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Good things in smaller packages

Winnipeg retailers find a bigger store isn't always better

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Middle-age homeowners aren't the only ones downsizing these days -- retailers are also getting into the act.

"The trend now is to try and do more with less," according to Michael Stronger, a retail leasing specialist with Winnipeg's Shindico Inc. "Bigger is not always better. Sometimes it is, but not always."

John Prall, a retail leasing specialist with Colliers Pratt McGarry, agrees, saying retail giants like Walmart and Real Canadian Superstore aren't as stuck on the big-box concept as they once were.

"They're willing to be much more flexible."

Stronger said Cabela's is another example of a retailer that's adopting a more flexible approach to development. When the U.S. hunting, fishing and outdoor merchandise retailer entered the Canadian market three years ago by acquiring the S.I.R. mail order and warehouse sports store at 1300 Ellice Ave., most industry observers thought it would eventually replace the 38,000-square-foot S.I.R. outlet with one of its trademark mega-stores, some of which are more than 200,000 square feet. And they expected any other new stores it builds in Canada would also be supersize.

"But since the recession they've done a complete rethink of their store model," Stronger said. "Now they're working on a 70,000-square-foot store in Edmonton."

The two realtors said several factors are causing retailers to rethink the bigger-is-better strategy that dominated retail development in Winnipeg during the last 10 years.

One of them is the dwindling supply of new, development-ready land. That's making it harder for retailers to simply buy a large chunk of land in a new development and build as big a store as they like. Instead, they're having to stick with an existing development, and that sometimes means downsizing to make the new store fit the available space.

"It's the same concept generally," Stronger said. "It's just maybe 25 per cent smaller."

Another factor is the tougher lending practices that were implemented after the financial market meltdown. That's making it harder and more expensive for some retailers to raise the capital needed to finance a big expansion.

A third factor is changing consumer buying patterns.

"For a lot of consumers, time is valuable," Stronger said. "Walking into a 200,000-square-foot store involves a major commitment of time because it takes longer to find things. And as more and more people become busier and busier, they're looking for quicker retail experiences."

Prall said this change in thinking is also providing a new lease on life for some of the existing big-box stores in Winnipeg, such as the Real Canadian Superstore at Grant Avenue and Kenaston Boulevard and the Walmart on Empress Street near Polo Park.

Walmart is getting into groceries in a bigger way and Real Canadian Superstore has been putting more emphasis on clothing. But there's no room to expand either of those stores to accommodate the new product lines.

The old way of thinking would have been to find a new site and build a bigger store. The new way of thinking is to do an "in-store conversion," where they rework the space and product offerings to make room for the new products.

Stronger said in Superstore's case, they've already made the changes. In Walmart's case, that's the direction most industry observers expect them to go.

But even if they do, that doesn't mean they're abandoning the large-format prototype, Prall said, noting Walmart plans to add on to two other Winnipeg stores where it does have room to expand.

He and Stronger said there'll also be some new big-box stores built in the next round of retail development, which should get underway within the next year or two.

For example, there will likely be several of them in the IKEA/Seasons of Tuxedo development being built at Kenaston Boulevard and Sterling Lyon Parkway. In fact, the IKEA store will be about 350,000 square feet.

Stronger said some of the names being bandied about include Target (a U.S. department store chain), Lowe's (a U.S. home and building supplies chain) and Marshalls (another U.S. department store chain), and J. Crew, a U.S. casual-clothing retailer.

 

Know of any newsworthy or interesting trends or developments in the local office, retail, or industrial real estate sectors? Let real estate reporter Murray McNeill know at the email address below, or at 697-7254.

murray.mcneill@freepress.mb.ca

Republished from the Winnipeg Free Press print edition November 22, 2010 B4

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