SkyCity Centre Winnipeg | 45F | 575 Ft | 175.26 M | Cancelled

[Riverman]

Originally Posted by Simplicity

It's really weird that you insist on ignoring the actual reasons for something in favour of something you've constructed in your head.

Signature material.

[Coldrsx]

Originally Posted by Simplicity

This is not the reason. It's already been explained why these stores fail and it has nothing to do with bad management or miscalculating the demo.

The clientele is too expensive to run a grocery store. Sobey's would need to turn themselves into a convenience store that sold milk at twice the price their suburban stores sell it at and that isn't their model.

It's really weird that you insist on ignoring the actual reasons for something in favour of something you've constructed in your head.

I won't belabor it, but it was MT closest store and first hand they had high costs yes, but ran it into the ground.

[Simplicity]

Originally Posted by Coldrsx

I won't belabor it, but it was MT closest store and first hand they had high costs yes, but ran it into the ground.

What does this even mean?

1) Are you implying that the Sobey's corporation purposefully ran their store into the ground either through ignorance of the business or spite?

2) That they're incompetent at running a grocery store (even though they run hundreds very successfully)?

3) Or that they continued to put management in place that has no experience running grocery stores and refused to acknowledge the error of their ways?

OR, can we look at a couple more likely scenarios here:

1) Sobey's is in the grocery business and not the convenience store business

2) 'Ran it into the ground' is your catch-all phrase for explaining things you don't like.

You're ignoring the obvious reasons for failure and underwriting your opinion of the scenario by insisting you shopped there. That's great - the Sobey's corporation thanks you for your patronage. On the other hand, you've now been explained countless times why the model doesn't work. And this isn't mindless contrarian chatter; the store is closed, vacant, and can't find another tenant. Yet, you haven't offered a single actual reason for how this store might work even though we can presume you're not a grocery executive and you're even less likely to have access to the books of the store.

Please enlighten us. Nobody considers constructive commentary belabouring the point, I can assure you.

[Coldrsx]

It was their first ultra-urban grocery foray into Alberta with an amazing location in the middle of the downtown, but at a high lease rate. The design of the store was a failure from day #2, a huge waste of a cafe in the front trying to sell coffee beside an oyster bar next to a fireplace... cause us urban folk all want that. Their '6 red seal chefs' who prepared us truffle lobster mac or ham sandwiches was overkill by 5, eventually I believe they only had 1. Their central kitchen area was about 1/5th of the size of the store, again, a lot of waster space. The produce section was decent, but meat section small and inefficient as their lobster and crab tanks were larger than the fresh butchered area. The grocery aisle portion of the store was limited, inefficiently laid out due to the cafe and expensive. Front of house was very tight, often lined up 10-15 people deep which blocked the rest of the circulation. A rather large sushi bar in the front didn't help things and was another waste of space, but again, urban hip folk want that fresh imitation crab. The only thing that store did well was lunchtime paninis, but then you were forced to wait in obscene lines. AGAIN, it was often quite busy, but quite expensive for groceries and Sobeys initially thought they could make things up another 10-20% versus the Save-On 5 blocks away, people caught on to that quickly... and by the time Sobeys introduced their savings program people had left the building. Finally, when the store first opened it had huge garage doors on the streetside that they would open, push fruit out, make it inviting etc and had operable windows fronting Jasper in their cafe... but about a year after opening they stopped using these and put wonderful vinyl stickers up all over the facade which made it difficult to know if it was open or not at times and essentially made it into a internally focussed suburban store.


(http://farm7.static.flickr.com/6226/6270995052_79fb211999.jpg)

Staff/management were a rotating door.

I am not in the grocery business and it was a multitude of reasons on why they closed, but they did not make it easy for themselves to succeed here.

[Simplicity]

Originally Posted by Coldrsx

It was their first ultra-urban grocery foray into Alberta with an amazing location in the middle of the downtown, but at a high lease rate. The design of the store was a failure from day #2, a huge waste of a cafe in the front trying to sell coffee beside an oyster bar next to a fireplace... cause us urban folk all want that. Their '6 red seal chefs' who prepared us truffle lobster mac or ham sandwiches was overkill by 5, eventually I believe they only had 1. Their central kitchen area was about 1/5th of the size of the store, again, a lot of waster space. The produce section was decent, but meat section small and inefficient as their lobster and crab tanks were larger than the fresh butchered area. The grocery aisle portion of the store was limited, inefficiently laid out due to the cafe and expensive. Front of house was very tight, often lined up 10-15 people deep which blocked the rest of the circulation. A rather large sushi bar in the front didn't help things and was another waste of space, but again, urban hip folk want that fresh imitation crab. The only thing that store did well was lunchtime paninis, but then you were forced to wait in obscene lines. AGAIN, it was often quite busy, but quite expensive for groceries and Sobeys initially thought they could make things up another 10-20% versus the Save-On 5 blocks away, people caught on to that quickly... and by the time Sobeys introduced their savings program people had left the building. Finally, when the store first opened it had huge garage doors on the streetside that they would open, push fruit out, make it inviting etc and had operable windows fronting Jasper in their cafe... but about a year after opening they stopped using these and put wonderful vinyl stickers up all over the facade which made it difficult to know if it was open or not at times and essentially made it into a internally focussed suburban store.


(http://farm7.static.flickr.com/6226/6270995052_79fb211999.jpg)

Staff/management were a rotating door.

I am not in the grocery business and it was a multitude of reasons on why they closed, but they did not make it easy for themselves to succeed here.

This is the issue: what you're claiming is poor management is in fact the only way the model works if it's going to work. Everything you mentioned is considered a high margin good for a grocery store: pre-made food, sushi bar, coffee, etc... All of that stuff was there to underwrite the possibility that they could perhaps sell you some groceries at prices you were willing to pay - a subsidy, if you will.

This isn't a failure of the management team. This is a failure of the market's willingness to pay a premium for groceries so in turn the store tries to sell you things other than groceries. Since you're not buying that stuff - generally because it's expensive and because your attitude towards these things is pretty clear - you can't have a grocery store either.

We're right back to where we started with this. If management would've given you what you wanted - a basic grocery store like you'll find in the suburbs at prices you're willing to pay with a brand name you find acceptable - they never would've put the store there to begin with because the model doesn't work.

Sobey's isn't interested in vacating an expensive lease they're on the hook for. They just looked at the willingness of the consumer to pay a 40% premium on groceries instead of buying an endless number of paninis and the store fell victim to the math.

[CoryB]

Originally Posted by Simplicity

1) Are you implying that the Sobey's corporation purposefully ran their store into the ground either through ignorance of the business or spite?

2) That they're incompetent at running a grocery store (even though they run hundreds very successfully)?

3) Or that they continued to put management in place that has no experience running grocery stores and refused to acknowledge the error of their ways?

To some extent all three of these are happening at a lot of stores. It doesn't help with a lot of the store level management was hired with little or no retailing or hr specific education. They then learn from their co-workers the corporate way of doing things (which may be wrong btw). The issues just compound from there.

The best example was while shopping in a grocery store and wanting to purchase some bananas. They had the entire large section for bananas filled with over ripened product, and not a couple of bunches but multiple boxes and they were charging full price for them. Sitting in the produce staging area you could see several boxes on bananas that were more the appropriate colour to be selling. When I asked for some from the box the produce manager refused saying I needed to take what was on the floor. Needless to say I didn't buy anything there that day and also didn't return again to that store.

[Arts]

Originally Posted by Simplicity

This is the issue: what you're claiming is poor management is in fact the only way the model works if it's going to work. Everything you mentioned is considered a high margin good for a grocery store: pre-made food, sushi bar, coffee, etc... All of that stuff was there to underwrite the possibility that they could perhaps sell you some groceries at prices you were willing to pay - a subsidy, if you will.

This isn't a failure of the management team. This is a failure of the market's willingness to pay a premium for groceries so in turn the store tries to sell you things other than groceries. Since you're not buying that stuff - generally because it's expensive and because your attitude towards these things is pretty clear - you can't have a grocery store either.

We're right back to where we started with this. If management would've given you what you wanted - a basic grocery store like you'll find in the suburbs at prices you're willing to pay with a brand name you find acceptable - they never would've put the store there to begin with because the model doesn't work.

Sobey's isn't interested in vacating an expensive lease they're on the hook for. They just looked at the willingness of the consumer to pay a 40% premium on groceries instead of buying an endless number of paninis and the store fell victim to the math.

So it's the customer's fault when a business fails to turn a profit and leaves the market? I think the problem is the model, not the market. There are a certain number of people that live (either 24hrs or just 9-5) downtown and all those people must eat. It seems no matter what the number is, if density means that the cost of doing business will perpetually increase faster than the willingness of downtown residents to make financially irresponsible choices, what is the point of even having density?

A better model is needed, one where the more people in a given area, the higher the profitability for a merchant (not the other way around as you suggest).

[Simplicity]

Originally Posted by CoryB

To some extent all three of these are happening at a lot of stores. It doesn't help with a lot of the store level management was hired with little or no retailing or hr specific education. They then learn from their co-workers the corporate way of doing things (which may be wrong btw). The issues just compound from there.

The best example was while shopping in a grocery store and wanting to purchase some bananas. They had the entire large section for bananas filled with over ripened product, and not a couple of bunches but multiple boxes and they were charging full price for them. Sitting in the produce staging area you could see several boxes on bananas that were more the appropriate colour to be selling. When I asked for some from the box the produce manager refused saying I needed to take what was on the floor. Needless to say I didn't buy anything there that day and also didn't return again to that store.

Sure, there are anecdotal examples to support anybody's point of view. But in the aggregate, Sobey's is a very well run grocer with a competent and experienced management team. And evidence of that is that they were able to successfully snuff out one of their larger competitors by purchasing them. That's no easy task.

What people need to remember when commenting on the state of a business or industry is that it helps to discern what is fact from what is personal taste. Just because something may rub you the wrong way leading to a certain personal reaction doesn't mean it's a bad management practice. You're a pretty astute retail consumer so you'll ask for the bananas in the box. The other 98% will take what's on the shelf reflecting a solid management practice in the grocery business: moving old inventory first.

[Arts]

Originally Posted by Simplicity

Sure, there are anecdotal examples to support anybody's point of view. But in the aggregate, Sobey's is a very well run grocer with a competent and experienced management team. And evidence of that is that they were able to successfully snuff out one of their larger competitors by purchasing them. That's no easy task.

What people need to remember when commenting on the state of a business or industry is that it helps to discern what is fact from what is personal taste. Just because something may rub you the wrong way leading to a certain personal reaction doesn't mean it's a bad management practice. You're a pretty astute retail consumer so you'll ask for the bananas in the box. The other 98% will take what's on the shelf reflecting a solid management practice in the grocery business: moving old inventory first.

Is 98% of customers willing to buy over-ripened produce a factual statement or your own opinion? Is it good quality control management to sell low quality produce while the good produce goes bad waiting for a spot on the shelf, meanwhile all the loyal patrons are continually disappointed in either not being able to find what they wanted to buy or else disappointed that they are continually throwing out uneaten food that went bad before they can consume it? wouldn't a good produce manager give away the bad fruit for cheap and sell the customer what the customer actually wants? Then when they can't sell enough bananas at all because nobody is shopping there anymore they close shop and people like you blame the customers for not wanting to buy poor quality food at premium prices. Perhaps it IS poor management and not the model at all then.

[Simplicity]

Originally Posted by Arts

So it's the customer's fault when a business fails to turn a profit and leaves the market? I think the problem is the model, not the market. There are a certain number of people that live (either 24hrs or just 9-5) downtown and all those people must eat. It seems no matter what the number is, if density means that the cost of doing business will perpetually increase faster than the willingness of downtown residents to make financially irresponsible choices, what is the point of even having density?

A better model is needed, one where the more people in a given area, the higher the profitability for a merchant (not the other way around as you suggest).

To a degree, yes.

Don't misunderstand what I'm saying. Urban dwellers can have their suburban style grocery store as long as they're willing to pay for it. There's no argument there. Profitability - as you're asking for - is a function of consumer's willingness to pay a premium. That's convenience in this case. So far the issue has been that they're not interested in paying for it. And I've been through the reasons - urban dwellers occupy a certain demographic that is by and large not conducive to the type of store they want. They're generally childless, generally younger, and thus have different 'at-home' eating habits. They also don't want to push a full cart all the way home or carry 12 shopping bags. Suburban style grocers are low margin and predicate themselves on the basis of volume; that's the trade-off. In life and in groceries. They survive on families of 4 loading up for the week and packing those groceries into their cars for the drive home.

So you can't have it all. If downtown consumers want a suburban style grocer with all the convenience and selection that accompanies it, they'll pay significantly more. Why? Because the average ticket is lower. I was through this already in another post - you don't want customers who make 7 stops a week and buy three things at a time. You want people who make one or two big trips and disappear for the rest of the week. But they don't want to pay more because Sobey's isn't a convenience store to them - it's a grocery store; it should have grocery store prices. And the moment it doesn't, people revolt because they're price sensitive. Eventually they'll just get in their car and drive to get groceries.

If you want to live in an urban area, you need to get used to the fact that prices are higher as a function of how many arms you have; your average ticket is always going to be lower. And because space is at a premium in dense areas, you always get smaller stores with less selection to at least try and keep prices reasonable.

Which is why our downtown has several grocery options, all of them relatively small, all of them kind of expensive, and all of them with comparatively poor selection.

Density isn't the be all/end all. The demographics matter. And since urban demographics in all but a few places in North America simply churn, not much improves. It's always going to be younger, childless people in the downtown areas. For grocery stores that's a poor demographic. If you think it's financially irresponsible, then you have the option to buy your groceries in the suburbs.

[Authentic_City]

Originally Posted by Simplicity

Sure, there are anecdotal examples to support anybody's point of view. But in the aggregate, Sobey's is a very well run grocer with a competent and experienced management team. And evidence of that is that they were able to successfully snuff out one of their larger competitors by purchasing them. That's no easy task.

What people need to remember when commenting on the state of a business or industry is that it helps to discern what is fact from what is personal taste. Just because something may rub you the wrong way leading to a certain personal reaction doesn't mean it's a bad management practice. You're a pretty astute retail consumer so you'll ask for the bananas in the box. The other 98% will take what's on the shelf reflecting a solid management practice in the grocery business: moving old inventory first.

I wouldn't be so quick to dismiss the anecdotal experiences of customers. On whole Target is a very well run retailer with a competent management team too. However, the anecdotal experiences of customers (discussed quite a bit here) were poor from the start after their expansion into Canada. My experiences with my local Safeway since the Sobey's takeover have been, on the whole, quite poor. The prices are noticeably higher and the selection of many items is poor. I don't claim to know more than the management of Sobey's, but I do know that I prefer to shop elsewhere these days. I'll go out on a limb and call it poor management at the local level.

[Simplicity]

Originally Posted by Arts

Is 98% of customers willing to buy over-ripened produce a factual statement or your own opinion? Is it good quality control management to sell low quality produce while the good produce goes bad waiting for a spot on the shelf, meanwhile all the loyal patrons are continually disappointed in either not being able to find what they wanted to buy or else disappointed that they are continually throwing out uneaten food that went bad before they can consume it? wouldn't a good produce manager give away the bad fruit for cheap and sell the customer what the customer actually wants? Then when they can't sell enough bananas at all because nobody is shopping there anymore they close shop and people like you blame the customers for not wanting to buy poor quality food at premium prices. Perhaps it IS poor management and not the model at all then.

This whole thing is just an anecdotal argument on top of anecdotal argument. These companies have supply chains that operate very well most of the time or they wouldn't still be in business 80 years later. If the occasional produce order comes in over-ripened or the store had a difficult time moving bananas one week we're losing the forest for the trees. This stuff is mostly irrelevant in the overall scheme of things.

And to prove this, Loblaws/Superstore has had historically lesser quality produce than both Sobeys and Safeway. In the meantime, Loblaws is the success story of the bunch because consumers are price sensitive and stores control costs by making decisions like this. One week it's a bad decision, a week later it's forgotten.

Let's not get hung up on one person's experience at the banana display.

[Simplicity]

Originally Posted by Authentic_City

I wouldn't be so quick to dismiss the anecdotal experiences of customers. On whole Target is a very well run retailer with a competent management team too. However, the anecdotal experiences of customers (discussed quite a bit here) were poor from the start after their expansion into Canada. My experiences with my local Safeway since the Sobey's takeover have been, on the whole, quite poor. The prices are noticeably higher and the selection of many items is poor. I don't claim to know more than the management of Sobey's, but I do know that I prefer to shop elsewhere these days. I'll go out on a limb and call it poor management at the local level.

I call this growing pains of merging two multi-billion dollar operations. Things will get figured out.

Target is either an outlier at this point or the first victim of a very unforgiving retail environment in this country. That's really yet to be seen. And Target didn't do itself any favours by leading customers to believe they were getting one thing and ending up with another. But Sobey's isn't some babe in the woods. They've been operating in these markets for a long, long time. It's safe to assume they know the tastes.

And the truth about prices in the grocery space is that they're up all over the world. Safeway isn't alone in this.

[CoryB]

Smart management would realize that trying to sell over ripened bananas for full price wouldn't end well. Instead they would talk with the in-store bakers and work on having a special on banana bread and muffins to try and recover some of that lost value. Customers then leave with a product that want, get excellent customer service and may end up with a bonus banana bread they hadn't intended to buy when coming to the store.

[Arts]

Originally Posted by Simplicity

This whole thing is just an anecdotal argument on top of anecdotal argument. These companies have supply chains that operate very well most of the time or they wouldn't still be in business 80 years later. If the occasional produce order comes in over-ripened or the store had a difficult time moving bananas one week we're losing the forest for the trees. This stuff is mostly irrelevant in the overall scheme of things.

And to prove this, Loblaws/Superstore has had historically lesser quality produce than both Sobeys and Safeway. In the meantime, Loblaws is the success story of the bunch because consumers are price sensitive and stores control costs by making decisions like this. One week it's a bad decision, a week later it's forgotten.

Let's not get hung up on one person's experience at the banana display.

The big grocers have supply chains that are very good at stocking large suburban grocery stores. They are not good at putting their model into dense urban small scale locations with clientele like you describe... but more than urban dwellers just "paying the premium" it has more to do with their dominance of the total supply chain leaving it unavailable to smaller scale grocers that could otherwise serve dense urban markets quite profitably even without excessively high premiums. You yourself admitted that their supply chain works for them because they bought up all the small players. Yes a premium can be justified for urban convenience markets, but not to the point where it's more feasible for urban dwellers to have to fire up their car on the weekend and spends hours shopping out in the burbs and having to install restaurant sized fridges in their tiny downtown apartments just to have a week's worth of fresh food at their disposal.

[Simplicity]

Originally Posted by CoryB

Smart management would realize that trying to sell over ripened bananas for full price wouldn't end well. Instead they would talk with the in-store bakers and work on having a special on banana bread and muffins to try and recover some of that lost value. Customers then leave with a product that want, get excellent customer service and may end up with a bonus banana bread they hadn't intended to buy when coming to the store.

Sure, but bananas are one of like 40,000 SKUs in a grocery store and there's very little actual baking happening in a store - it's mostly just putting in things in the oven.

Anyway, the point still stands: some weeks there's not much you can do about bad produce. It's not indicative of much.

[Simplicity]

Originally Posted by Arts

The big grocers have supply chains that are very good at stocking large suburban grocery stores. They are not good at putting their model into dense urban small scale locations with clientele like you describe... but more than urban dwellers just "paying the premium" it has more to do with their dominance of the total supply chain leaving it unavailable to smaller scale grocers that could otherwise serve dense urban markets quite profitably even without excessively high premiums. You yourself admitted that their supply chain works for them because they bought up all the small players. Yes a premium can be justified for urban convenience markets, but not to the point where it's more feasible for urban dwellers to have to fire up their car on the weekend and spends hours shopping out in the burbs and having to install restaurant sized fridges in their tiny downtown apartments just to have a week's worth of fresh food at their disposal.

You have to understand that food producers don't discriminate between small and large grocers, urban and suburban. They get squeezed by absolutely everybody because consumers demand food at dirt cheap prices.

If anything, the big time grocers have the advantage where it might come to a smaller, even lower margin outlet specifically because of their supply chain - not in spite of it. And the producers and wholesalers have no choice but to sell to the smaller guys at a premium strictly because they buy less at a time. The economies of scale go right up the ladder and right back down. This idea that smaller guys are getting squeezed right out has no basis in reality at all. They just have a difficult time competing because even staunch urbanists have a limit on what they're prepared to spend on food and that hits the bottom line of your friendly neighbourhood grocery. That's why they're all out of business or getting there. Again, not all customers are equal. If somebody is going to run a grocery store in a very profitable way as you say in a dense urban environment, a) no they're not because nobody does, and b) if they're going to come close, that store is going to look a lot more like the grocery section at Shopper's than anything else and even Shopper's benefits from the supply chain of Loblaw's.

This isn't an argument you can win by insisting on things that aren't true. The numbers are what they are - if you aren't prepared to pay a significant premium on your grocery bill, then you have to go to the suburbs. That's the grocery landscape these days.

[Biff]

These are all great discussions but I sure hope they release actual detailed renders of the building soon. I am kind of getting tired of reading about expensive banana's and ordering groceries over the internet.

........I know, I know.....I don't have to read these but I enjoy seeing all the proposal renderings coming from Toronto, Calgary, Edmonton and Vancouver and like seeing one from Winnipeg. I'm glad I was alive 2 - 3 years ago when all of the downtown Winnipeg proposals came out, Alt, Glasshouse, SkyCity Centre, 300 Assiniboine, D Condo, SoPo Square, 416 Main, Pumphouse Tower................ahhhh, good times

[drew]

^ who cares about renders!

It's playoffs baby!

[Simplicity]

Originally Posted by Biff

These are all great discussions but I sure hope they release actual detailed renders of the building soon. I am kind of getting tired of reading about expensive banana's and ordering groceries over the internet.

........I know, I know.....I don't have to read these but I enjoy seeing all the proposal renderings coming from Toronto, Calgary, Edmonton and Vancouver and like seeing one from Winnipeg. I'm glad I was alive 2 - 3 years ago when all of the downtown Winnipeg proposals came out, Alt, Glasshouse, SkyCity Centre, 300 Assiniboine, D Condo, SoPo Square, 416 Main, Pumphouse Tower................ahhhh, good times

I swear to god I've been physically banging my head against my desk.

Anyway, at some point I'm going to start creating threads around here for every rowhouse proposal in North Kildonan and Transcona. Then we'll have something to talk about.