Business

Winnipeg Free Press - PRINT EDITION

Retailers see more winners than losers with new outlet

By: Murray McNeill

Posted: 12/17/2008 1:00 AM | Comments: 0 (including replies)

It's big, it's bold, and it's arrival is bound to cast a chill over other home furnishings retailers in the city.

But retail industry officials say there'll be more winners than losers if IKEA Canada gets the green light to build a new 350,000-square-foot store in southwest Winnipeg.

Local retail developer Sandy Shindleman said a development of that size -- the IKEA store is part of a 1.5-million square-foot retail development being planned for the corner of Kenaston Boulevard and Sterling Lyon Way -- will generate a whack of new retail and construction jobs.

Related Items

Articles

IKEA spokesperson Madeleine Lowenborg-Frick confirmed the store alone will employ about 400 people. And there'll be an undetermined number of spin-off jobs because IKEA hires local firms to provide some of the after-sales services it offers, such as home deliveries, furniture assembly, and kitchen installations.

Shindleman and retail analyst John Winters, of Toronto-based John Winter & Associates, said that size of store -- IKEA said it will be one of its largest in Canada -- will also act as a giant retail magnate. It will draw destination shoppers to Winnipeg from all over the province and from as far away as Saskatchewan, Northwestern Ontario, North Dakota and Minnesota, they said, which will also be good for the local economy.

Then there's all that sales tax revenue that used to flow out off the province when Manitobans either purchased products through IKEA's catalogue division, or drove to IKEA stores in other cities. Most of that revenue will now be staying in Manitoba, said commercial real estate agent Ken Yee, of Cushman & Wakefield Lepage.

IKEA is teaming up with a veteran Winnipeg retail developer -- Michael Nozick of Fairweather Properties Inc. -- to develop the new retail power centre at Kenaston and Sterling Lyon Way.

Fairweather also developed Linden Ridge Shopping Centre, one of the three retail power centres at Kenaston and McGillivray Boulevard. Although the IKEA/Fairweather development will be about the same size as those three power centres combined, Nozick said he's optimistic they'll fill all of the new space.

He noted it will be 2012 or 2013 before the IKEA store opens, so that's plenty of time to line up tenants. He said he's already talking to two large "international players" who are interested in being part of the development.

Although Nozick wouldn't reveal who they are, Yee wondered if one might be Wal-Mart, which is rumoured to be interested in opening one of its superstores in Winnipeg. Another possibility might be Cabela's Canada, the outdoor sporting goods retailer that's interested in adding another Winnipeg outlet, he added.

Yee, who was the listing agent for the 450,000-square-foot Kenaston Common power centre at Kenaston and McGillivray, said that hopefully by the time the new development is ready to go, the North American economy will be on the rebound and a new wave of retail development will be hitting the city.

While the new IKEA store will likely steal some market share away from existing home furnishing retailers in the city, Shindleman and Winter said it's not likely to drive anyone out of business.

They said the retailers it will be competing with, such as Jysk, The Brick , Leon's and Sears Home -- are part of well-established, national or international chains. So they can take the heat.

Michael McMullen, executive vice-president at the North West Company in Winnipeg, and a former senior manager within IKEA's US operations, said a store that size is likely to suck $70 million to $100 million-plus in annual sales out of the market. But it will also generate plenty of customer traffic, which will be good for other retailers in the area.

Mark Dufresne, president and CEO of The Dufresne Group, one the largest independent regional furniture chains in Canada, said he welcomes the presence of IKEA in the market.

"We share a parking lot with them in Calgary and Edmonton and it has been great for our business," Dufresne said referring to his company's Ashley Furniture Home Store locations in those Alberta cities. "They do about 50 per cent of their business in home accessories and our furniture compliments their offerings."

-- with files from Martin Cash

murray.mcneill@freepress.mb.ca

martin.cash@freepress.mb.ca

Republished from the Winnipeg Free Press print edition December 17, 2008 A4

(You must be logged in to post your reaction)

Your reaction?

More Business

Undock

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is register and/or login and you can join the conversation and give your feedback.

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010; View the changes. New to commenting? Check out our Frequently Asked Questions.