A funny thing happened on the way to the shops recently – the world suddenly became a lot smaller. It wasn’t a case of bumping into friends from the far side of the globe on my local high street, it was a series of announcements about the shifting shape and size of global retail.
As we were kicking off production on this 66th issue, news came from Canada that Loblaws, the country’s largest food retailer, was snapping up Shoppers Drug Mart – the nation’s largest pharmacy operator. On the surface the deal looks like a straightforward solution that adds prescriptions and more beauty products to shopping carts already bursting with the daily essentials of milk, bread, kale (when, oh when, will this leaf go out of fashion?) and lactose-free ice cream. Look a little closer and it could be that it’s more about the Shopper Drug Mart real estate portfolio than the margins offered by all those painkillers and dietary supplements.
Canada, like the US, is not only suffering from a plague of unsightly box-stores creeping ever closer to city centres – it’s also showing signs of serious strain at key infrastructure junctions. As mayors (well, most of them) do more to move their citizens to public transport and bicycles while figuring out whether they should widen highways or charge higher toll fees, there’s a realisation in both the public and private sector that the current retail set-up of strip-malls, sprawling car-dependent shopping centres and isolated, architecturally unremarkable food sheds are not compatible with new blueprints taking shape at city hall.
While there’s no shortage of Shopper Drug Marts occupying all of these spaces, there are also hundreds of locations tucked into local neighbourhoods. In recent years Shoppers has come to dominate many city streets by adding extra floors and expanding their offer to include more food and beverages.
For sure Loblaws saw a small dent in sales as a result of this move but more importantly it’s spotted an opportunity to potentially rethink its retail format by downsizing and getting closer to all of those people who’ve decided to move downtown, trade in four wheels for two and prefer stocking up their pantry four or fives times a week rather than once.
This shift to smaller format food shopping offers up a golden opportunity for developers, independent retailers and planners to not only revitalise dying neighbourhoods but it also amounts to a mini-revolution for the way many North Americans live.
It’s perhaps not surprising that many see this tie-up as not only a virtual food and drug retail monopoly but also a threat to mom and pop businesses that have managed to survive (even thrive) due to their proximity to leafy suburban streets and high-rise condos.
The conversion of some Shoppers Drug Mart locations into all singing and dancing neighbourhood supermarkets will no doubt harm many traditional businesses not equipped for the fight but it also offers a unique chance for the wily entrepreneur to capitalise on a renaissance that will likely play out in neighbourhoods both gentrified and near derelict across the country.
Rather than fear the reinvention of two of the Canada’s retailers, existing shopkeepers and those itching to hang out their own shingle should set to work shaping their little corner of commerce rather than worrying about markdowns and volume discounts. The harsh reality is that the vast majority of cities no longer boast the cosy stretch of retail that consumers once loved to frequent.
Neighbourhood action groups may have been fighting valiantly to hold on to their last remaining independent bookshop or flower store but a general lack of attention by municipalities and town halls has left even some of the best local shopping streets looking a bit forlorn and lacking vision.
While the Canadian retailers work on concluding their deal, across the Pacific in Japan and south of the border in the US, 7-Eleven is looking to fight back against the likes of Walmart with an assault of reconfigured small formats in its response to shifts in daily travel and purchase patterns. The Japanese parent of the 7-Eleven brand wants to replicate much of its success in Asian cities by taking a saturate-and-dominate approach, which it hopes will encourage more regular trips to stores while also responding to the opening of more urban rail networks and bus corridors.
At long last, North American cities (and many in Europe and Australasia) have a real opportunity to re-engineer not just whole city blocks but entire postal codes. This is thanks to retailers finally waking up to the realities of cities that are no longer fit for purpose and ageing citizens who want to be closer to the action downtown rather than suffering in a remote retirement home.
For the reader keen on starting up their own venture, all those city blocks in Calgary, Hamilton, Miami and Seattle are just waiting for a bit of redefinition and some solid concepts that will help stitch together a cohesive sense of community.
For this entrepreneurs special (page 91 onwards) we introduce you to not only a few retailers who have launched some savvy businesses but also give you some tips on everything from finance to where the pastures are greenest.
If you’d like to swing by for a masterclass, please get in touch with me (tb@monocle) or my colleagues Tommy Seres and Isabel Käser. All comments and questions are welcome at these addresses as well. As ever, thank you for your kind support.
For more from our editor-in-chief, read his column in the FT Weekend.