MEMORABLE MOMENTS IN ONTARIO RETAILING

 

© John Winter Associates Limited

Two Wheeler Avenue, Suite 201

Toronto, ON, M4L 3V2

416-691-1870, fax: 416-694-6258

 

 

THE EIGHTIES

 

Turning Point: 1989 Last of the Enclosed Malls

 

Highlights: Eastgate rejected, London expands, Outlet Mall fails, Triple Net Leases, Bretton's emerges, Woodbine Centre opens, first planned power centre.

 

1980    Ontario's population reaches 8.7 million. They are served by 362 shopping centres, according to Statistics Canada.

 

1980    Hudsons Bay Co. ups its share of Zellers to 100 percent, thus increasing the consolidation in the industry. The total price for Zellers was $185 million, some $1.2 million per store (some $200 per square foot of store, but the sales productivity will never come close to this level). Zellers has a contemporary split of 70 percent hard goods and 30 percent softlines.

 

HBC now has a massive debt load due to its recent acquisitions of both Zellers and Simpson's: one billion dollars in long term notes, $500 million in short term notes and $100 million at floating rates. When interest rates float up to 20 percent in the coming recession, the corporate pain is acute. (Hudson's Bay loses $107 million in 1984).

 

1980    Eastgate loses its OMB store wars battle in Ottawa to become the second regional centre in the east (the title would later go, without any background studies, to the 800,000 square foot Place D'Orleans straddling the Cumberland and Gloucester boundary). Philip Hammer observes an oversupply of department stores and an under-supply of everything else, except in the central area. Dr. Hammer writes of the "chronic under-productivity of the CBD stores resulting from diversion of sales to outlying competitive facilities without a corresponding reduction in existing CBD floor space". By maintaining and protecting the central area's market share, to get the Rideau Centre off the ground, initially for a two year period, which grew into a 15 year period, what the City and Region supported was a historic retail pattern, including considerable unproductive retail space there. Downtown Ottawa had provided "a retail umbrella" for Hull; now the new Quebec shopping centres were also eating into that share.

 

The OMB is particularly critical of the hearing’s particular use of the gravity model, “The first run of the computer model produced a certain set of predictions which were amended to reflect the subjective judgment of the analysts. Those amendments were in quantity in the order of changes to 30 percent of the first run predictions … The Board is therefore of the opinion that the results obtained from the complex predicative model and given in evidence are not correct and cannot support the already approved requirement of the Official Plan that a regional shopping centre designation must be supported by marketing evidence” (R762471).

 

A fudge factor of 30 percent is a tad high. For the next decade, all Larry Smith & Associates reports will warn of the simplistic acceptance of gravity model results.

 

The Board was just as critical of the rival procedure, the residual approach, particularly because it was based on “overtly optimistic and clearly not achievable” population projections. (“The effect of the residual approach as used by Mr. X and the fact that Mr. X’s evidence showed that a residual approach prohibits transfer because it assigns ever increasing shares to the major shopping centres in the area, including the CBD and the Rideau Centre. There is great doubt that impact exists on other facilities because Mr. X could not quantify such impact. It is obvious on the Mr. X evidence that there can be no transfer of dollars, let alone adverse impact on the CBD and the Rideau Centre, under that analysis if Eastgate were opened in 1986”.

 

So what to do: a pox on both your houses! The Board is “of the view that if any reasonable doubt should exist in its mind as to the planning or marketing need, the proposed designation should not be approved”.

 

But developers are wily and determined creatures, not to be discouraged by an arithmetical error. With their large egos, they often make decisions based on their gut rather than on arithmetic so Gloucester Centre grows on the Eastgate site (click here) and in the 1990s, an adjacent site opens Silver City Centre (movies + books + electronics + good eating).

 

1980    Wonderland expansion is approved by the OMB. There is no reason to refuse unless it impacts on the planning function of Westmount (R801421).

 

1981    Department stores obtain their highest market shares of their merchandise category. A record 300 stores are now operating in Ontario. Their share is cut by a third over the next decade as the mall chains, whose location they facilitated, eat into their share. New department stores still get built (particularly downtown by Eaton's). In their long (arrogant) leases, these companies continue to allocate their space for the next hundred years.

 

1981    August 12, IBM launches its PC standard. Calculations and retailing will never be the same. The PC brings to the small retailer the inventory control mechanisms that only big firms like Canadian Tire could afford and pioneer. Soon the PC will tell the medium then the small retailer what sold, and what didn’t, and will immensely help forecasting (particularly helpful in suggesting what sales might have been if those little yellow dresses had arrived when promised, and not six weeks late).

 

1981    Canada’s Wonderland opens. The $120 million theme park is to provide extensive spin-offs to Vaughan, but no hotels appear near the seasonal facility. In 1990 a mall anchored by Bloomingdales is proposed to the north (on the Sure Gain pig farm); in 1997 Vaughan Mills is proposed to the south. Wonderland’s attendance at some three million ranks it as no. 20 in North America.

 

1981    Oakville Place (450,000 square feet) is constructed over the ruins of a Towers/Food City combination (100,000 square feet), on a very visible but constrained site beside the Queen Elizabeth Way.

 

1981    Canadian Tire begins its disastrous foray into Texas. It purchases 81 White's stores with their "unique" merchandise concept of furniture + auto parts ("the furniture store where you can get your car fixed"). Rather than rebuild their core Ontario stores, they begin a five year losing foray into a different climatic zone in the United States. (The company had previously obtained a 35 percent share of McEwans, even further away, in a completely different operating environment and climate, Australia).

 

The Financial Post trumpets: "They've walked away with a hell of a deal, a clever deal ... They bought the company for next to nothing ... they paid no goodwill" (January 18, 1982; well those headlines should alerted The Financial Post to something). White's also warehouses to 423 independents. Its sales per square foot were $65, while Canadian Tire was averaging $200 back in Canada. Great opportunity for enhancement, at least on paper.

 

Canadian Tire explains that it has been building smaller stores recently (in entering the BC market in the late 1970s, there were no large sites available in the lower mainland; the smaller stores generated $500 per square foot) and that it was running out of expansion opportunities in Canada. Anyway, "there are no substantial differences" between Canadian and U.S. buying patterns, according to the company.

 

The small White's stores are blown away in Texas by the 100,000 square foot Pep Boys. Ian Brown writes: "White's stood for old stores, bad value, even—for there was a large black and Hispanic population in the southwest—racism. The research showed that the name 'White's' had a negative halo around it" (Freewheeling, page 213). Translation: No black was going to boast that he got his spark plugs at White's. Canadian Tire considered changing the name to The American Way.

 

1981    Woolco ejects all its jobbers: Graftons, UCS, Dominion Drugs, International Restaurants, Hallmark and Kinney Shoes. The discount department stores of a decade earlier were basically a grouping of independent jobbers; Woolco is the last chain to dispense with them and take full responsibility for all aspects of its in-store merchandising.

 

1981    Council in the City of London approves expansions to Westmount, White Oaks and Wharncliffe shopping centres over its Planning Department's objections. The OMB listens to the planners that that amount of expansion would have a detrimental impact on the downtown (which has a planned function as the paramount retail centre). The City joins with the developers in an appeal to the Ontario Cabinet, who reverses the OMB's opinion (OPA 154 is approved with a 230,000 square foot expansion to Westmount, OPA 159 is approved giving White Oaks another 600,000 square feet). The third department store in White Oaks is put on hold until "Council approve a resolution, based on a market study, to the effect that the Central Business District would not be seriously and substantially adversely affected for more than two years from the data of the study".

 

Next year, the Committee of Adjustment also ignores the London Official Plan and approves first a discount clothier, Winners, in a Service Commercial designation (1983), and then a Toys "R" Us (1984), both near White Oaks. By OPA 277 (1984), Council confirms the Committee's action by opening all Service Commercial designations to virtually any size or type of retail store, by themselves or as part of a group, in areas of the City where retailing had never previously been permitted. As a result of these actions, by the end of the 1990s, the City has enough commercial land to last for another century's growth, ready and designated for commercial development. (Much is not in the right location, however.) Further declines in the downtown share can be expected. Indeed, a Waterloo Ph.D. thesis on London concluded, "the level of policy and programme concern with regard to the CBD leaves one with the impression that the 1961-1991 planning efforts accomplished almost nothing" (Curtis, 1994, page 313). When Eaton's folds its historic store downtown, I'm on a talk show with the London mayor. The mayor can't understand the decline. "Remember your history", I say.

 

1981    Wasaga Beach gets its second supermarket. According to the OMB, the new Zehrs "will have some, but no fatal impact on the existing commercial facilities" (RR80986).

 

1981    Sturgeon Falls gets its mall. The OMB comments: "The recapture of the leakage of DSTM dollars from the trade area and the increase in the disposable income of a growing population will ... result in a demand for additional space needed to justify the shopping centre within a reasonable number of years ...some impact on the CBD, the Board is satisfied that, after a period of adjustment, the CBD can continue to grow" (R77684).

 

1981    The City of St. Catharines commissions the most detailed retail study yet by a municipality. Forty-nine square feet of retail and service commercial space per capita is measured.

 

The downtown has a million square feet, the second highest retail sales (the highest is the regional mall, Niagara Pen Centre) and a vacancy of 20 percent. Downtown is equal to its competitors on all but one characteristic. It rates very well on amenity, comfort, variety and choice, access, merchandise quality and prices. It rates disastrously on parking.

 

The writing is on the wall for the retail downtown: (a) only four percent of the consumers rate it as their first choice for shopping (compared to 50 percent for the regional mall and 19 percent for Ontario’s first enclosed mall, Fairview; Table 5.2), and (b) a quarter rate its parking as ‘poor’ and another third rate its parking as ‘bad’; Table 5.22).

 

What to do? The recommended policy is don’t worry! The consultants think, from a disastrous misread of the Harvard Business Review 1978 and totally contrary to their own figures, that “Department Store sales will decline from about 63 percent of all retail sales to less than 30 percent by the year 2010” (page 167). In 1981, department store sales were just under ten percent of all retail sales in Canada.

 

“The increase will go to specialty stores. By definition a specialty store offers a singular product or merchandise line with a high level of personal service and support. It is observed that consumers are becoming tired of impersonal mass merchandized goods and are now seeking a more intimate and individualized merchandising form. As a consequence, specialty stores are forecasted to grow from about 25 percent of retail sales to almost 50 percent by 2010. Here is a major direction for downtown shopping. The independent retailer has the most flexibility, and opportunity, to provide specialized service to the market… there is considerable promise for improved retail activity in the St. Catharines CBD”.

 

“{the CBD shopper} … a more sophisticated shopper, professionally oriented and having a higher household income than the average shopper. This profile is closely associated with the specialty store shopper. These consumers are very much brand conscious and prefer to go to a favoured store directly, do their shopping, then leave…Potential increases in retail spending as allocated by the computer model alone, can substantially improve retail sales…The trend towards specialty stores and the presence of sophisticated shoppers now in the Downtown area offers a strong possibility for an improved CBD. Indeed, there should be some expectation that Downtown retailers will excel in merchandising and exceed their potential by drawing from other centres”.

 

So you don’t need to do anything: retail trends are reputedly marching in the direction of the CBD. Pity the data was all-wrong. Pity people put such faith in those days in simplistic computer models. And what about the parking?

 

1981    Owen Sound gets its large mall. The Board notes that the 15 percent impact on the core is "not adequately substantiated". The Board feels it would be less. The Board listens to examples of impact in the Grey and Bruce area: "were being successfully counteracted by their astute and aggressive merchandising practices. In both cases the initial loss in business experienced from this outside competition had been regained totally or almost totally after a relatively short period of two to three years" (R802087).

 

1982    Canada's first Outlet Mall opens in Brampton, 190,000 square feet, at Highway No. 7 and Heart Lake Road (Highway 410 was not yet built in this location).

 

It fails: (1) the mall is operated by Bramalea that has the 900,000 square foot Bramalea City Centre to protect, one block, half mile, two minutes drive away to the east (neither a propitious ownership nor a suitable location for an outlet mall). (2) The leases stipulate that prices cannot be lower than 35 percent below the chain's other prices elsewhere in the Greater Toronto Area—Bramalea has a retail jewel to protect a short golf shot away.

 

The next anchor is the Titan Warehouse Club, Ontario's first membership warehouse, under-capitalized, but with a superb computer system. It too fails.

 

The next activity is a flea market. This triggers a landlord-tenant battle, in which Toys “R” Us claims the mall is not being run in a first class fashion. I find a quote in the ICSC New York library from Toys “R” Us U.S. President Lazarus that Toys “R” Us loves to be beside discounters, and their case falls apart.

 

The two other off-price centres in the market fared better: Lawrence Plaza (325,000 square feet, soon to be anchored by a Winners that drew in females with incomes exceeding $100,000) and Dixie Mall (522,000 square feet). Dixie had been devastated with the opening of Sherway Gardens and the good tenants walked across the expressway. Dixie languished for almost two decades. The catalyst was the opening of a basement (weekend) flea market in 1977. Then a Sears Clearance Centre and a Knob Hill Farms (160,000 square feet) food terminal arrived, and the mall became a draw again. Its new owner, Cambridge, did not have any competing malls in the vicinity.

 

I work for the new owners of the Outlet Centre on what went wrong (too close to the urban market). The next outlet centre I work on is a roaring success, at 75 kilometres distant, in Cookstown (click here for photo).

 

1982    First Future Shop opens, 4,000 square feet, by Mr. Khowrowshabi, who had left Iran four years earlier.

 

1982    Toronto retail sales at $13 billion exceed those of Montreal by 15 percent (and are double those of Vancouver). The store type with the fastest growth is drugstores, which are being transformed into the neighbourhood general merchandiser with the expansion of the front of the shop.

 

1982    Miracle Food Mart supermarkets launch their "constant discount pricing" on 2,000 frequently purchased items. A new food price war erupts. Prices drop 11 percent. A vigorous response by the other chains means that there is no change in market shares, just blood on the floor.

 

Price cutting just to gain market share can be a losers game with no benefit to overall profit if you are not number one in the market. Price elasticity of the top 500 supermarket brands is some -1.85; in other words, a ten percent price cut should produce an 18½ percent increase in sales (this excludes a few luxury brands with a positive price elasticity, where sales increase when the price goes up). There are variations: household cleaners have a price elasticity of -1.01, much less price sensitive than dairy and bakery (elasticity: -1.69). Market leading brands have lower price elasticities than also-rans. Thus it makes more sense to support your market position with advertising than price promotions (since their lower elasticity means the increase in sales from price cutting may not add to profits).

 

1982    Retail Council publishes its Recharges Study to coincide with the March ICSC convention: "In many of today's normal standard forms of net, net lease, increasingly more costs associated with operating a shopping centre have been passed onto the retailers, with the result that operating costs such as CAM, HVAC, realty taxes and insurance have become significant factors in the retailer's P & L". The result is that the triple net lease becomes standard: the ultimate in bottom line, the net net net lease, every conceivable cost is passed onto the retailer, further diminishing the risk to the developer. Retailing turns into a fee business.

 

1983    At the ICSC Convention, Rubin Stahl (a true showman) is leasing up the West Edmonton Mall expansion with the help of a real lion. Delegates only get their pictures taken with Garfield. It's an improvement over previous years cutouts of Marilyn Monroe and Superman (click here for photos).

 

1983    Yorkdale expands by 75 stores to 1½ million square feet, the first expansion since its construction 19 years previously. The marble floors and wide walkways remain; the new design relies extensively on skylights, planters, benches and pop-out storefronts.

1983    Metro Toronto Planning begins its tri-annual survey of shopping centres and retail strips.

 

1983    K-Mart buys Bargain Harolds, a 53 store chain.

 

1983    November. First Insider’s Report published by Loblaws. Within three years, three out of five Ontarians would read the four seasonal editions for some 20 minutes each.

 

1983    Half of Ontario's retail sales are in shopping centres, according to ICSC, based partially on our statistics. This shopping revolution has taken only a brief quarter of a century.

 

1983    Ontario turns gradually away from malls. Non-mall construction increased to 61 percent over the first three years of the 1980s, while it was exactly balanced with mall space in the last three years of the 1970s. Unlike a mall store, non-mall type retailing did not have to pay a premium in its rents and maintenance charges for the anchors (Canadian Retailing, September 1993).

 

During the 1960s and 1970s, the shopping centre had taken Ontario retailing by storm, transforming the retail structure of suburban areas. The growing trend of the 1980s was towards freestanding stores, which were destinations in their own right and did not need (a) the combined store attraction, or (b) the impulse-purchasing environment (which were the strengths of the enclosed mall). An enclosed mall is a high-margin business: (s)mall stores need full margins.

 

Destination shopping trips tended to be pre-planned rather than spur-of-the moment trips. Free-standing stores tend to draw from larger trade areas (see Summary of 544 surveys) and are not as closely tied to a community as are traditional shopping centres. This also meant that they were not as concerned about locating at the focus of community life; instead of planned foci, they can substitute alternative, more affordable locations.

 

The success of the free-standing warehouse concept, where there is little distinction between the retail and the storage area, was being extended in mid-decade from big-ticket, infrequently-purchased items to smaller ticket items as well as to frequently purchased food items. The comparison between stores (the rationale of a central place) changes to a comparison within large box stores.

 

The space extensive nature of these warehouse stores frequently makes them inappropriate tenants for many shopping centre environments, where stores have tended to shrink in size just at a time when the typical size of a warehouse store has risen.

 

The first new format, big-box store is IKEA in Mississauga. The municipality prohibits their operating their signature restaurant (Mississauga must have felt that selling Swedish meatballs didn't go well in an industrial area). IKEA fights back with no one selling the food: it was on an honour system. Irked by the foolish restrictions, IKEA moves in 1987 to a more visible location beside Highway 401 with its largest store on the continent, 250,000 square feet. The almost simultaneous opening of an adjacent Canadian Tire produces gridlock on the one access road, pointing to a severe problem with any warehouse retrofit in an industrial area.

 

When it arrived in Ontario, IKEA had made the classic outsider's mistake, of selling European beds, which did not match North American mattresses and sheets. In the mid-1980s, IKEA claims that its annual store visitation is equivalent to two percent of the world's population. Two percent of the world!

 

1984    The strike against Eaton's lasts six months with less success than the four year strike in the late 1940s. Unlike 1952, when all the stores were street front, it is impossible to picket department stores in the private property of a mall. Standing at the edge of the parking lot has no effect. Other labour groups are slow to respond. The strike fizzles.

 

1984    Trudeau takes time out from yet another constitutional conference to open downtown Ottawa's Rideau Centre. The Rideau Centre has the poorest visibility of any of the new downtown centres (click here). Rideau opens with the delightfully alliterative (and very successful) “Rendavous Rideau” campaign—those reverberating “r”s just roll off the tongue.

 

1984    People's Jewellers has 236 locations in shopping centres and 23 on the street. This is a reversal from 1964 when it opened its first mall outlet in Yorkdale; it then had 23 outlets on the street. People's Jewellers over-expansion in secondary and tertiary malls would soon catch up with the retailer.

 

1984    The sharp drop in Ontario's August sales is widely interpreted widely as the beginning of another recession. It's just the Los Angeles Olympics keeping consumers away from the stores.

 

1984    The Brick arrives in the Ontario market from its Alberta base, and increases the competition in the furniture market.

 

1984    Dominion loses before the Ontario Labour Relations Board: it cannot turn its old unionized stores into non-union Mr. Grocer's. Non-union would represent a ten cents savings on the dollar and would be formidable competition to the Loblaws (unionized) baby shark, No Frills.

 

Dominion is stuck in a time warp with too many small 20,000 to 25,000 square foot stores while its prime competitor has taken ten percentage points of market share away from it with contemporary stores in the 40,000 to 45,000 square foot range.

 

Dominion dominated the Ontario market in the early 1970s by sprinkling many small supermarkets throughout the suburbs. In an era of convenience, consumers shop at the closest store. There was also not much difference between a Dominion at 20,000 square feet and one of its competitors also at 20,000 square feet; the key difference then was accessibility. Operating costs are higher in small stores (explaining its push to a non-union workforce), and thus its prices creep up above its prime competitor.

 

Dominion ends the year with a $30 million operating loss. It says that 110 of its 290 stores (38 percent) are losing money. Dominion cuts its Ontario stores from 216 to 156.

 

A&P buys 93 Dominion supermarkets in February 1995 for $115 million (a measly $1½ million per store). Sixty of these stores are in the Toronto market. A&P had few stores in Metro. Corporate A&P briefly rockets past Loblaws in market share (25 percentage points for the amalgamated firm versus 21 points of share for Loblaws). A&P now has 199 stores in Ontario. It pays $30 million for the inventory. The new stores include Eglinton and Markham that was opened four years earlier (with talking cash registers) for a cost of $10 million.

 

Conrad Black’s Domgroup also sells 58 franchised Mr. Grocer stores for $40 million (a pittance, $600,000 per store) to Loblaws.

 

The old lady Dominion is retired after 65 years. Other chains marketed, renovated and expanded their units; Dominion didn't. It was once the largest retailer in Ontario. "New Dominion" stores are now operated by A&P. In the first half of 1985, the worst 33 still lose a million dollars a week in total.

 

1984    Eaton's becomes the largest Ontario department store chain with all its new downtown stores: the ranking is now Eaton's, Woolco, K-Mart and then Sears. A decade earlier it was Woolco, Eaton's, Simpson's followed by K-Mart.

 

With the emerging electronic control systems, with "just in time inventory", the new stores are functionally more efficient (in terms of selling: total area if not in productivity, click here for the changing store productivity).

 

The 1984 to 1986 period is the golden era of Zellers, sales increase 27 percent, operating profit per square foot increases 121 percent.

 

1984    Survey of Toronto Residents’ Shopping Behaviour indicates that the city’s strips “are a largely unrecognized powerhouse in Toronto retailing where they play an important and formidable role in servicing local communities with convenience merchandise and services”. The most frequent complaints are lack of parking and the strips not being open consistently at night, areas where the malls excel.

 

Retail strips play a unique role as ‘incubators of retailing’. It is practically impossible for first-time retail entrepreneurs to get mall locations (because of the high rent and financial requirements) so the low rents and low store décor and fixturing costs (minimal entry cost) attract new and different retailers”. All you need is first and last month’s rent, and you’re a retailer on a strip. No wonder so many fail there.

 

1984    The shortage of Cabbage Patch dolls marks the Christmas season in North America. I observe vast stocks unsold in Galeries Lafayette and Le Printemps on Boulevard Hausseman in Paris. Despite this hit product, Coleco goes bankrupt in a few years.

 

1985    Kownski writes The Malling of America about the most effective vehicle yet invented to sell goods and services to the suburban population. Retailing is for professionals, not amateurs. Whereas a retail strip in an old part of town mixes the old and the new, the marginal and the innovative, no business is going to survive on a shoestring in a mall. Anything not high-powered and well-financed, fades away. Enclosure, protection and control are the three keys to a mall's success. The success concept of the future will be one-stop living (an expansion of the idea of one-stop shopping).

 

1985    Muncaster leaves Canadian Tire due to the debacle in Texas. In December, the White's stores are sold for $55 million, at a significant loss. Canadian Tire starts to "Zellerize" its stores, adding electronics and household items that were never in its mix before. On the first day of snow, they might not have any salt; but they would have CDs.

 

1985    "Cocooning" becomes a trend, basically the baby-boomers' propensity to stay at home with the kids and the VCR.

 

1985    Steinberg of Montreal joins forces with The Price Co. of San Diego to bring the phenomenally successful warehouse club concept to Canada. Plans call for 15 to 20 outlets in the next five years, at a cost of $7 to 10 million per store. Each store will initially bring in some $100 million in sales, and sales at the first one in Quebec and the first one in Ontario will greatly exceed $200 million annually. Not bad for a $10 million investment. They operate on a gross margin so low, eight percent, that conventional retailers can’t compete on price. Steinberg will soon exit its conventional stores in Ontario, Miracle Food Mart and Basics (10 percent of the Ontario food market) and Valdi (3½ percent of the grocery market).

 

1985    The first two Bretton's stores open in Ottawa. Comark's Bretton's is a triumph of market research: there is a gap and a need for a clothing department store, without all the other stuff. (Bretton's combines the high-margin, high-turn merchandise into a 60,000 square foot unit, with high-service; click here for their department store model). Sixty thousand square feet is equivalent to one level of a suburban department store (whose models are generally on a 300 by 200 foot footprint; the 200 feet gives two stores of 80 foot depths, plus a central corridor of 40 feet).

 

Comark targets 40 to 50 outlets. The existing department stores—who generally had anchor approval clauses—have other ideas. Without much leverage, Bretton's has a terrible job finding suitable locations in good malls. (The more successful Winners concept, of course, by-passed the big malls and their blackball clauses, altogether, for free-standing and power centre locations). It takes eleven years for the chain to expire.

 

Like IKEA and Marks & Spencer, Bretton’s makes the classic outsider's mistake: it sends large fur booties to Vancouver, where there's not much snow, and where the Asian feet are rather small.

 

1985    Woodbine Centre opens in August. August is an ideal month in which to open: a quick boost from back-to-school, and a nice ramp-up to the key holiday season. The excitement of a new regional shopping centre clogs the access roads for miles around on its opening night.

 

Compensating for its poor anchor combination (Sears + The Bay), the 700,000 square foot regional was the first Ontario mall to offer an entertainment centre, coaxing consumers by carousels, excitement beyond the simple sale of goods (a 48,000 square foot Children’s Village).

 

Woodbine approval needed 17,000 pages of testimony, 441 exhibits (almost three times the Sherway number), 101 public meetings, 94 hearing days and 64 witnesses, including myself. The public must have been so exhausted that "no members of the public came forward in support" (The Land Economist, July 1983). A touch of the absurd is added to the proceedings as my client had just fallen deeply in love and can only be contacted during the day at a series of local motels. It’s straight out of Kafka.

 

Of the six small Albion Mall retailers who appeared at the hearing claiming they would be devastated if the new mall were built, five were still in business a decade later.

 

Four years later, we have the opportunity to re-do the market shares in northern Etobicoke: the only discernable impact is that there are two new department stores, and no other Etobicoke shares have changed with the arrival of the regional shopping centre.

 

1985    Flea markets proliferate in regional shopping centres on Sunday when the legitimate retailers are forced to closed by Provincial laws. In Bramalea City Centre, for instance, new merchandise ("illegally obtained", according to the centre’s retailers) is sold outside the closed stores in the common areas on Sundays. The higher maintenance costs get passed onto the traditional tenants.

 

The Penn Centre in St. Catharines also runs a very successful flea market each Sunday. Nothing compares to the 20,000 shoppers each Sunday at the Metro East Centre in Pickering. It is the bottom of the recession; and there is nothing else to do on a Sunday.

 

1980s  Mid-1980s: the battle of the food superstores begins. Loblaws opens 100,000 square foot food and general merchandise combo stores in Pickering and Burlington. Super Carnival arrives from its successful Quebec openings in 1986 in the Hamilton market. With non-union labour, the first stores do a million dollars in sales per week, a staggering $735 per square foot. Loblaws soon buys out Burnac's Super Carnival.

 

1985    February is the cruellest month in retailing: the score is in (the Christmas results) and heads roll. This year, major changes at The Bay where losses mount (due to lower sales and an enhanced debt load). February is usually the beginning of the retail year because it has the lowest inventories (except in south Florida; February is Christmas in Miami).

 

1985    Square One expands by 120 stores and changes its design so that there's a core within the square. Next year's expansion holds the prospect of almost one thousand stores. The plaza was looking a little tired after 12 years of operation and needed some changes to keep it up to date with contemporary design, materials and colours.

 

1985    Safeway pulls out of the southern Ontario market. It sells 22 stores to the Oshawa Group. Safeway maintains a toehold in Thunder Bay and Fort Frances which it can service from Winnipeg.

 

1985    The New York State Court of Appeals reaffirms that shopping centres are private spaces, 5 to 2. Judge Wachtler, in a dissenting opinion writes “In the past, those who had ideas they wished to communicate to the public had the unquestioned right to disseminate those ideals in an open marketplace. Now the marketplace has a roof over it and is called a mall, we should not abridge that right”.

 

1985    Joseph Mimran opens the first Club Monaco store. Their unisex concept morphs into designer items at discount prices. Dylex swallows it in 1989. Polo Ralph Lauren obtains control through the 1997 IPO.

 

1985    The Live Aid Concert from London and Philadelphia is seen by 2 billion viewers. Global ideas are a reality. Retail sales remain local.

 

1985    The new Yorkdale Bay eschews furniture and appliances in favour of a more dominant assortment of fashion apparel and other soft goods lines.

 

1985    One third of Ontario will visit a store on an average day in 1985, according to one of those eclectic Statistics Canada surveys. J'achète donc je suis. On an average Saturday in mid-decade, half of all the Province's women will visit at least one store (click here for the statistics). Shopping is so pervasive that more people will have shopped than will have visited friends, cleaned their homes, done laundry, or participated in hobbies. They obtain catharsis through consumption. More Ontarians will have shopped than have picked up a daily newspaper (Statistics Canada, Where Does Time Go?).

 

Shopping is classified by Statistics Canada as an unpaid, productive activity, neither a leisure activity nor an entertainment activity, though many Ontarians behave as if it were. The Europeans and Japanese spend half the time shopping than a typical Ontarian. The data suggests to me that well-designed shopping centres—with good decor and a magical mix of stores—can retain people longer than is absolutely necessary to satisfy their needs.

 

1985    David Apperley, former manager of Square One and who has led the prayers at ICSC breakfasts, becomes a deacon in the Catholic Church. His parish is in a school a short golf shot from Square One. I attend his first homily: “we in society must distinguish between those goods which, like food, can be consumed and forgotten or, like clothing and automobiles, discarded and replaced by newer goods, and spiritual goods like works of art which can only nourish if they are not consumed”.

 

1986    August: Zellers launches Club Z. Half of Ontario households will soon have an account. The 1960s “Green Stamps” returns with a vengeance. It provides a competitive advantage, a vehicle for obtaining and maintaining customer loyalty. The ingratiating slogan of the “Law of Toyland” also appears.

 

1986    Knob Hill Farms, the lowest-cost food store, wishes to redevelop a 350,000 square foot warehouse on Eglinton Avenue East as a discount food store central to half a million consumers (click here for mural). The Scarborough Planning Department is supportive: “a healthy evolution of obsolete facilities that cannot and probably should not be controlled through the planning process”. This area of Scarborough was called the Golden Mile because retail, industrial and housing co-existed. Two supermarkets, including Loblaws who wanted to build a 120,000 square foot super-combo store on the redeveloped Golden Mile Plaza, are opposed. Along with some residential opposition, and union opposition about the non-union Knob Hill employees, Council rejects the proposal as “not being in the public interest”.

 

Council hires its own consultants to oppose its own Planning Department at the Ontario Municipal Board. The OMB ridicules the Knob Hill consultant’s claim that impacts would be spread evenly over Scarborough. Had he never heard of distance decay, the ripple effect, where impacts get weaker further out? The OMB turns down the project. Eglinton East cannot handle the traffic. Consumers lose.

 

1986    Ontario now has 444 malls, according to Statistics Canada, up 70 percent from their last count. Since 1973, regional shopping centres have increased the fastest, a 167 percent growth, or 70 new Ontario centres.

 

Ontario has a reasonably balanced distribution: neighbourhood shopping centres (190 centres, up 18 percent over 1973), community shopping centres (89 centres, up 41 percent), regional shopping centres (112, up 167 percent), and 53 other indoor centres (not counted in 1973). Compared to Quebec, where the major department stores avoided in the early years of the PQ, Ontario has a much greater proportion of regional shopping centres (Quebec has a larger proportion of community centres anchored by the juniors). Alberta, which boomed in the late 1970s and early 1980s, was the mall capital of the country, with a much higher proportion of regionals.

 

But the writing is on the wall: productivity of stores in shopping centres exceeded those outside shopping centres by 24 percent in 1973. The ratio had dropped to 17 percent by 1986.

 

When ICSC does the count, also in 1986, it announces 1,245 shopping centres in the province, accounting for eight percent of total employment. ICSC includes every single strip centre, not just those over 50,000 square feet.

 

The GTA has been adding all kinds of malls at a rate of 47 per year in the mid-1980s, compared to some 27 a year in the late 1970s. From the election of the PQ in Quebec, Toronto’s population growth has soared, spurred by many migrants from Montreal.

 

1986    Forty percent of Ontario's new shopping space is now in renovations and expansions of existing centres, up from five percent in the mid 1960s. (Retailing in Canada, December 1988). Increasingly, developers are smartening up existing malls rather than building new product. The entrances get particular attention, in an attempt to make a distinctive statement. (The way families shop is to go through the entrance together, get to a central court, then split up).

 

The interval between construction and expansion has considerably narrowed: it generally took ten years before the malls built in the 1960s expanded; the gap decreased to some seven years for the 1970s malls; by the mid-1980s, the gap was only two years.

 

Shopping centres have developed a distinct life cycle: sales will grow in a typical regional for five years, level off for five years and then decline, unless a refurbishing or a redefinition takes place. A neighbourhood centre ramps up faster and tends to be steady for a decade (unless a new population cycle begins in the neighbourhood). More developers are trying renovations to rekindle the lost spark, and to restore their positive pulling power. By making their product more attractive, they stop competitors from stealing their tenants. Winners make things happen; losers let them occur.

 

1986    A mall is judged by the stores it keeps. A brilliant MA thesis at Western (Bernardo: Shopping Centre Transition in Metropolitan Toronto, 1952-1986) makes it clear that, as a mall declines, stores decrease and services gain. The key to avoiding shopping centre decline in the 1980s, therefore, was specialization in the sales of goods (the offering of a cornucopia of merchandise) rather than in the provision of services. Goods are things you can drop on your toe; services you cannot.

 

The balance of retail to service is crucial: developers should be careful to monitor the tenant roster to maintain more retail than service tenants. The reason is fundamental to the way a shopping centre operates: consumers are willing to travel longer distance to purchase goods than to obtain services (see Summary of 544 surveys). Stores selling goods build traffic, have positive pulling power and larger trade areas. They draw customers from further afield. Non-goods outlets in shopping centres tend to have smaller trade areas and serve consumers from a much more constrained area.

 

The selling of goods, therefore, is the essence of a good shopping centre. A compelling tenant mix is one that is predominantly goods-oriented. Shopper appeal relates to goods, not services.

 

Selling goods brings in people and creates bigger transactions. Providing services does not. A shopping centre slipping into decline is usually characterized by a predominance of service tenants. These services generally pay lower rents. Maintenance deteriorates. Pot holes appear in the parking lot. As service tenants increase, a consumer is offered a poorer choice and is forced to go elsewhere for comparison merchandise. The shopping in the declining centre becomes more local and convenience-oriented, and consumers do not seek out the centre with the same impetus and frequency.

 

Bernardo shows that, globally, the ratio of selling of goods to the selling of services has been relatively constant over the previous three decades. Any switch to services within a shopping centre is a real indication of actual or potential decline.

 

Four factors condition the tenant mix and therefore the speed of shopping centre decline:

 

1.         The size of the centre. Size tends to insulate a centre from the deteriorating effects of age and location. The larger the centre, the easier it has been in the Toronto market to maintain a high proportion of goods retailers. Larger centres are oriented to the selling of goods while smaller centres tend to be oriented to the provision of localized services. The medium sized centres, from 100,000 to 300,000 square feet, are the most vulnerable to change: too large to be really convenient, too small to offer a good spectrum of goods, and now too small to maintain an effective specialty retail mix.

 

2.         The age of the centre. Shopping centres change as they age: the newer the centre, the more likely it is to have a predominance of retail tenancies. The more services a centre has, the likelier it will be that the centre is either an older one, or a smaller one, or both. The older it becomes, the more likely it is to have a distinctive service orientation. The longer the inaction on the part of the developer, the greater the decline.

 

3.         Location. Shopping centres are predominantly suburban. The older centres in the now mid- to central cities, have more service than goods tenants, and many have lost their original anchors. Stuck in constrained sites, and affected by a declining and an aging population, they have found it difficult to obtain suitable replacement stores. Their general merchandise function is superseded by the larger shopping centres in the newer suburbs, and they are left with an inappropriate mix.

 

4.         Maintenance. Functional decay (the loss of goods retailers) tends to be a precursor to physical decay. As the shopping centre shifts from a goods-predominant centre to a service-predominant centre, the loss in vitality may also be reflected in a lowering of maintenance standards. The newer suburban centres, with their Art Deco designs (in the mid-1980s), look and feel different from the generational chrome and white centres of the 1960s, that are marooned in the mid-city areas. Their colours and obsolescent designs, as well as their functions, set them apart.

 

If built on a large enough site, shopping centre expansion has been the major re-merchandising vehicle in the Ontario market of the early 1980s to restrain decay and enhance shopping centre attractiveness. Not all expansions have been successful: an expansion that involves a general merchandise anchor store is always successful in increasing the ratio of retail to service tenants; any expansion of over 30,000 square feet also has a good change to increase the range and depth of shopping merchandise; and expansion of over 30,000 square feet anchored by a department store was a sure-fire method of centre rejuvenation. However, in our experience, expansions of less than 30,000 square feet, notably those anchored by a food store or no anchor store whatsoever, tend to change the proportion of the tenant mix in the wrong direction, to increase (rather than decrease) the proportion of non-goods to goods tenants. Indeed, an expansion without re-tenanting may not restore a shopping centre’s lost lustre and may hasten its decline.

 

A cycle of growth and decay is evident in the changing mix of goods to service tenants (click here for conceptual patterns). The message for developers is that they should try to keep their centres as full as possible with tenants selling goods. A centre should look modern and the concept and presentation should be upgraded frequently, whether it needs it or not. (For instance, you’ve never seen an out-of-date McDonalds, but I’m sure you’ve seen many out-of-date malls. The new criterion is an upgrade every five to seven years, that is, each “generation” in terms of their customers).

 

Increasing competition in the 1980s (a) tended to decrease the goods ratio (more space chasing fewer stores), (b) encouraged developers to upgrade (the right stores were in great demand, and notable concessions could be negotiated) and (c) good locations got better, and poorer locations got worse. Choice sharpens, not dulls, quality.

 

1986    Campeau's junk bond empire buys Allied Stores for $4.1 billion. In October 1997, Campeau begins to buy Federated shares through a dummy corporation for $45 (Federated operated Bloomingdale’s, Abraham & Strauss, Burdines and Goldsmith’s). Mall owners salivate at the prospect of Bloomingdales arriving in Canada. I look at a Bloor Street site for them. Not surprising it is the same site that Le Printemps is interested in as well.

 

The 1987 stock market crash drops Federated shares to $34. Campeau Corporation makes a formal offer at $47 per share for all 90 million shares outstanding, a $4.2 billion, again all with borrowed money (interest rates on the junk were some 17½ percent). In partnership with R.H. Macy, Campeau then offers $73.50 a share. The company is overburdened with debt and starts to bleed money. Coming up to Christmas 1988, Federated cannot pay suppliers. Allied bonds were being bought for 32 cents on the dollar. In 1990, Allied and Federated file for bankruptcy protection. Campeau borrows more money from the Reichmans, offering Scotia Place and malls such as downtown London as security. Only Galleria London wasn’t worth anything like its construction value.

 

1986    Sears opens its first "Store of the Future" in Square One. The company has a 27 percent share of the market. The retrofit costs $2 million. There are two new features: (1) the central island sales centre with four cash registers, and (2) "action lines", a full representation of men's and women's fashions. There is carpeting throughout, new lighting and a refurbishment of the formerly blank walls.

 

1986    August: Eaton Market Square, Brantford, the eleventh downtown Eaton’s project in ten years, opens. The project is described as comparable to the Eaton Centre Guelph, just one anchor, on a 60 year lease. Eaton’s had left the low-income Brantford market two decades earlier and on their triumphal return, the Eaton family said they “were dedicated to the concept that the health of a community depends on a strong downtown market”. Ten million dollars of public money went into the isolated parkade, $5 million went for land assembly, $2 million was a special interest-free loan to Campeau and $1 million was spent on relocating services. Some of the land was municipally owned; Brantford took the opportunity to move its City Hall away from main street. The Brantford Expositor declares “The downtown will die without the mall” (July 6, 1984). “If we don’t take advantage of this opportunity, the downtown is finished!” Woolco and Sears dominate the suburban market, with strong showings from Zellers and K-Mart.

 

Campeau is able to leverage the interest free loans and grants by using an absurd professional market opinion: if department stores can capture a 40 percent share of their market segment, then the project can be a success. The department store share was currently 20 percent. No tenants were signed when the sod was turned on the project, except Eaton’s, who had a secret agreement that the City would oppose any new retail development for a decade, to allow the downtown project some breathing room.

 

The project had but one anchor (Woolco, who doesn’t receive any handouts, promptly closes downtown), poor one-way traffic flows, a weak (impoverished) downtown population, and no regional draw (5 percent custom from outside Brantford, compared to 37 percent for the suburban Brantford Mall).

 

The net effect of the government actions in Brantford were to leave Colborne Street downtown, in the words of the Hamilton Spectator (July 11, 2001) as “blight”, “desolate”, “decayed”, “resemble a leftover war zone”, with poor access to the new activity generator, the casino (75 percent custom from outside Brantford).

 

The casino is a long, steep walk from the downtown (click here). No downtown in Ontario rivals the blight of downtown Brantford. It doesn’t get any worse than this (click here and here). The Eaton’s in the virtually abandoned downtown mall has become a call centre (click here).

 

The same consulting company used the utterly unattainable 40 percent market share for department stores to recommend the downtown Sarnia project: “The need to ensure that the CBD’s role as the prime focus of commercial activity in the Sarnia region is not jeopardized in the future … the downtown site is eminently suited to the development of a new traditional department store” (Sarnia Downtown Redevelopment, for the Greater York Group).

 

The same consulting company used the utterly foolish 45 percent market share for other Campeau lands, like Kanata and South Keys (click here). When they revisit Kanata six years later, using more reasonable department store shares, they could not find a market for a regional shopping centre there. To make even a downsized community centre work, they advised “that no additional significant retail development be approved in Kanata during the foreseeable future”.

 

The Regional Planning Department of Ottawa-Carleton, which had no expertise in the matter, despite the Official Plan stating there was no market for additional regional centres, plans a raft more of them using an astonishing 38 percent department store share of DSTM, considerably higher than the contemporary level, and about double the 1993 actual share.

 

Thus, from the early 1980s, the vision of anchoring so many enclosed regional shopping centres was, in fact, not realizable. The only way people maintained the myth, and got it to work on paper, was by using numbers with no relation to reality.

 

1986    Miracle Mart department stores close in March.

 

1986    Dylex is operating 2,800 stores under 24 different retail banners. Including Suzy Shier, Bargain Harold Emporium, LA Express and Big Steel Man. It is the heyday of the regional shopping centre and Dylex is the largest clothing retailer in Canada. It also buys Brooks Fashion Stores and Foxmoor chains in the U.S. as it has almost exhausted all possible niches in Canada.

 

1986    Cambridge Leaseholds fortuitously loses the beauty contest to build a new downtown mall in London. (Cambridge was promoting the Talbot block and, with an initial lead in the race and with City support, began demolishing the historic structures there). Campeau won the race by promoting the largest shopping centre in the City (770,000 square feet), spanning two blocks, including a redevelopment of the tired Wellington Square, which had reached the end of its economic life. Campeau adds 500,000 square feet and 120 stores, in an award-winning (for its daring and audacity) "London Square". Campeau points to the success of Rideau Centre (that was developed under a building freeze and moratorium); unlike London, where the Ontario Government reversed an OMB decision limiting growth. London Square is a racetrack design over the streets. It's awfully difficult to rent one storey up in the air. The original Eaton's downtown development with its 70 stores had been much more successful over the pervious three decades.

 

With their narrow turning radii, London Square had parking garages that only an engineer could have liked. At first, fender benders were a daily occurrence in the cramped space. After damage to their cars, which would eat up their deductible, consumers were not too happy to return. Besides the "The Violence Against Women Survey" (1993, Statistics Canada) showed that Canadian women's commonest worry was walking alone to her car in a parking garage (affecting 88 percent of the critical 25-34 year, fashion-conscious age group). London Square's parking garages were particularly dark.

 

During the two year reconstruction, only Eaton's, Bi-Way and the Elephant & Castle remained open. Eaton's sales never recovered. Although it was only paying 59 cents per square foot in rent, its sales never went over $50 per square foot, a level at which no-one could be profitable. Phase II, a third retail storey and an office tower, is never built.

 

It was $150 million projects like this that drove Campeau into bankruptcy. Ironically, the bankruptcy trustees appointed Cambridge Leaseholds as the manager. Their Talbot block remained largely demolished. Gangs, panhandlers and strange people inhabited Dundas Street. Police Chief Julian Fantino posts police on rooftops along Dundas to control the gangs of youths. Not a propitious environment for family retailing.

 

1987    Running out of good sites, Cadillac Fairview begins the Eatons Centre of Hamilton. Sale price in the year 2000, $8 per square foot.

 

1987    Triple Five announces a shopping centre twice the size of their West Edmonton Mall just to the south of Pearson airport in full view of Highway 401. Unlike Alberta and subsequently Minnesota, their demands for tax concessions are rejected in this province.

 

The opening of Triple Five's Mall of America (1992) is the end of this type of mega, mega mall, at least in North America.

 

1987    Canadian Home Shopping Network is launched on cable in January. The CRTC in its infinite wisdom restricts the new cable channel to still shots and voice-overs. In retaliation for buying out the competitor, Rogers' Canadian Value Network later in the year, the CRTC insists that it withdraw its application for moving pictures.

 

1987    Half Ontario households have microwaves, up from eight percent in 1981.

 

1987    The only discernible retail reaction to the stock market crash is the sharp drop in women's clothing sales. Or, it may have been due to some myopic designer bringing back the mini skirt when the baby boom was past that type of thing. When the dust clears, total retail sales in October in Ontario are up a stunning 12.6 percent over the previous year. Sales for the year are much higher than anyone had ever dared hope, even with the jittery retailers discounting before the Christmas selling season.

 

The fashion debacle indicates once again that you can bend the product to fit the market, but not the market to fit into the product. Particularly in apparel, there are no lifetime franchises for appeal.

 

1987    HMV Canada Ltd. buys the slumping Mr. Sound chain of 37 stores.

 

1987    We plan the new Farmers’ Market in downtown Welland. Crowds stay away on opening day because Santa is arriving at the regional mall.

 

1987    Chatelaine’s Shopping Habits Study indicates that women are the designated shoppers in Ontario: 80 to 90 percent say they are the decision makers or joint decision makers; the proportion drops to 48 percent for their spouse’s clothing and shoes.

 

Two phenomena of critical importance: women tell Chatelaine that they are shopping less frequently (trying to minimize the length and number of times they go shopping, because they are much busier); but for ego-centric items, like the right furniture, they are willing to travel astonishing distances (click here).

 

1987    JMB Realty Corporation buys Cadillac Fairview for $2.9 billion, most of which of course was borrowed from institutional investors. In a boom like the late 1980s, commercial property is seen as the perfect hedge against inflation and the volatility of other assets; in a boom, real estate values had nowhere to go but up. When real estate asset values plummeted in the early 1990s in the dreadful recession, Cadillac declares a $2.7 billion loss (the worse Canadian loss ever recorded, surpassing Olympia and York's $2.1 billion in 1992 and Campeau's $2 billion in 1990). The Cadillac president goes on to another company, and amasses a $US 4.6 billion debt load.

 

1988    First Decadent Chocolate Chip Cookie rolls off the production line in Kitchener, ON. One point two billion would be sold over the next five years.

 

1988    I conduct a study for Woodside Developments Inc., south of Highway No. 7 at Lunar Crescent, for the first totally-planned new format centre in Ontario, in Markham (click here for view). It proves a roaring success. I advise Vaughan to plan for the intersection of Highways 400 and 407 to be the largest retail centre in the Province (click here for view). It becomes enormous, but without adequate care, the traffic flows are atrocious. (The traffic flows could have been improved with an overpass, but the overpass blocked the views of the car dealership of an Ontario Cabinet Minister). Before the multi-million dollar development can proceed, however, the "planned function" of the invisible Woodbridge core has to be modified (R880156). In the late 1980s, the Province’s first Price Club here in Woodbridge mops up $200 million in annual sales, equivalent to the sales of a mid-sized regional shopping centre.

 

1988    Hudson's Bay announces its first profit in five years. Zellers begins its (ungrammatical) promotion, “Lowest prices is the Law at Zellers”.

 

1988    January. Universal Product Code for general merchandise comes into effect. Towers is the first Canadian department store to implement full scanning.

 

1988    The Ontario Government has the choice of location in the Canadian pavilion at the forthcoming World Fair. They ask where they should locate within the building. As most people are right handed, they naturally veer to the right. So take the right side I advise, as any retailer knows.

 

1988    Provincial sales tax rises to eight percent in May (it had been six percent for 15 years).

 

1988    The Oshawa Group’s Pharmaprix buys Boots. Boots had bought Loblaw’s Tamblyn 15 years earlier. Tamblyn had great locations due to Loblaw’s leverage. When it was owned by Boots, the good locations became more scarce. Boots, which had a one third share of the UK market, and was virtually synonymous with aspirin there, had a very hard time adapting to the Canadian environment.

 

1988    The hockey team does well at the winter Olympics and February sales show the first month-to-month decline in four years in Ontario. Consumers come out of hibernation in March with the mood and resources to consume. Four forces were a potent combination: increased employment, consumer confidence rose, and thus consumers took on even more debt, and incomes grew after implementation of the tax reforms. The only clouds on the horizon are the amount of debt and how little there is in Ontario savings accounts.

 

1988    Lindsay asks me if they should have a downtown mall. "Do you want to destroy those fine facades?" I ask.

 

1988    A&A Music adds 100 stores in a (desperate) defensive move to compete against HMV (1987). Yonge and Gerrard with Sam's, A&A and HMV set the CD prices for the nation. Briefly, A&A Music has number one spot with a 26 percent share of the recorded music sales. Their downward spiral become acute when suppliers refuse to supply new product, customers can't get what they want, and the collapse is final by March, 1993. HMV has the top share within five years.

 

1988    The world-wide disgrace of a Canadian athlete at Seoul was followed by a spate of buying, showing that shopping is a wonderful antidote to depression, whether it is on a personal or on a collective level. Catarthesis through consumption.

 

1988    Hespeler asks for help for its ailing central area; the Highway 24 by-pass is about to open, and will take virtually all the traffic off the main street. Hespeler downtown has been vacated due to two large malls approved and built on its periphery. Hespeler had been amalgamated into a larger city, and forgotten. Extensive public meetings are conducted: in the minds of the older residents, the community is alive with memories, of tea dances in the 1940s, of the flour and woollen mills of the 1950s and the steel tools of the 1960s. It is cruel to seek such public input, get peoples’ hopes so high, when there is no economic basis for resuscitation. Just pretty it up, I suggest (click here and here). There’s nothing more you can do.

 

1988    Le Printemps looks at Ontario. We evaluate two sites. The French use a different definition of DSTM. Faxes flow from the Boulevard Haussman (Gallerie Lafayette opened a store the previous year in the Trump Tower, so rival Le Printemps was re-valuating its world-wide strategy. At contemporary Gallerie Lafayette Paris you got frisked for weapons; at the doors of Gallerie Lafayette, Trump Tower, the New Yorkers got a Wal-Mart style greeter, "Bonjour Madame, Au Revoir Monsieur").

 

1988    Toronto’s loss to Atlanta of the 1996 Olympics means that the City’s expropriation of a quarter of a billion dollars worth of land for the Olympic Village at the mouth of the Don has to be rethought. Consultants propose Ataratiri, a town of 12,000 people with an uneconomic supermarket of 12,000 square feet. Pity it will take a billion dollars to clean up the dirty industrial wasteland. Local bureaucrats argue that it is worth it. No one else agrees

.

1989    Sky Dome opens in downtown Toronto.

 

1989    The excesses of the late 1980s, when retail sales were rising steeply (click here for statistics), were embodied in the renovation of The Old Davis Tannery Centre, as upscale specialty boutiques. There was a 40 foot marble-encased waterfall (taller than the one in the Trump Tower, NY) between a commuter GO station and the municipal offices. Commuter station plus middle income market was not particularly propitious for upscale retailing characteristic of Bloor Street. The Appraisal Services Division of Central Guarantee Trust couldn’t find any comparables in Newmarket but, on the basis of the leases, valued it for mortgage purposes at $29 million ($193 per square foot). It turns out that many of the leases were not at arms length, and the project collapses. Try deep-discount outlet centre, I suggest to the vulture funds; but first, blow some holes in the walls to show that it really is a retail project.

 

1989    Free Trade Agreement begins. Internal North American tariffs to be off within a decade. Finally, we have the basis for an off-price segment of the retail market. Imagine the problems at the border: the first truck of Liz Claiborne dresses is contemporary fashion and pays full taxes. How to explain to the customs that the next truck, with identical dresses, but in last season's colours, is only a fraction of the value? Now within a common tariff wall, any clothing can move freely. Ten thousand of last years' jeans can move easily from Los Angeles to Toronto to New York, without any hassle.

 

1989    Walter Salmon (professor of retailing at Harvard) argues in the Journal of Retailing that "excellence in execution" will from now on distinguish the winners from the losers.

 

1989    Bay Northern Stores are closed in March, along with the wholesale and fur divisions. Northern Ontario loses an icon of civilization, the trading post. Of course, the gold towns of Marathon and Manitouwadge deserved better than the little holes in the wall that passes as a Northern Store. I plan the new shopping centre in Marathon. The auroras, and particularly the clarity of the night sky there, are astonishing.

 

1989    I recommend to the City of Thunder Bay that they recognize reality and designate Intercity as a Regional Commercial Centre. The market forces had created a new downtown for the finally integrated City. OPA 41 ends some two decades of unsuccessful municipal promotion and protection of the two former cores. Intercity now has the Harbour Expressway (1980) as a link to the Trans-Canada.

 

1989    The $30 million facelift is finished on the downtown Simpson's store (including that big hole between the ground and the first floor). The re-launch is characterized as the "Miracle on Queen Street". President Paul Walters claims it to be the "best fashion floor in North America". The basement has a gourmet food hall like the R.H. Macy flagship on Herald Square in New York or Harrods in London. The Miracle is reputed to have the largest cosmetics area in the world. The first floor has high fashion boutiques. The St. Regis Room is expanded. Critics say the store is too upscale, too urban and too costly. HBC hopes that the upscale grandeur can unlock flagging downtown real estate value. The low-level mirrors on the new escalators have to be changed to discourage peeping-toms.

 

Ontario women refused to act like the dutiful souls they once were, and did not buy what was offered. Fashion designers by this time had tried everything: colour, lengths, silhouette and/or accessories, all with no success in re-energizing the market. In 1989, women were more critical and more quality and durability driven. They were also distinctly less trendy, basically due to a collective ageing (they are starting to dress like their mothers).

 

Only very young people make fashion statements (it is as if we each have only a decade or so in us of fashion consciousness, before eccentricity, indifference or the needs of our families settle in).

 

Going sharply upscale and after younger customers alienated the other Simpson's customers (for instance, they lost that wonderful notions section, second floor, south-east). One of these older customers is reported in the Globe and Mail (June 6), "We still have Eaton's".

 

As with Eaton's seven years later, Simpson's becomes two companies: an upscale flagship, complete with designer boutiques, and a string of mid-priced suburban stores. Some of the mid-priced locations were not suited for an upscale aurora (Warden Woods, Brampton Mall, Cedarbrae, Richmond Hill, Mapleview, Woodbine, to name a few).

 

1989    Burns Fry identifies Loblaws and Dylex as the “two best managed ‘world class’ merchandising companies in Canada” (forgetting of course Canadian Tire). Burns Fry was correct with one of these companies. Loblaws had just announced a billion dollar initiative to construct discount combo food stores, ranging in size from 80,000 to 130,000 square feet, which sell food, drugs and an increasing range of commodity-type hard goods normally bought at a Woolco, at drug stores or at a Canadian Tire store. The results in the west have been spectacular, with average sales per square of some $750 (when grocery stores in general were averaging some $350 per square foot).

 

1989    Mapleview Mall, Burlington opens along with Erin Mills Town Centre and an entirely rebuilt Westmount (with 950 underground parking spaces). After this, no more new enclosed shopping centres will be built in Ontario. It was the end of an era. At the opening celebrations, all the canapés in the world could not conceal that Mapleview was nowhere close to being fully leased. Prime tenants had been refusing the developers' new properties. Rents were falling. Vacancies have started to appear in all but the very best regional malls.

 

Developers were doing their best, with more grandiose architecture for instance, to differentiate their product, but they were facing a double bind: more independent stores could increase their variety, but generally did not have the credibility to get mall locations. The existing chains continued to grope towards new formulas to assure their sales, to rejuvenate their images and remake the shopping centres. Of course, lavish architecture had to be paid for, but no longer by the retailer, nor the consumer. Value retailers needed new, more affordable, more accessible locations.

 

1989    was another turning point. No more new enclosed malls would be built in Ontario. The last of the big spending years and the curtailment of shopping: in 1980, the average number of shopping trips to a regional mall was 37 per year. This had dropped to 24 per year by 1990. While seven stores per trip were shopped in 1980, only 3½ were patronized by 1990. An average consumer spent twelve hours per month in a regional shopping centre in 1980; only four hours were spent there by 1990. Shopping was becoming less fun, and more functional.

 

1989    The Town Square becomes planning doctrine, just when new regional shopping centres become uneconomic. The town square consists of a mall surrounded by offices and houses, as at Square One and Scarborough Town Centre. It certainly isn't a pedestrian environment: the distances between the elements are huge. In the United States, warehouses surround the typical regional mall.

 

(The worst example of the Town Square is in south Edmonton, where Heritage and Mill Woods are established, not on an expressway, but in the interior of communities. Neither is successful. Enter the big boxes, which (because you don't organize a community around them), are allowed to go (very successfully) on the Calgary Trail, just where one regional shopping centre should have been located. Among Canadian Malls, Heritage and Mill Woods rank as # 98 and # 83).

 

(Actually, Edmonton has the example of the best retail layout, in its suburb, St. Albert. Along the St. Albert Trail, there are very large lots used for shopping centres, freestanding retail, some vacant reserve, away from the residential areas, but with excellent accessibility. At the major intersection with Bellerose Drive, is the Safeway and the Wal-Mart. The design is practical, central, accessible, can be flexibly expanded in a number of various formats, and doesn't impinge on the residential areas).

 

(Indeed, if you were planning a New Town today, you should probably follow the St. Albert design, and not the E.P. Taylor scheme of a large mall at the core. For one thing, a large mall represents a huge parking space, and if you try to put in parking structures, who is going to pay for it? Certainly not the customers).

 

 

 



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