SAINTS PRESERVE US
Crash and Burn
Beyond the city limits in Leduc County
a super-duper outlet mall is rising in the environs of the Edmonton
International Airport (EIA). From the highway the massive structure resembles a
prison, complete with watchtowers. Costco, with all its concrete Soviet
Brutalist charm, has been confirmed as a tenant. The Alberta Aerotropolis
project envisions the province’s capital city, the city of Leduc and industrial Nisku as an inland port,
anchored by the EIA and big box stores. Despite explosive growth along the
Queen Elizabeth II, the Calgary – Edmonton corridor, I
wonder if the retail component is a decade behind the times. As is, perhaps,
the high stakes bet on the long term robustness of the fossil fuel industry and
its Nisku service companies.
The city currently boasts two premium
malls. West Edmonton of course, and Southgate ,
now host to the cavernous vacuum of the debacle that was Sears. Toys “R” Us
will probably leave some big, empty boxes strewn about. Secondary commercial
properties are struggling with abandoned Zellers and Target leases. Some are
reeling from the double whammy of Sobeys’ Safeway acquisition; grocery banners
which no longer compete with each other merely require a single space for their
wares. Most malls are depressingly populated with medical service and supply
companies, and dental clinics whose signs always feature a gigantic, rooty
molar. Neighbourhood strip malls tend to be even drabber, shabby convenience
stores tucked between FOR LEASE signs and whitewashed windows.
Loblaw was once Canada ’s most innovative grocer,
thanks to visionary gourmand Dave Nichol. The President’s Choice (PC) brand was
audacious, promising consumers a private, exclusive and superior product to
that of any of the nationals. The foundation of the PC line was somewhat
ironic, the formula of Royal Crown cola, a deceased and forgotten though tasty
brand, an early victim in the war between Coke and Pepsi. After the gift of
President’s Choice cola Nichol graced us all with “decadent” chocolate cookies.
Last week Loblaw announced that it intended
to extort its vendors again, shaving invoices for a modest percentage to cover
processing costs. The company announced the launch of a fee-based loyalty
program. The company announced too that it would close 22 of its stores but was
coy about which ones where. The company announced an e-commerce initiative
predicated on consumers’ needs featuring premium pricing which may potentially
be eased somewhat by signing up and paying for the enhancements touted by the
fee-based loyalty program.
The Sobeys attempt at being digital is the
ludicrously codenamed “Project Sunrise.” The only quantifiable result to date
is the termination of the careers of 800 of its employees.
The golden or perhaps black metric for
traditional retail has been same-store sales. Ever upward! Amazon never cared a
whit for this dusty model. It didn’t have to. So this is why e-commerce can
become something like Hercules’s Hydra for newcomers, old school operations.
E-commerce will reduce foot traffic. Reduced foot traffic will reduce impulse
purchases, incremental sales. Less busy stores require less staff. A lack of
staff, especially cashiers, will annoy average shoppers inside stores who are
not professional third party pickers with lists. They may ultimately decide to
spend their money elsewhere, some place with a human face and a modicum of
customer service. But where will they go?
My guess for baby boomers like myself is
that we’ll just give up and go home, a safe place to click-step into the new,
emerging world order. Younger people, prizing experiences over consumer goods,
are already mobile, shopping from anywhere without actually having to endure
the hassle of going to a store. Chain retailers are twigging to the new reality,
that they don’t need hundreds of locations so much as a few warehouses and a
virtual store. Amazon seems to be going against the trend it created with its
Seattle shop and its acquisition of Whole Foods, a modest operation, but it
doesn’t strike me as a strategy so much as a novel attraction, like a themed
corporate outlet on Times Square.
Electronics retailer Best Buy has long
complained that consumers utilize its stores as mere showrooms before
purchasing items from less expensive, competing online vendors.
Chapters-Indigo, a bookseller, seems convinced the path to profit is lit by
votive candles and padded with aphoristic throw cushions. Why visit a bookstore
that doesn’t sell books? The HMV music chain closed its doors leaving Edmonton with one decent
record shop; that one hurt me.
My sweeping generalization of economic
digital disruption is that most sectors have or will become more efficient
while utilizing less labour. Retail provides a fine example of the paradox
posed in this period of transition. Online shopping is a relatively painless
and positive experience. A venture into the actual physical marketplace has
been degraded into something akin to agony, no staff, no stock, no
satisfaction. And anyway, people who are out of work or juggling multiple
part-time obligations or struggling with their new roles in the gig economy
tend not to throw money around.
But if you’ve got the money, honey, why
settle for the wares of a dowdy banner still trying to figure out the modern
world which already went by in a Doppler engine drone? Direct-to-consumer
startups are offering viable alternatives to Gillette razor blades, Kraft
Dinner and Heinz ketchup; they’re as disruptive now as Loblaw was in the 80s
when it launched its President’s Choice brand to humble the nationals: Dave
Nichol versus Goliaths.