Big Boxes and Chains
As an independent journalist, Bob MacKenzie writes articles for a number of print and internet
publications. The local and national scope of his monthly articles for the Kingston Business
Journal make them of interest to readers not just in Kingston but across North America. These
articles are reprinted here for your information. All material included in these pages is copyright
© Bob MacKenzie and Kingston Business Journal, 1998. No reproduction for any reason is
allowed without prior permission in writing from the author.
The article below was published in the March 1, 1998 edition of Kingston Business Journal.
Kingston Welcomes Big Boxes and Chains
There is something inherently dangerous about so-called "big box" retailing. In local papers across Canada and the United States and on the internet, writers express their fear and anger toward this new phenomenon. Community activists attempt to prevent construction of the giant stores and bemoan their presence once built.
Kingston is an eye in the storm of controversy regarding this retailing revolution. Here, as an increasing number of large chains and big box retailers set up shop, reactions both in the greater community and in the retail establishment are largely positive.
Doug Ritchie, Managing Director of the Downtown Kingston! BIA, explains that, "Big box is a method of retail that lowers overheads traditionally associated with goods distribution, principally in the areas of occupancy cost and staffing.
"A lot of purchasers just want to get [the shopping] over, and they want low prices," according to Ritchie, "So big boxes work. They are generally in a lower price location with lower service."
Ritchie suggests that these new stores do not compete directly with downtown retailers but rather with the large department stores such as Wal-Mart and Sears. "Big box takes care of day to day required purchases," says Ritchie, "and leaves the niche markets available to the specialty shops."
Kingston has recently seen a boom in large chains and big box retailers. Tim Hortons Donuts has opened a regional head office in Kingston and doubled the number of stores in the city, Indigo Books and Costco have located here, and construction is under way for a Home Depot and a Chapters book store.
Last December, city council was presented with results of a "Regional Commercial Systems Study" commissioned by the city to examine some of the directions in which Kingston is moving.
"Here in Kingston," says Allan Gummo, Senior Strategic and Capital Planner for the City of Kingston, the study demonstrates that "we have our own unique demographic features and our own financial base which is attractive to these investors. It's a matching of market receptivity and corporate plans."
Gail Logan, General Manager of the Greater Kingston Chamber of Commerce, agrees. "Business has recognized that Kingston has a good market — not just local but regional, from Brockville to Belleville. We have good demographics, both in income and education level, to provide a consumer base."
"The recent activities in terms of Indigo Books or Costco and others like that," says Gummo, "is that the time was right in terms of their own development plans. The really big boxes are now in a position to scale down to fit into smaller markets. So they can now move into a market of say 110 thousand as opposed to a quarter of a million. It's part of their own corporate evolution."
This, according to Stuart Pinchon of Home Depot, expected to open in late July, is the reasoning which prompted his management to build in Kingston.
"We are growing and hope to be operating 100 stores within the next two years," says Pinchon. "Kingston fits the demographic that has been successful for us in the past. For example, Barrie, while having a smaller population, has a similar market area to Kingston. And then there's Ottawa. We have two stores there and a third coming, so Kingston seems a logical direction to move.
"There's a need in Kingston," according to Pinchon, "and an opportunity for us to serve that need."
Gail Logan agrees with Doug Ritchie, who sees the newcomers not as a threat to local retailers but rather as an opportunity to expand into a larger regional marketplace.
"Some will argue that the big box stores will be a negative for local retail businesses," she says, "but that's not necessarily so. Consumers like convenience, and retailers will survive when they give the customers what they want.
"Local retailers have to create themselves a niche. They have to offer quality and service. Then they will compete very well with the larger retailers. Consumers now are pretty sophisticated. They look for quality, value, and service."
Logan notes that, "Our trading area is actually quite large, extending from Belleville to Brockville. That gives us 175,000 or more consumers in our trading area." According to Logan, "There is an opportunity here for new business because of the regionality of some of these [large retail] facilities — an opportunity [for local retailers] to capitalize on the added traffic in our community."
David Cash, Chief Executive Officer of the Kingston Economic Development Corporation (KEDCO), agrees that,"Big box retailers can be a draw for the community, bringing in new investments and expenditures. On the other hand," he suggests, "if we get over-built on the retail side, that might not be a positive thing.
"If Home Depot, for example, brings in people from the region — say Brockville or Napanee — then that's a positive thing for our community.
"I understand that people [from Kingston] will drive to Ottawa to shop at Costco," says Cash, "so with the new Costco store in Kingston, that may be a good thing. There will be less leakage [of retail dollars] out of the community."
"This is a time for local retailers to think about new marketing strategies," Gail Logan suggests. "If they are not already doing business in Belleville or Brockville, then maybe they should think about it."
Logan points out that people don't drive into town to make one stop. "They go shopping for the day. They stop for lunch. They buy gas for the car. They do a variety of things in our community. There is lots of spinoff for local retailers. This is an opportunity for local business to capitalize on that — to get their message to those consumers."
Barbara Allan, formerly co-owner of Printed Passage Books and now General manager of Indigo Books, says that at first she had some doubts about how the public would receive a larger big box type book store.
"Looking at it from the other side, as independent operators," Allan says, "we had to ask ourselves, ‘Do we really want big box stores? Is this how people want to shop?' After opening this store, we have found the answer is yes. It became very apparent very quickly that people want the larger store; they want the bigger selection; and they want to be anonymous when they shop. Yes, they want the service too — but they want it to be in the background, unobtrusive."
"It is how people want to shop," says Allan, "and as long as they do it will be here."
Big box retailers such as Costco, Home Depot, and Chapters almost invariably built at the outer edges of the community, where they can reach out to a more regional marketplace. Allan Gummo points out the exception to the rule.
"Indigo Books is an interesting case," says Gummo. "It's interesting that Indigo chose to locate downtown rather than outboard in a suburban location."
Indigo's Barbara Allan explains that, "Because of [Printed Passage's] experience of being independent owners, our input to [Indigo] was that downtown was where the customers were. We felt the business that we had expertise with was downtown.
"We had a commitment to our customers downtown and we knew how healthy downtown was," says Allan. "Indigo looked at a variety of real estate but finally chose this location."
Doug Ritchie points out that, "Downtown differentiates itself. It's a centre for entertainment — theatres and dining and so on. And there are the specialty stores offering greater depth but less range along with high levels of service and high product knowledge.
"Big boxes are not very direct competition with very many downtown stores" says Ritchie. "Of course, there are some that may get hurt — but for the most part it's a different market. Big boxes are mainly competition for the big department stores and for the shopping centres.
"For example, if you go into Walkwell Shoes for a pair of Dacks, you want fit and personal service. You want a lifetime warranty. You are not interested in just pulling a pair of shoes from a twenty foot rack." Likewise, according to Ritchie, "If you want a several hundred dollar parka, you will go to Trailhead or Mountain Gear, not Costco. You want to shop with other people who share your interest in camping and mountaineering and will understand your needs."
Stuart Pinchon of Home Depot agrees that the big box retailers take a less specialized approach.
Pinchon says of Home Depot, "We are a one-stop home improvement retailer covering products from lumber, building materials, flooring, paint and decorating products, hardware (tools and fasteners), plumbing, kitchen and bath, electrical and lighting, gardening, seasonal items such as lawn mowers and snow blowers, and millwork (which is doors, windows, and mouldings)."
In a city that has come through a period of higher than usual unemployment, job creation is another important component of the arrival of the big box retailers.
"It's good to see the new construction in a couple of ways," says the Chamber's Gail Logan. "First it provides a lot of new jobs in the construction industry, and then it provides new assessment for retail."
As well, the stores themselves will be providing employment for many local workers.
"We will be hiring about 200 people in the Kingston area to work in the store," says Stuart Pinchon of Home Depot. "We have started that process already. We have hired the management team. Two people will be starting [at the end of February for a period of] extensive training."
Pinchon adds that, "I must say that I have been very impressed with the people I have interviewed in Kingston. The calibre is exceptional — outstanding. We expect to have a very educated associate base as well as customer base."
Are the major retail chains and big box retailers here to stay?
The research suggests that the trend toward big box merchandising will continue. According to Allan Gummo, "Kingston in the past has demonstrated our own market growth characteristics. There are periods where it is up and down or cyclical, but there is a long-term growth trend that companies can base their business plans on and make their decisions accordingly." This positive trend will continue to make Kingston an attractive location for the large regional retailers.
"The market will dictate or determine what should be offered," says the Chamber's Gail Logan. "Consumers will decide what they want and business will provide what is needed."
Return to Table of Contents
Last Updated February 23, 1998 by Bob MacKenzie