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December 1, 2003 - Strategy Magazine
News

Big box goes downtown
Category killers like Home Depot and Costco have conquered suburbia

by Lisa D'Innocenzo
page 1

Today, a big-box store conjures up images of "plaza city," a place overrun by minivans and dotted with perfectly landscaped soccer pitches. But that's about to change. The major players are trying to shift that kind of thinking, as they head into the downtown core to cozy up to urbanites.

As you read this, the likes of Future Shop, Costco, Home Depot and Rona are moving downtown, and they're doing it by retooling everything they stand for. The warehouse-style retail chains are introducing new environments to cater to the time-pressed, space-deprived downtowner, with a particular emphasis on service, convenience and an urban-friendly product mix.

Why take a risk in moving downtown? Simple: because that's where the people are. In 2001, Statistics Canada reported that 51% of Canadians now live in four urban regions - the Golden Horseshoe of Southern Ontario, the Greater Montreal Area, Vancouver and the Lower Mainland of B.C., and the Calgary-Edmonton Corridor. And since the last census in 1996, Toronto grew by 9.8%, Montreal by 3%, Vancouver by 8.5% and Calgary by a whopping 15.8%.

"Unlike some U.S. cities which are becoming ghost towns, Canadian cities are happening places," says Donald Cooper, business speaker on marketing, service and business excellence for The Donald Cooper Corporation in Toronto. "There are two customers to reach: the people who live downtown, and those who work there."

But if big-box chains think they can take what works in cookie-cutter home communities and transplant it to urban centres, they might get burned; after all, it's a completely different shopping experience. For one thing, urban shoppers "are under much more time pressure, and are much less forgiving," says Cooper. "They have one eye on the merchandise and one on the clock."

There are other challenges too. Joe Jackman is the chairman and CCO of Toronto-based strategic retail creative company Perennial, which counts Loblaws, Canadian Tire and Canada Post among its clients. He says urban stores will need to accommodate significantly more foot traffic (although urbanites would likely spend less money than suburbanites).

Chains also need to adjust their merchandise mix so that it caters more definitively to smaller households. Says Jackman: "Large families will look for large-format packaging, but in a city, that might not be suitable at all."

Burnaby, B.C.-based Future Shop seems to have done its homework before Nov. 20. That's when the retailer opened its flagship store on the corner of Robson and Granville streets in Vancouver's entertainment district, an event that was promoted by advertising - produced in-house - consisting of print ads in the local entertainment weeklies, transit creative and posters distributed in bars and restaurants - a tactic that wouldn't have been considered in suburbia.

While Future Shop didn't scale down the size of its 30,000-square-foot metropolitan location, it has worked on retooling its offerings.

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