Ottawa's locally owned retailers fighting a losing battle to stay viable
David Sali, OBJ
Published on February 03, 2017
Much like the store they’re in, the Ottawa Lynx throwback hats on sale at Elgin Sports are a stark reminder of a bygone era.
The capital’s Triple-A baseball team, once such a hit with fans it led its league in attendance two years in a row, could not sustain its popular appeal and ultimately fizzled out after a 15-year run. Today, the same fate is befalling Elgin Sports, a once-thriving business that has been part of Ottawa’s retail scene for seven decades but will close its doors for good when its current lease expires at the end of February.
When Karl Kofmel started working for the company in 1984, Elgin Sports had seven locations across the city and employed more than 100 people. Now the owner of the sole remaining location at the corner of Bank and Albert streets, Mr. Kofmel says he can no longer see a future in bricks-and-mortar retail at the site.
“I think people’s buying habits have changed a lot,” he says during an interview with OBJ in the store’s back office, where the two-storey shelves that used to be packed with shoes, shirts and other merchandise are now half-bare. “Downtown used to be a place to come and go shopping. But over the years, that has changed.”
Mr. Kofmel began his retail career more than three decades ago, a time when consumers regularly patronized locally owned shops such as Elgin Sports.
Founded on Elgin Street in 1946 by Emmett “Red” Noel, the business soon expanded citywide. Mr. Noel eventually handed the reins to his son Brian in the early 1980s, the high-water mark for the chain.
“The GST happened (in 1991), the economy crashed, so the owner just slowly started downsizing from seven (locations) down to one,” says Mr. Kofmel, who bought the last remaining store four years ago.
At first, he thought he could turn things around. But he says a multitude of factors – the rise of online shopping, big-box stores and direct competition from his own suppliers chief among them – worked against a smaller player like Elgin Sports.
“Elgin Street, we couldn’t survive as a retail business there,” he says. “There’s just too many restaurants, bars, pubs. It’s almost an entertainment district as opposed to a retail area. The same thing is happening here on Bank Street. It’s not really conducive to retail anymore. I think if you’ve got the right little niche, you can make a go of it. But if it’s something (consumers) can get at the malls, at the big-box stores, at Tanger Outlets, then there’s no need for them to come downtown.”
Elgin Sports is far from the only locally owned retailer feeling the pinch. Earlier this month, Ottawa’s only children’s bookstore, Kaleidoscope Kids, said it was closing up shop after years of flat sales figures.
Ian Lee, a professor at Carleton University’s Sprott School of Business, is not surprised by the latest retail casualties.
“I am predicting that small stores like Elgin Sports will be vanishing, all of them,” he says bluntly. “They’re going to go the same way as bookstores and video stores.”
A longtime observer of Ottawa’s retail scene, Mr. Lee says small businesses in any sector where consumers can easily compare products without having to actually see or touch them – such as sporting goods, books and electronics – simply can’t compete with online retailers such as Amazon that deal in huge volumes of product and have comparatively low overhead costs.
“They have the ultimate competitive advantage,” he explains.
Asked if there is anything independent retailers in those sectors can do to stay afloat, Mr. Lee doesn’t mince words.
“If my view, I don’t think so,” he says. “I know it sounds pessimistic, but I buy Nike shoes. Where do I buy them? Well, I don’t buy them at small, independent athletic stores. Either I’ll get them online or I’ll get them at factory outlets.”
Retail analyst Barry Nabatian of Shore-Tanner & Associates says Ottawa households are struggling in the face of increased debt, escalating food prices and soaring hydro rates, and many are turning to discount retailers such as Wal-Mart at the expense of independent stores.
Per-capita spending on consumer goods in the capital hasn’t shown any real growth for several years, he says, even though the city has added two million square feet of retail space – mostly in the form of discount malls such as Tanger Outlets and higher-end stores in the new Rideau Centre expansion.
“The middle class’s disposable money is diminishing,” Mr. Nabatian explains. “(Independent, locally owned stores) are the ones who have been suffering the last few years.”
He argues the overall impact of online shopping on small retailers has been “overblown,” noting those sales accounted for only about four per cent of Canadians’ total retail spending tab in 2016.
“People do a lot of research on the Internet, but they want to go see, feel, touch before they buy,” Mr. Nabatian says.
But in sectors such as electronics and books, recent figures from the United States show as much as 40 per cent of all spending now occurs online. It’s a troubling trend, Mr. Lee says.
“There’s a logic to what’s going on, and the sales that are migrating to the web, to the Amazons, are where you don’t need the tactile experience.”
Algonquin College business professor Cheryl Dowell, a former manager at retail chains such as Fairweather and Ikea, is slightly more optimistic. She says there’s still room in the retail landscape for locally owned shops that offer a sense of “community” and strong customer service.
“The giants can’t offer that niche, that one-on-one relationship,” she says. “The average Canadian is overextended and in debt. We need to feel that human connection. Where better to get that (than) when you go into a small business?”
Mr. Nabatian agrees that if there is any hope for the mom-and-pop enterprise, it lies in offering a level of quality and customer service the big-box stores and online giants can’t match.
“That is really their only way to survive,” he says.
Mr. Lee isn’t so sure.
“We’re not willing, most of us, to pay for customer service. I already know what my (shoe size) is.”
He says he would caution aspiring independent retailers against selling generic merchandise in sectors such as sporting goods and electronics and instead focus on targeting underserved market segments.
“My generic advice to small business is, try and have a niche where you’re not competing against the big guys,” Mr. Lee says. “Secondly, even if they are selling it, try and choose an area where there’s a lot of support needed for the customer and try and sell on that basis. Those who are doing just mainstream things like selling general sporting goods, well, they’re going to have a tough time.”
Back in his stockroom at Elgin Sports, Mr. Kofmel can only wonder when the next domino will fall.
“The world of retail is changing; the landscape is changing,” he says quietly. “I think there’s still a lot of changes to come, too.”
http://www.obj.ca/Local/Retail/2017-...-stay-viable/1
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