof, it's closer, and that means more people are likely to buy it, some retail observers suggest.

Add to that soaring gas prices and the idea of parking the car and loading up sounds a lot more reasonable.

"It's cheaper to get to one supercentre where there's ample parking and the like," said Daniel Baer, leader of retail and wholesale practice at Ernst & Young.

"You're going to see more of these supercentres, fewer conventional malls and fewer conventional stores."

While the idea of multiple stores under one roof isn't exactly new, it is timely because of a shift in demographics.

Baer says that with an aging population more people find that mobility is becoming an issue, so they want to do as little travelling as possible to buy the essentials.

Then there are families, whether they're single parents or not, who are already grappling with a work-life balance that usually isn't going in their favour. They'll cut corners running the weekly errands whenever given the chance.

But the icing on the cake are the competitive options already available to these two groups of consumers.

Costco has spent more than 20 years luring away supermarket shoppers with bulk supplies of food items and a variety of other discounted products including DVDs, furniture, computers and appliances.

More recently, Wal-Mart has led an impressive campaign to drive a stake into the Canadian supermarket chains by offering all of its trademark items as well as a wide array of food products, including fresh produce.

Supermarket giant Loblaws (TSX:L) made an unconventional leap in the opposite direction, straying from food stuffs and into shirts and shorts two years ago with its Joe Fresh Style discount clothing line.

Meanwhile, old-style department stores could one day become something that grandparents recall in stories about their childhood.

"Department stores are particularly oversized, they're overspaced for sure. Look at the Bay on Queen St." said Wendy Evans, head of retail consultancy Evans and Co. Consultants Inc., referring to one of the Bay's large flagship store in downtown Toronto.

"There's just no way you can fill that and make it really productive. You're better off to have different concepts, really blown up categories."

Executives at Hudson's Bay Co. have been on the same wavelength as Evans, discussing the potential of splitting up some of the Bay's larger multi-floor stores into various labels, for example installing a Zellers on one floor and a Lord & Taylor on another.

-- The Canadian Press

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