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Can B.C neighbourhood retail survive inthe era of the big box store?

Shopping in Vancouver is undergoing tectonic change. Can B.C neighbourhood retail survive in the era of the big box store?

It’s a summer day in North Vancouver’s Deep Cove, and a merchants’ association event is in full swing. On Gallant Avenue, a lemonade stand does a brisk business while kids paint up a storm at an art-supply station. An entertainer performs tricks, sings songs and hands out balloons for the crowd. These street-front festivities are being financed by nearby LaLa Home Decor Ltd., a home decor and gift boutique.

In December LaLa will throw a wine-and-cheese party for 150 invited guests. According to store clerk Meagan Warren, the adults-only fete is also a big hit:  “Customers are always asking, ‘When’s the party?’” But while the event may be billed as a free night of fun, it’s also about business; the party takes place in the store, where the till is kept running. “People come and do all their Christmas shopping. It’s part of the experience of this community,” says Warren. Welcome to the new face of retail.

According to Retail BC CEO Mark Startup, retailers such as LaLa are getting it right. Materially besotted baby boomers, he posits, are abandoning a desire for “more stuff” in favour of “better experiences.”

“We want to enjoy ourselves,” Startup says. In other words, affluent consumers expect more from their retailers than the conventional delivery of goods and services. And retailers that don’t make an effort to meet that expectation may not survive.

There are more than 30,000 retailers in B.C., most of them small and medium-sized. They generate more than $52 billion annually in sales, making them a significant provincial business sector. Yet competition has never been stiffer. “It’s never been more challenging or competitive in Canada for the retailer,” says Startup. “The market has matured, creating enormous pressure on Canadian owners and operators to improve their efficiencies.”

While sales are growing by between six and seven per cent a year, net annual profits currently hover between three and four per cent – that’s nearly half what they were 20 years ago. With high volume, low margins and national and global brands nudging their way into community-minded neighbourhoods, it’s survival of the fittest. And the fittest are those that turn the simple act of shopping into an experience.
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Startup has a phrase for the kind of experiential marketing being used by retailers such as LaLa: “the theatre of retailing.” And like good theatre, it’s not only what’s seen on the surface but the substance behind the scenes that draws a crowd.

Brand consciousness is increasingly important, Startup says, citing the example of coffee bearing the fair-trade logo (which promises that foreign labourers are fairly compensated). “Consumers want to shop in stores that have a purpose or are making a statement. The best retailer knows he’s not just selling a SKU [stock keeping unit]; he’s rewarding the customer.”

Small and medium-sized retailers have the ability to specialize. That’s one reason why community-style retailing is thriving. Another is the density and walkability of homegrown retail areas, which appeals to a growing interest in the environment and health. “Now even the Costcos and Safeways – the big boys – understand the advantages of being in walkable commercial neighbourhoods,” says SFU City Program director Gordon Price.

Price believes the key to a positive retailing experience is to get rid of the need for a car. Retail, he says, is burgeoning in neighbourhoods that have long existed on the city’s public transportation network – what he characterizes as the pre-1950s streetcar grid.

So great is the draw to such pedestrian-friendly neighbourhoods that big-box stores and supermarkets will increasingly accept municipally imposed restrictions in order to set up shop in these local residential neighbourhoods, usually with a much-diminished footprint.

This is happening all over North America, Price says. In Vancouver he cites a Costco on Expo Boulevard, Overwaitea-owned Urban Fare in Yaletown and Coal Harbour and, what he argues as the best example of big-box urban design, the Canadian Tire store on Cambie Street.

“There’s room for both [the neighbourhood shopping district] and the big-box outlets, as long as the big box adapts to the urban landscape and not the other way around,” Price says.

In 2004 residents near Broadway in Kitsilano fought the introduction of big-box outlets, particularly a Home Depot, although not entirely successfully. In 2007 a London Drugs and small-format MarketPlace IGA deftly inserted themselves in a trendy nine-storey residential complex on Broadway at Vine Street.
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Even malls are reinventing themselves. Take the new Village at Park Royal in West Vancouver. Situated west of the conventional mall on the south side of Marine Drive, it is characterized by pseudo-village storefronts lining irregular roadways (one is sign-posted “Main Street”). Wide sidewalks are brick-faced and adorned with heritage lamp stands. On an autumn weekend, the Whole Foods Market hosted a charity barbecue on a spacious plaza, while a band played ’60s and ’70s hits that could only appeal to the shopping baby boomers.

Price characterizes this village as an artful imitation of a neighbourhood streetscape – albeit one lacking the “intimate connections” of a genuine residential neighbourhood.

Similarly, retail analyst David Gray of Sixth Line Solutions says the Village at Park Royal taps into the desire for an authentic, neighbourhood-based experience, but misses the mark. “The Village is a nice place,” he says, “but it’s not the live-work-shop environment people are after.”

So shopping malls and big-box stores aren’t bowing their heads and melting away; they’re adapting. Faced with the soaring price of urban land, they’re getting smaller and making do with less parking. And they’re taking cues from the independent retailers that are breathing new life into long-time commercial neighbourhoods.

Max Logan is a former chief of staff to B.C. Finance Minister Carole Taylor and a recently appointed B.C. director of government relations and member relations for the Retail Council of Canada. Relocating from Victoria, Logan chose to live in Vancouver’s funky, economically emerging Main Street area. “It has all kinds of terrific little shops and cafés,” he says, “and that’s how my wife and I identify our neighbourhood. We grab a coffee and go for a stroll.”

A September 16, 2007, New York Times travel article paints an appealing picture of what it describes as the “metaphorical railroad track” that still divides “the seedier east side” of the city “from the better-off west.” Main Street businesses such as Twigg & Hottie (garments of bamboo and hemp), Narcissist Design Co. (“body-conscious” dresses) and Voltage (“an anarchist Toys ‘R’ Us”) deliver, it suggests, a chic and cheeky alternative ambience.

Gray sees the Main Street revival as a good example of the Darwinian nature of retail, which is always evolving for better or, in some cases, for worse. Consider glitzy Robson Street, the city’s premier retail enclave, where four decades ago a merchant sold fresh eggs from a stall-like storefront. And Kitsilano’s Fourth Avenue, where today purveyors of an Urban Elite baby stroller priced at $740 and elf-like footwear at $300 a pair have long replaced the potters and tie-dye hawkers.

“I don’t want to upset people, but retail is in an ongoing and natural state of flux,” Gray says. “And the visionary businesses are created by those who have the neat ideas,” such as those along Main Street. “Successful startups attract like-minded retailers, and a critical mass of businesses develops. And then, with success, some big guy comes along and the demand for limited property spikes and prices go up.” Weaker businesses fail, chain stores move in (a phenomenon Gray calls “creative destruction”) and the ebb and flow begins anew. “Fast forward a few years and you’ll get more chains saying, ‘How about Fourth Avenue?’ Then Fourth gets bid up until you get another Robson Street.”

An added force for change in the retail sector is the battle to lure staff in a labour-short economy. Thirtysomething Logan says the industry needs to present itself as a business culture with real and long-term promise and substantive rewards. “There’s a changing perception as to what a job in retail means. It should include good wages, a flexible working structure and a community with shared interests and values, as well as opportunities for growth.

“There’s no reason why a university law student who works part-time for a retail chain, once he or she has finished law school, can’t move off the sales floor and go to head office and work in the legal department,” Logan continues. “One of our challenges is to show the opportunities for personal and professional development in retail.”
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Occasionally, a retailer creates a culture unto itself and a loyalty you’re unlikely to find at Starbucks or Sears. At the Cove Bike Shop  in North Vancouver, owner Chaz Romalis believes the status of the rugged mountain bikes he builds and sells is enough to draw a steady stream of mechanics. “They feel privileged to work for the Cove,” he says, pointing to a poster of the Cove Shocker bike, named “downhill bike of the year” by Mountain Bike Magazine.

“We’re the oldest in the business pretty much, so our mechanics feel secure,” Romalis explains. “And the fact that we design and brand our own bikes – there’s not a lot of shops that do that in Canada – that’s pretty cool.” Romalis says he doesn’t have to look for staff. “The B-team guys are easy to come by.”

Robin Delany operates four Delany’s coffee houses – in the West End, West Vancouver’s Dundarave and Village at Park Royal, and Edgemont Village in North Vancouver – and is planning a fifth. While he’s now running a small chain, each business embraces his grassroots neighbourhood ethic. “If you’re seen as an operation with a social conscience and socially attuned, that has an attraction for a lot of people,” he says. As for  staffing, Delaney suggests that by respecting his employees’ lifestyles and offering as much flexibility as he can, he’s won half the battle.

LaLa owner Kristina Egyed, who has come out of a profitable summer “staffed to the hilt,” says of the mostly young women she employs, “They’re seeking responsibility. They’re Gen X and Gen Y, and they’re plugged in and tuned in. And if we don’t offer them a level of responsibility, they’re out the door. They’re bored.”

But for others, the labour issue looms large. Retailers have to think outside the box, Startup says. They might start, he suggests, by approaching potential employees through the Internet and other non-traditional avenues.

Retail faces other challenges, not least of which are the municipal business property taxes that, in Vancouver, are six times greater than those for residential property. Last year, at the urging of the Vancouver Fair Tax Coalition, council froze business property taxes at 2006 levels. But critics want more. Startup believes that when civic politicians, beholden to the residential voter, see serious signs of tax fatigue in their own community retail districts, the tax inequity will be fully addressed.

Startup adds that good transit is linked to a growing consumer desire to walk. That’s why Vancouver’s streetcar grid will favour the street-front retailer well into the future, says Price. With sufficient residential density and good public transportation, he says, long-time commercial hubs will revive and develop.

“The streetcar grid is a resilient dynamic that continues to evolve, but always reflecting the community around it. It gives character to the marketplace – whether it’s the Punjabi Market [Main Street and 49th Avenue], West 10th Avenue, Commercial Drive or Fourth Avenue. As [urbanist] Jane Jacobs said, ‘It allows for new ideas in old buildings,’” says Price. “The successful model refers to the community around it. Compare that to your standard strip of post-industrial chain stores and big-box clusters.

“What’s not to like?”
 

Want more information? Read On Location, the companion piece to this article, also by Alison Appelbe.