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Giant Tiger plans to add stores in rural centres

Discount retailer sees potential for growth

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THE urban retail jungle is getting crowded, so the North West Company's Giant Tiger division is on the prowl for expansion opportunities in smaller rural centres where the competition is less fierce.

"We like rural sites more than we like urban sites," NWC president and CEO Edward Kennedy said Wednesday following the company's annual shareholders meeting in Winnipeg.

Kennedy said company officials believe smaller rural centres with a trading area of 10,000 to 15,000 people or less -- Neepawa, Morden and The Pas would be good local examples -- are an ideal fit for a discount junior department store retailer such as Giant Tiger.

Industry heavyweights such as Walmart and Target aren't likely to set up shop there, he said, which increases Giant Tiger's odds of succeeding in those markets.

But that doesn't mean the company is turning its back on Winnipeg and other larger urban centres in Western Canada where it has a master franchise agreement with the Ottawa-based Giant Tiger chain.

"We like Winnipeg," Kennedy said in a later conference call with analysts. "We hope to open more stores there."

And although NWC closed six underperforming Giant Tiger stores late last year in Alberta and Saskatchewan, Kennedy said, "We haven't given up on Edmonton and we will continue to look at Regina and Saskatoon... "

The franchise agreement allows NWC to open up to 70 Giant Tiger stores in the four western provinces by 2032. It currently has 31, including 13 in Manitoba.

Eight of those 13 are in Winnipeg, and Kennedy wouldn't speculate on how many more NWC might add.

But he said he could see adding up to a half a dozen more in rural Manitoba.

Kennedy told shareholders that U.S.-based Target's arrival this year in Canada -- it plans to open at least 124 stores -- hasn't had meaningful effects on Giant Tiger just yet.

"But I know that once Target gets its feet firmly planted on the ground, it will be a formidable competitor," he added.

Target opened three stores in Manitoba last month -- two in Winnipeg and one in Brandon -- and plans to add two more. But Kennedy said big-box retailers such as Target and Walmart like to be in regional malls and retail power centres, while Giant Tiger prefers strip malls in older neighbourhoods where there usually aren't a lot of other food/general merchandise stores.

He said that approach has worked well in Winnipeg and could work in other large western Canadian cities.

Kennedy told shareholders and analysts Giant Tiger is taking other steps to improve competitiveness. That includes driving down operating costs and using the savings to lower its prices. It will add more niche products such as nurses' uniforms, plus-size women's apparel and multi-pack basics such as pairs of socks for $10.

It also continues to add new revenue-generating services at its more remote locations -- a post office, a Tim Hortons kiosk and point-of-sale-activated cellphone minutes. It's also introducing its own prepaid Visa card called WE Financial.

"The real growth is going to come out of food and services," he added.

In addition to Giant Tiger, NWC also owns and operates Northern and NorthMart stores in northern Canada, AC Value Centre stores in Alaska and Cost-U-Less stores in the South Pacific and Caribbean.

The company's shares (TSX:NWC) closed down 92 cents Wednesday to $24.40.

Republished from the Winnipeg Free Press print edition June 6, 2013 B5

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