BC Business
Selling recreational clothing and gear used to be about clustering, but the economics may no longer hold.
BREAKING CAMP: Local retail pioneer MEC’s new Olympic Village location is its seventh permanent home in the city
Walk into the new MEC flagship store in Vancouver’s Olympic Village and you’ll spot a restored baby-blue Volkswagen microbus, an homage to the retailer’s first venue. Back in 1971, the original van would haul camping and climbing gear acquired at Recreational Equipment Inc. in Seattle and resell it to a handful of members in Vancouver for a 20-percent markup.
MEC has occupied six more permanent storefronts in its hometown over the years, each one larger than the last. And with each successive move, a bigger entourage of outdoor recreation shops has clustered around this traffic generator, to the point that up to 20 like-minded hiking, biking, watersport and adventure travel stores made their home along Broadway’s outdoor retail row, between Alberta and Quebec streets, after MEC relocated there in 1995.
So what happens now that MEC has moved again, to East Second Avenue, where it has 33,000 square feet of space and a 20-year lease with developer Beedie Group? History would dictate that the small fry will decamp to Olympic Village. But several factors suggest the pattern may be broken this time.
First, there’s less retail space in the immediate vicinity of the new MEC store and wide-ranging demand for it, given the ongoing residential development and population growth in the area. Then there’s the question of whether the economics of clustering still stand.
“When MEC moved to Cambie Street [at West 8th Avenue in the 1980s], it was for sure a destination,” retail analyst David Ian Gray of Vancouver-based DIG360 Consulting notes. “People would really journey to get to it.” Now technical sports clothing and gear is more widely available: online, in the manufacturers’ outlet stores, at MEC‘s own satellite outlets in North Vancouver and Langley and at flashy newcomers like Toronto-based Sporting Life in Burnaby.
That’s part of the problem that saw the cooperative’s board accept a rescue package from Los Angelesbased Kingswood Capital Management in September—a regime change confirmed over the objections of many co-op members in B.C. Supreme Court on October 2.
“MEC itself has some tough work ahead to rebuild the brand and get back to profitability, or a surplus,” Gray adds, referring to the co-op’s $11.5-million loss on sales of $462 million in its most recent fiscal year. In a summer when, stuck for other vacation options, seemingly everyone went camping, the new Vancouver store sold out of fuel and dehydrated dinner packs in advance of the B.C. Day weekend, leaving members hungry and muttering the disparaging old nickname, “Out-of-equipment Co-op.” (In an email, MEC attributed its supply disruption issues to “the unusually high demand for outdoor apparel and gear earlier in the season.”)
Which brings us to the wild card: COVID-19. Independent retailers of all kinds are scrambling to stay afloat during the pandemic. Gray expects most of those left on outdoor alley to wait and see before they break camp on Broadway and commit to pricier space near False Creek.
“There are bigger things at play than where MEC is located,” agrees Mike Hodge, principal, retail, with commercial real estate agency Avison Young. In addition to the pandemic, longer-term, the SkyTrain extension along Broadway will almost certainly come with a new community plan and higher-density redevelopment. That would likely have made Broadway less hospitable for small, destination retailers even if MEC was still there, he says.
Hodge uses the example of the onetime furniture store cluster on South Granville that has largely been dispersed by urban renewal, giving rise to smaller clusters in Gastown and the Armory district. “Retailers are still lemmings; they still like to be in a cluster with their user group,” he concedes. “But market conditions dictate where those clusters have to go.” Hodge could foresee some outdoor stores along Broadway holding on until redevelopment comes, while others shutter. Still others might opt for combined retail/production space in nearby Mount Pleasant.
Taiga Works, for one, has closed its store and operated out of its East Vancouver production space since COVID-19 hit. Eco Outdoor Sports, which has other locations plus an e-commerce channel, shut its Broadway store when its lease expired, around the time the pandemic was declared. Valhalla Pure Outfitters closed down for two months, then reopened to roaring business this summer, says owner Richard Harley. “We’re doing fine, thank you very much,” he quips, noting that Valhalla operates 12 stores in B.C. and Alberta, most of them nowhere near a MEC outlet.
In some respects, small stores are better able to cope with change than big ones like MEC, Harley adds. “We respond as we know how, which is to fill our stores with things people want to buy,” he says. In fact, Valhalla benefited from MEC‘s summer stocking problems as some customers made the hike back up the hill to Broadway to find food and fuel, Harley explains. “We are destination stores. People will search us out.”
$166.6 million June retail sales of sporting goods, hobby, books and music in B.C.
+47% Change in sales from May 2020
+3.3% Change in sales compared to June 2019
8.9% Forecast decline in Canadian sporting goods sales in 2020
2.7% Average annual growth in Canada’s sporting goods industry, 2015-20
3 B.C. provincial parks’ rank among park systems in North America, surpassed only by the U.S. and Canadian national park systems
6/10 Share of British Columbians who visit a provincial park in an average year
26.2 million Number of visitor days at B.C. provincial parks in 2018-19
Sources: Retail Council of Canada, IBISWorld, B.C. Parks