The Economics of B.C. Malls

The main strip in Gibsons is full of charm and character. But the town’s commercial centre has become the mall a kilometre away.

The mall is the cornerstone of many small B.C. communities. 
But are they really a net positive for the local economy? 

In the interest of full disclosure: I’ve never liked malls. 

As far as I’m concerned, they’re all the same: stale air, contrived architecture and a barrage of overpriced storefronts. When I lived in east Van or Montreal or Toronto, nothing gave me more pleasure than hopping on my bike and doing all the shopping I needed out of quirky little stores that have been in families for generations. 

Which is why, when I moved to Gibsons on the Sunshine Coast four years ago, I was shocked to find out I didn’t have a choice. A trip to Sunnycrest Mall in Upper Gibsons is unavoidable here. Liquor store selection? Head to the mall. Replacing your ink cartridge? Mall. Picking up a package? Mall, mall, mall.

It bugged me that I couldn’t hop on my bike and pick up what I needed on our quaint little main street in Lower Gibsons, an 80-year-old two-block stretch along the waterfront, featuring a wharf, gift shops/galleries, convenience stores and restaurants. Instead, I had to get in my car and trek a kilometre up the hill to Upper Gibsons (downtown’s busy younger brother), parking between an idling truck and a Hummer to shop at London Drugs, Supervalu, even Hallmark – week in, week out. 

When I started to notice the heavy turnover of local businesses in the mall and found out their rents were somewhere between $15 and $25 a square foot, every fibre in my body began to itch for answers. How did we get here, I wanted to know. Is the typical small-town mall – with seven or eight corporate anchors (Starbucks, BC Liquor Store, RBC, London Drugs, Reitmans, CIBC, the Bargain Shop and Athletes World, in our case), a handful of franchises and a few local stalwarts – really the only model that’s working these days? On a recent trip through the Okanagan, all I saw was one depleted main street after another; the malls, on the other hand, were hopping.

Most small-town folk – even myself on a generous day – will begrudge our local mall this: it’s not great to look at, but it keeps our economy humming. The corporate chains and franchises bring more jobs into town and, because they’re large outfits with economies of scale, they can provide us with more selection at lower prices. 

But the journalist in me wasn’t so sure: does the local mall – dominated in large part by corporate anchors and franchises – have a net positive benefit for the local economy? Sure, it might provide jobs, more stuff and savings for locals, but what does it take away? Even if I leave out those community intangibles that we lose at the mall – chatting with the owner at the till, less car traffic, local colour and flavour – are we losing our money too? 

To find out, I meet up with Michael McLaughlin, a middle-aged gumboot-wearing small-business consultant and the local economic development officer. He doesn’t buy my cynicism.

“This is a common misconception: that malls suck money out of the local economy. You need to examine that statement,” he tells me. “Imagine our town without a mall.” 

McLaughlin, a thoughtful part-time farmer hired by the Town of Gibsons to head up an economic development initiative for the Sunshine Coast called BCI (Best Coast Initiatives), pauses and considers his next statement. “Most small businesses fail because they’re poorly run.” 


Image: Paul Joseph
Property manager Nanci McCaw makes Sunnycrest
Mall in Gibsons a home for local retailers.


Corporate stores have deeper pockets to wait out the lean years, McLaughlin explains, as well as having a proven business model. Franchises are bought by vetted entrepreneurs, ensuring a higher chance of success for the parent company. Small businesses run by local merchants share none of these advantages. Merchants in Lower Gibsons may have cheaper rent – it’s about two-thirds the rate at Sunnycrest Mall – but less traffic: the retail vacancy rate in Lower Gibsons is currently more than double Sunnycrest’s. The car-dependent regional mall may not be pretty, these numbers suggest, but it’s working. 

Still, if the regional mall needs the corporate anchors and franchises to generate the traffic, doesn’t that mean the bulk of our money is leaving the community? 

“I don’t know,” McLaughlin admits. “You have to figure out where their profit goes, how much they pay their labour, and whether they are locally or foreign-owned. Just because they’re chains or franchises doesn’t mean their money doesn’t stay in town.” 

A week later, though, McLaughlin sends me an email. “Bingo” reads the subject line. “Economic impact assessments have demonstrated that $100 spent in a locally owned store generates $45 in local economic return,” he quotes, “while the same amount spent in a non-locally owned store generates only $13 in return.” 

That finding, from an extensive 2002 retail study done by the U.S.-based non-profit Civic Economics, points to the fact that – regardless of how much of their profits local merchants invest in the local economy (a difficult number to track) – they generally employ other locals, who live and shop in the region, to do their advertising, accounting and management. Corporations and franchises generally don’t. The result? A net loss of 32 cents on every dollar we spend.

Bingo indeed. Was this not the very proof I was looking for? 

If only it were that simple. McLaughlin also directs me to a recent survey he conducted of 500 locals that examined their off-coast shopping habits (the Sunshine Coast equivalent of heading to the nearest big town – in our case, Vancouver – to stock the pantry for winter). As it turns out, even if local merchants are reinvesting a third of a dollar more into the local economy than foreign ones, local consumers are taking this extra money elsewhere. Gross household spending off-coast was almost 40 per cent. More than half of the households surveyed shop off-coast at least once a month. And the primary reasons they do? Price, selection and convenience. 

So if we’re losing 40 per cent of our local shopping dollars to off-coast stores for these reasons – and only gaining 32 cents on the dollar from local merchants – should we be luring more of these chains to the coast to keep our dollars here? 

Small-town economics, I was learning, is a lot more complicated than I had initially thought. At the Gibsons library, I found a book that helped me understand why. Second Growth: Community Economic Development in Rural British Columbia, published in 2006 by a team of professors from SFU and UBC, analyzes how small towns in B.C. are negotiating the difficult transition from resource-based economies to a more balanced mix of industry requiring greater community engagement. 

I track down the lead author, SFU economics professor Sean Markey, for his thoughts on the chains-versus-local-store conundrum. 

“The issue of anchor stores, franchises and big-box retail is tricky,” Markey tells me, “These stores may provide an anchor for local businesses or completely gut the local business district and usually spread out and destroy the benefits of a central business district due to setup on cheap, vacant land.” 

His research, he continues, has led him to believe that rural economies that are doing well have paid attention, over time, to the quality of their built environment.

“In this respect,” he says, “the mall areas may provide good service, decent goods and services and provide a quality central meeting area for the community – or they may be designed solely for auto culture, be architecturally ugly and not really be places anyone would voluntarily spend their time.” 

Nanci McCaw, property manager and marketing director for Sunnycrest Mall since 1993, believes her job is to make sure hers is the former and not latter kind of mall. Tall and slender, with dyed red hair, designer glasses and a green shawl draped over her shoulders, McCaw looks like she should be working the floor in a fashionable Robson Street boutique, not holed up in a windowless manager’s office by the mall bathrooms. But the challenge of turning the mall into a thriving shopping centre is what’s kept her here for this long. She takes pride in the evolution of her mall – which, once you’re inside, could be mistaken for Robson. 

“It’s not that I don’t want people to think they’re on the coast,” McCaw insists. “It’s more that we supply goods and services of the same quality and calibre as anywhere else.” 

Chain stores, she believes, up the ante. Her merchants (she talks about the small businesses in the mall – the flower shop, the candy shop, the Chinese restaurant – like they’re her own children) are forced to raise their game to attract customers into their stores. Anthem Properties Group Ltd., the Vancouver-based developer that purchased Sunnycrest from a smaller Vancouver developer over a decade ago, pays her to manage the property while the merchants contribute to a fund she uses to generate more walk-by traffic. She does everything from meat draws to allowing local non-profits to use the mall atrium for wine auctions and other fundraisers. (“I have learned that if the prizes are meat, you have a successful promotion,” she says.) 

But McCaw sees her role as bigger than just management and promotion. 

“I am the mall,” she says, laughing. “My merchants benefit from the organization; they have to work like a team or it’s not going to work.” Your typical downtown main street doesn’t have that kind of co-operation, she goes on, unless the local government takes on that role. 


Image: Paul Joseph
Will Cummer, local retailer at the Sunnycrest Mall
in Gibsons, B.C.

Will Cummer, one of McCaw’s favourite new tenants, agrees. An artisan woodworker and entrepreneur, Cummer spent 10 years in Lower Gibsons trying to get three different businesses (artisan and woodworking stores) off the ground. None of them generated enough money to keep him going. 

“My romance with Lower Gibsons is dead,” Cummer says, sitting in a plush leather chair at his desk beside his son Matt, overlooking their gallery-style storefront, Woods Showcase, featuring original work by local artists and artisans (everything from paintings to carvings to pottery). “There’s a pull-up-the-drawbridge mentality there to letting things evolve and change.” 

Despite the glaring need for growth, he explains, the local merchants don’t like seeing new competition in their neighbourhood. The result, he believes, is a stagnated economy. 

Giving up on Lower Gibsons nine years ago, Cummer and his son took over an empty storefront at Sunnycrest Mall for one month, just before Christmas, to sell the work of 25 local woodworkers. It was a good month. When November rolled around the year following, the only storefront available at the mall was double the size, so they asked some quilters to join in. For the subsequent eight years, the Cummers took over a vacant store for each Christmas season, inviting more artists and artisans to join in, and every year their sales numbers grew. “Guerrilla storefare,” Matt says, grinning. 

McCaw – at the behest of her bosses at Anthem, who were charting the sales success over the Cummers’ nine-year run – started pestering Will to set up a permanent storefront. And so in April 2011, after two straight Christmas seasons showing 25 per cent increases in sales (and after a particularly lucrative month during the Olympics in which they sold $11,000 in one hour to a wealthy European couple), the Cummers – using their own family savings and a business plan they’d been crafting for five years – opened Woods Showcase. Now they have more than 2,000 square feet of permanent show space in one of the best locations in the mall (smack dab in the middle between the liquor store and London Drugs), where they need to sell $1,000 a day on average to cover their costs of doing business and still have enough left over to live off of. 

“This is an expensive place to operate. Absolutely. The landlord says they’ve made concessions,” says Will Cummer, looking around and shaking his head, “but it still looks big.” 

For McCaw, the opening of Woods Showcase is a sign that Sunnycrest Mall is heading in the right direction. When she first arrived, the previous mall owner would helicopter in from Vancouver to pick up his tenants’ rent; indeed, there used to be a helipad for this express purpose where the London Drugs sits now. Now she works for a company in Anthem, albeit still Vancouver-based, that sees the value in seeking out startup businesses like the Cummers’ to foster a sense of mall community, as well as deliver results to their bottom line. 

“We want to keep Sunnycrest active and vibrant,” she says. 

If the Cummers can succeed, it’s a win for everyone involved: the local artists and artisans, the mall, even the anchor tenants who might benefit from the additional tourist traffic. But that’s a big if. And all the risk, in the end, falls on the Cummers’ shoulders. The storefront sat empty for two years before Will Cummer took the leap. Anthem has nothing to lose.


Image: Paul Joseph
Molly’s Reach is an icon, but many other shops in
Lower Gibsons are closing.


The retail core of Lower Gibsons, which is home to Molly’s Reach (the restaurant featured in the ’70s CBC TV show The Beachcombers), an Italian ice cream store, a few high-end gift shops, boutiques and galleries, continues to draw tourists and locals throughout the year. But every month, it seems, another merchant packs up their store and leaves – and nobody is taking their place. This year alone, one of the area’s two main blocks has lost a successful gallery, a real estate agency and an artisan store, and is about to see its Bank of Montreal relocated to a shiny new building in Upper Gibsons. Fong’s – a classic everything-you-might-ever-need store (onions, wicker chairs, mop buckets) – a gift shop and a fashion boutique are all that remain of what was once the main drag in town (40 years ago, the block housed the only cinema on the coast). There’s no doubt about it: there may still be a steady stream of tourists, but Lower Gibsons has lost its mojo.

This is a predicament that SFU’s Markey has seen play out all across small-town B.C. “People will only support local businesses because they are local up to a point,” he explains. “So the business community has to be proactive in engaging the community, making sure their service is of a high quality and finding their niche in terms of being competitive with chains. It is not an ‘If you build it they will come’ scenario.” 

Which is where a regional mall such as Sunnycrest has a distinct competitive advantage. McCaw is proactive; she’s paid to be. Higher lease rates at the mall pay her salary so she can engage the community and push her merchants to “find their niche.” Sure, it’s something of a benevolent dictatorship – for the most part, local merchants don’t have much of a say on how to engage the community; McCaw tells them how – but at least there’s someone creating plans (meat draws!) and executing them. 

Which makes me wonder: just as chains and franchises force local merchants inside the mall to raise their game, will the mall force Lower Gibsons to raise its own? Local merchants can’t always see the forest through the trees. They’re thinking about cash flow, payroll and next month’s stock. Perhaps the continued success of the regional mall will provide an intangible of its own: motivation for local merchants to come together and organize on their own.