Canadian Retail Thread

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Wednesday » August 10 » 2005
Les Ailes stores get new owner
Fairweather Group pays $6.2 million. Sale does not include swimwear division; Margolis resigns as president and CEO

SHEILA MCGOVERN
The Gazette

Wednesday, August 10, 2005

The struggling Les Ailes de la Mode stores have been sold to the Fairweather Group in Toronto for $6.2 million, and retail analysts said it might be for the best.

The sale was not a surprise. Les Ailes de la Mode Inc. acknowledged more than a week ago that it was negotiating with the Toronto group, headed by Isaac Benitah.

The four stores - based in Montreal, Laval, Brossard and Ste. Foy - were to have been the pride of a retailing empire built by Paul Roberge in a rebirth of the luxurious department store. But they never took flight, and they dragged down the rest of his empire. In December 2003, the company had to seek protection from its creditors and sell a few of its banners, including the San Francisco chain on which it had been founded.

It emerged from bankruptcy protection with only Les Ailes and its swimwear division, which includes 50 Bikini Village and Ocean Bikini stores. At its annual meeting on July 21, the company said it still wasn't making money.

In announcing the sale, which does not involve the swimwear division, Les Ailes president David Margolis said that "on its own, the Les Ailes department stores would have required significant capital investments to remain viable in the long term."

By selling the stores to Fairweather, they "will benefit from the scale, purchasing power and relationships as well as the synergies that a large retailer can bring," he said. "Les Ailes' concept will continue under new leadership while recognizing its important impact on the Quebec retail market."

Benitah said he was excited about the purchase and that "with over $75 million in revenues and 630 employees, Les Ailes has a solid foundation from which we can build."

Fairweather will "continue to use the existing vendor base as well as adding new suppliers, which will broaden the appeal to customers and provide an enhanced platform for future success and growth," he said.

Benitah has been dubbed the "godfather of cheap chic," and there was speculation he would relaunch the chain as an off-price retailer like Winners.

However, three retail analysts contacted by The Gazette doubt that will happen.

"He absolutely should not do that," said Richard Talbot of Talbot Consultants International. Then he'd be competing with himself. A retailer can own a variety of stores "and maybe inside every low-end retailer there is also a high-end retailer."

Even though his stores would not carry the same merchandise, they would all benefit from combined supply, distribution, marketing and computer services, Talbot said.

And Quebec is the ideal market for a concept like Les Ailes, Talbot added. Though small department store chains are rare in the rest of Canada, Ste. Catherine St. has three - Les Ailes, Simons and Ogilvy - and the population remains fashion-conscious, he said.

David Howell of Associate Marketing International said low-end retailers are doing well, as are high-end retailers like Holt Renfrew and Harry Rosen. But the middle ground is not well served, he said, and Benitah has the expertise to capture that ground in Quebec and expand. "He understands the rest of Canada - Paul (Roberge) did not."

Ed Strapagiel of Kubas Consultants said many Canadian shoppers still want quality, and there probably is a stake to be claimed somewhere between The Bay and Holt Renfrew.

Benitah's empire has the reputation of being a tight operation, while Roberge "was probably not watching the nickels and dimes," Strapagiel said, and it also goes in for heavy marketing and promotion. "They are merchants who go out and hustle."

Roberge ran into trouble trying to expand too quickly, planning three stores in about a year, Strapagiel said. The Pointe Claire store never opened, the Ottawa stored closed, and the downtown Montreal store had to be chopped to a third of its size. When people run into financial difficulty, they cut back on advertising expenses, but you just can't do that in fashion. he said.

All agreed the tough nut to crack will be reviving the downtown Montreal store buried in the back of the old Eaton building. It has been a confusing store and tough to find, and it was the major contributor to Roberge's financial woes.

The Eaton building is owned by the Caisse de depot et placement du Quebec, the province's giant pension find manager. A spokesperson said yesterday the store was doing "business as usual" despite the sale.

Margolis, who founded the Winners chain, said he feels a sense of accomplishment at having stabilized Les Ailes, and is resigning as CEO and president. Leslie Glazerman, who has been Les Ailes' interim chief financial officer, will assume the title of interim chief executive officer.

The companies said the $6.2-million price tag is subject to certain adjustments, and $4.2 million was paid at the close yesterday, with the remaining $2 million to be paid in instalments in October, December and February.

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Rona eyeing expansion into the U.S.
Hardware firm posts record profit, sales
By ALLAN ROBINSON
Thursday, August 11, 2005 Page B5
With files from Bloomberg News

Rona Inc., the largest Canadian distributor of hardware, home renovation and gardening products, is not ruling out the possibility of expansion into the United States if the right opportunity comes along.

"Our eyes are open and our ears too," Robert Dutton, Rona's president and chief executive officer, said in a conference call yesterday in which the company reported record sales and profit in the second quarter of 2005.

Rona is already battling Atlanta-based Home Depot Inc. for market share on its home turf and in early June Lowe's Cos. Inc. of North Carolina said it was coming north of the border to open its marquee home improvement outlets.

"There's more than enough room for Home Depot and Rona, and probably a third major competitor," said Gavin Graham, a director of investments at Guardian Group of Funds Ltd. "With the extremely hot housing market, it's getting growth and there will be more purchases of smaller chains."

Rona's profit for the 13 weeks ended June 26 rose 31 per cent to $70.4-million or 61 cents a diluted share from $53.7-million or 46 cents a year earlier. Its sales were $1.2-billion, up from $1.1-billion.

About half of the 12.4-per-cent increase in sales from a year ago was the result of the $100-million acquisition of Alberta-based Totem Building Supplies Inc., which was consolidated beginning April 14.

The profit for the first half of fiscal 2005 increased 30 per cent to $84.6-million or 73 cents a share on revenue of $1.9-billion.

Shares of Rona rose $1.20 or 5 per cent to close at $23.97 yesterday on the Toronto Stock Exchange.

Rona has generated much of its growth through acquisitions and by adding new corporate and franchise outlets. The threat of competition is likely to accelerate consolidation of the home improvement industry in Canada by motivating independents and large existing chains to sell out to Rona or join its dealer network, George Hartman, an analyst at Dundee Securities Corp., said in a report in June.

The home renovation business remained strong in the second quarter, although construction material prices, which were boiling a year ago, weakened, said Claude Guévin, executive vice-president and chief financial officer.

Lumber prices were down l3 per cent from a year ago, while veneers and plywood prices declined 22.7 per cent.

"The improvement in [profit] margins always results from many small actions," Mr. Guévin said.

Profit continued to improve more rapidly than sales, reflecting improved operating efficiencies, the company said.

Rona operates 566 franchise, affiliate and corporate stores.

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Loblaws: officially selling everything
_________________________________
Milk, eggs . . . cellphones
Loblaw launches PC mobile service
By CATHERINE MCLEAN
Wednesday, August 17, 2005 Updated at 3:50 AM EDT
From Wednesday's Globe and Mail

First it had grocery stores, then it added a bank, now it also has a wireless service.

Loblaw Cos. Ltd. has become the latest retailer in Canada to launch its own branded cellphone service in an effort to tap a fast-growing market. Industry observers expect more chains will follow, a trend they say could lead to lower wireless rates over time as competition heightens.

"It enables them to lever the fact that they've got a huge percentage of Canadians that visit one of their stores during the course of a year," said retail consultant Len Kubas of Kubas Consultants.

"The idea of having a phone that you can use and buy from a supermarket that you visit every week makes a lot of sense," he added.

With the new service, Loblaw is expanding its popular President's Choice private label line. Customers can currently buy food products like PC Memories of Tuscany Balsamic Vinegar & Fig Sauce, open a PC Financial bank account, and now sign up for PC mobile service at its supermarkets, and the company has said there is more PC merchandise to come.

The first stop for PC mobile was Alberta. British Columbia, Ontario and Quebec are expected to follow in coming weeks. Loblaw officials were not available to comment.

While many retail outlets have sold major wireless carriers' phones and prepaid offers for years, they are only starting to branch out now with their own branded cellphone services. Sears Canada Inc., for example, offers wireless service through SearsConnect. 7-Eleven Inc. last year introduced its Speak Out Wireless service in the United States, which could be expanded to Canada this fall. And in Britain, supermarket chains Tesco PLC and J. Sainsbury PLC 's sell their own branded cellphone services.

Loblaw "has strong ties to the U.K. supermarket industry," Mr. Kubas said. "Once they saw the success of store branded mobile phones, they thought why not?"

Shoppers Drug Mart Corp. and Canadian Tire Corp. Ltd. are among the next likely candidates to launch branded wireless services as many Canadians shop at their stores, according to Mr. Kubas. Both firms were not immediately available for comment.

Retailers are hoping to attract consumers who have so far resisted signing up for cellphone service. In North America, a smaller percentage of the population subscribes to wireless services than in Western Europe and Asia.

The retail chains are entering the cellphone market through deals that let them use the networks of the top wireless carriers. PC mobile is using Bell Mobility Inc.'s network, according to its website.

Resellers including PC mobile will likely target the discount market, said telecom consultant Ian Angus of Angus TeleManagement Group.

Loblaw is marketing its prepaid cellphone service as an "affordable" alternative to existing offers. PC mobile charges 20 cents a minute for local calls, according to the website. In comparison, Bell Mobility charges 30 cents a minute for the first two minutes and then 5 cents a minute for the rest of the call. And Rogers Wireless Inc. charges 26 cents to 33 cents a minute with its Anytime Plan, while Telus Mobility's rates go from 25 cents a minute up to 40 cents.

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Empire Theatres Limited announces the acquisition of 27 theatres in Ontario and Western Canada

STELLARTON, NS, Aug. 22 /CNW/ - Empire Theatres Limited ("Empire
Theatres") announced today that it has agreed to purchase 27 theatres with 202
screens located in Ontario and Western Canada from Cineplex Galaxy LP
("Cineplex"). The transaction is valued at approximately $83 million and is
expected to close September 30, 2005, subject to customary closing conditions.
Stuart Fraser, President and CEO, Empire Theatres Ltd said "we are
pleased with this acquisition as it enables us to further expand our presence
across Canada beyond our core group of theatres located in Atlantic Canada. We
look forward to operating these theatres and introducing the Empire Theatres
brand to Ontario and Western Canada." Empire Theatres will offer existing
staff continued employment in these theatres.
Empire Theatres currently operates 28 theatres representing 177 screens
in Atlantic Canada including one IMAX theatre in Halifax, NS along with 4
theatres representing 24 screens via a joint venture in Western Canada. As a
result of this acquisition, including the joint venture, Empire Theatres will
operate 59 theatres representing 403 screens across Canada.
Cineplex entered into a consent agreement with Canada's Commissioner of
Competition in connection with the Famous Players acquisition requiring the
sale of 34 theatres with a total of 282 screens located in the regions of
Ontario, Western Canada and Quebec. The purchase by Empire Theatres represents
27 of these 34 theatres.
A complete listing of the theatres being purchased has been attached to
this press release.

About Empire Theatres Limited:
Empire Theatres is a 100% owned subsidiary of Empire Company Limited with
its corporate headquarters in Stellarton, NS. Empire Theatres is committed to
offering a terrific cinema experience to its customers by offering modern
complexes and amenities along with branded food choices. More information can
be found at www.empiretheatres.com.
Empire Company Limited is a public company traded on the Toronto Stock
Exchange (symbol EMP.NV.A). Empire's key businesses include food distribution,
real estate and corporate investment activities, including theatres. More
information can be found at www.empireco.ca.

About Cineplex Galaxy LP:
Cineplex, headquartered in Toronto, ON operates or has an interest in 132
theatres with 1,278 screens (after giving effect to the 34 theatres and 282
screens to be divested pursuant to a consent agreement with the Canadian
Commissioner of Competition) and is the largest motion picture exhibitor in
Canada. Cineplex is a public company traded on the Toronto Stock Exchange
under Cineplex Galaxy Income Fund (symbol CGX.UN). More information can be
found at www.cineplexgalaxy.com or at www.famousplayers.ca.


Ontario Region

Cineplex Odeon Showcase Cinemas Famous Players Jackson Square Cinemas
3325 Harvester Rd. 2 King St. W.
Burlington, ON Hamilton, ON

Cineplex Odeon Orleans Town Centre SilverCity Kitchener
250 Centrum Blvd. 135 Gateway Park Dr.
Orleans, ON Kitchener, ON

Cineplex Odeon Exchange Centre Famous Players Kings College Cinemas
111 Albert St., 3rd Floor 262 King St. W.
Ottawa, ON Kitchener, ON

Cineplex Odeon Elgin Mills Famous Players 8 Wellington
10909 Yonge St. 983 Wellington Rd. S.
Richmond Hill, ON London, ON

Cineplex Odeon Square One SilverCity St. Catharines
100 City Centre Dr. Pen Centre Shopping Mall
Mississauga, ON 221 Glendale Ave.
St. Catharines, ON

Famous Players Capitol Theatre Famous Players Rideau Centre Cinemas
223 Princess St. 50 Rideau St.
Kingston, ON Ottawa, ON

SilverCity North York
5095 Yonge St.
North York, ON


Western Region

Famous Players Capitol 6 Cineplex Odeon Granville Cinemas
805 Yates St. 855 Granville St.
Victoria, BC Vancouver, BC

Cineplex Odeon Oakridge Famous Players Esplanade
601 - 650 West 41st Ave. 200 W. Esplanade
Vancouver, BC N. Vancouver, BC

SilverCity Guildford Coliseum Calgary
15051 - 101st Ave. 100 - 16061 Macleod Trail S.E.
Surrey, BC Calgary, AB

SilverCity Country Hills Famous Players Gateway 8
388 Country Hills Blvd. N.E. 2950 Calgary Trail S.
Calgary, AB Edmonton, AB

Cineplex Odeon Clareview Town Cineplex Odeon
Centre Edmonton City Centre Cinemas
4211 - 139th Ave. 10002 - 102nd Avenue
Edmonton, AB Edmonton, AB

Paramount Theatre Lethbridge Famous Players Westmount Centre
4th Ave. and 8th St. S. Cinemas
P.O. Box 520 2003 Westmount Shopping Centre
Lethbridge, AB 111 Ave. and Groat Rd.
Edmonton, AB

Famous Players Capitol 4 Cinemas Cineplex Odeon Grant Park
216 1st Ave. S. 1120 Grant Park Ave., Unit 127
Saskatoon, SK Winnipeg, MB

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Indigo Books & Music in 'growth mode' to open new stores: CEO Reisman
RITA TRICHUR1 hour, 45 minutes ago
TORONTO (CP) - After finally closing the book on its three-year restructuring, Indigo Books & Music Inc. is fired up for growth and is set to open a slate of new stores over the coming year, CEO Heather Reisman said Wednesday.

"We're in growth mode," Reisman told shareholders during an address at the company's annual meeting in Toronto.

"(There's) lots in the pipeline in the growth side of the business."

Canada's largest bookstore operator will add three new Indigo superstores in Ottawa, Windsor and Montreal to its portfolio, along with new smaller-format Coles boutiques in Toronto and Uxbridge, Ont., and Whitehorse.

The new store openings will mark the first chapter of expansion for Indigo since its mega-merger with rival Chapters in 2001. At that time, the company was required to divest certain holdings in order to win regulatory approval from the federal Competition Bureau.

Subsequently, the book store chain has re-engineered its supply system while expanding sales of gifts and lifestyle products with the aim of transforming its shops into "cultural department stores."

"Last year market a major transition for Indigo," said chief financial officer Jim McGill. "The good news is the platform is stablized."

Late last month, Indigo said it turned the page with a solid jump in sales and improved efficiency which helped trim its losses by 26 per cent in the first-quarter of fiscal 2006.

Its net loss for the period ended July 2 totalled $8.1 million or 34 cents a share compared with a loss of just under $11 million or 46 cents a share for the same period last year.

Quarterly sales rose to $164.2 million from $155.9 million, a gain of 5.3 per cent. Those results did not include sales of the sixth instalment of J.K. Rowling's wildly popular Harry Potter franchise, Harry Potter and the Half-Blood Prince, executives said. Following its summer release, the company booked sales of 250,000 units per day.

Looking forward, Reisman said executives are thumbing through a catalogue of growth initiatives for both its store-based and online segments. Among them is an expansion of its "bibliotherapy" book line which includes doctor-recommended picks on a wide array of health issues.

"Bibliotherapy has become a very hot topic in the medical world," Reisman said. "We see this as an area for great growth."

She conceded, however, the industry remains in transition with traditional book retailers forced to contend with the impact of digitization, the Internet and new entertainment technology. For its part, Indigo has introduced a small range of digital products, including the faddy iPod MP3 player by Apple.

"We have to be aware of what opportunities are created by that," Reisman said, but declined to elaborate when pressed. "We're in a highly competitive industry."

The Toronto-based company controlled by Toronto power couple Reisman and her husband Gerry Schwartz, chairman of Onex Corp., operates bookstores in all provinces under the names Indigo Books Music & more, Chapters, The World's Biggest Bookstore and Coles.

The company, which had 6,300 employees at the end of its 2004 fiscal year, also operates Chapters.indigo.ca, an online retailer of books, gifts, music, videos, and DVDs.

Its shares (TSX:IDG - news) fell 20 cents to $8.05 on the Toronto Stock Exchange.

[someone123]

Empire is basically Sobeys plus some other things like the movie theatres. As far as I know they have a total monopoly on the movie theatre business in Atlantic Canada. The last locations owned by other chains here were bought out a couple of years ago.

[SSLL]

^don't they own the chain of Irving gas stations in the East too?

[MTL-514]

^ that's not the K.C. Irving family?

[someone123]

No, Irving is separate. The Irving "empire" consists of the gas stations, petrochemical plants, shipyards, forestry operations, and other things.

[MTL-514]

^ still owned by the Irving family?

[someone123]

Yes.

[SSLL]

Speaking of Nova Scotia, are you guys the only province not to have Sunday shopping still? What's up with that? Do most people want it now, or not care?

[someone123]

There is still no Sunday shopping at any point in the year, although it excludes many businesses (generally speaking, anything deemed "essential" and anything that's "entertainment".. it also goes by square footage and there are many strange exceptions probably built in because somebody knew someone with that kind of business). It's kind of a big issue but many people simply don't care, which is why the majority vote against it when it comes to plebiscites.

Eventually some business owners will have to take the province to court. I believe that's what ended the Sunday shopping ban in most of the other provinces.

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ETHNIC SUPERMARKETS TAKE OFF IN MULTICULTURAL CANADA

By Susan Thorne

Step into a T&T Supermarkets store, and it becomes immediately apparent that Canada, like the U.S., is a country of immigrants.

Emigration surges from Hong Kong and mainland China have made Asians the largest visible minority group entering Canada in the past 20 years.

Certainly, Canada’s Asian market is sizable and growing. Statistics Canada, the government census agency, predicts that by 2017, South Asian and Chinese immigrants together will number about 3.6 million, constituting more than 10 percent of the total Canadian population of 34.6 million. That will be up from 6.5 percent in 2001, the latest census.

Yet, aside from a few Chinese-owned malls in the Greater Toronto and Vancouver, British Columbia, areas showcasing mainly Chinese merchants, Canadian shopping centers have not targeted the Asian customer. Now, however, Richmond, British Columbia-based T&T Supermarkets is providing a link to this growing market segment.

T&T has re-created the Asian grocery business, which has traditionally been housed in smaller shops in Canada’s urban and suburban Chinatowns, with a modern supermarket format. Its stores, which measure between 21,000 and 65,000 square feet, sell about 20,000 different food items, including unusual and exotic fruits, jasmine rice and live Australian king crab. Founded in 1993 in Richmond, T&T has stores in Canada’s two largest shopping centers — West Edmonton Mall and Metropolis Centre, Burnaby, British Columbia — and in 10 other locations from Vancouver to Toronto, of which seven are shopping centers. The company says it plans to expand further in the country.

“The grocery business is a highly competitive, mature sector,” said company CFO Kam Choi. “The key to our success is differentiation —being able to meet the needs of the Asian customer.” T&T maintains a lower price point than other grocers through volume purchases of Asian specialties and by operating with a tighter profit margin, he says. Chainwide sales per square foot exceed C$500 ($414). That is about 20 percent higher than similar-size competitors in the Toronto area achieve, according to GRS, a Calgary-based retail real estate management consulting firm.

To be sure, the company needs a broad selection to serve its core customers, who, besides ethnic Chinese, include Filipinos, Japanese, Koreans, Thais and other Asian nationalities. “They all want to find their favorites, like in their home countries,” Choi said. T&T stores respond to this demand, and how. There are specialties not found in mainstream grocery stores, such as live fish and shrimp, red-bean ice-cream bars and freshly prepared foods from the in-house delis, bakeries and sushi bars. Take-out counters offer hot dishes such as rice congee (a breakfast rice “soup”), prepared dumplings, steamed buns and stir-fries. All of these can be taken home or eaten on the premises.

It is unusual for an ethnic specialty concept to achieve secondary anchor status at malls, but landlords say T&T enhances the merchandise mix and adds a new shopper demographic. “They help us reach an ethnic market that we might otherwise have lost out on, or would not have penetrated deeply enough,” said Brian Castle, senior vice president of the Western region for Ivanhoe Cambridge. Castle has had direct experience with T&T at Metropolis Centre, where he says the supermarket’s sales performance is strong, and at Coquitlam Centre, in Vancouver. He also observed the way two struggling neighborhood centers — Impact Plaza, in Surrey, British Columbia, and Pacific Place, in Calgary, Alberta — were revitalized when T&T became a tenant in 1998 and 1999, respectively. “These cases are a credit to them [T&T] in terms of the success and traffic they bring,” he said.

At West Edmonton Mall, the T&T supermarket is part of the Chinatown-themed attraction area that was added to the center in 2002. The store has sparked significant cross-shopping on the part of Asian customers, particularly those under 50, says center manager Gary Hanson. “I see a lot more of that younger generation going to stores like Club Monaco here, so our retail tenants are benefiting,” Hanson said. T&T’s presence boosts business at the nearby casino and the mall, because Asians shop for food more frequently than other customer groups, perhaps as often as five times per week, Hanson says.

Asian customers predominate, but non-Asians, drawn to the exotic merchandise, can make up as much as 30 percent of T&T’s customers at some stores. “They’ve got tanks of fish in there, ducks hanging up — that’s retail entertainment,” said Hanson.

The T&T at Promenade Center, in Toronto’s Thornhill district, has Jewish, Italian and Russian communities all around. The store, which opened in 2002, is performing well, says Choi. Nonetheless, future T&T units will follow concentrations of Asian population in Canada’s larger cities, with the Toronto area being a main focus (Choi envisions eight or more stores there), followed by Ottawa and possibly Montréal. Next year the company will open its eighth Vancouver store plus one store each in Calgary and Toronto.

Tom Leung, president of GRS, a Calgary-based retail management consulting firm, considers T&T a well-managed company with a strong retail concept for the Asian niche market. “Those consumers generally prefer recognized North American brands, but traditional tastes prevail in food shopping,” he said. Value is even more important than selection for these grocery shoppers, he says, and T&T is well positioned for this mind-set, with prices from 5 to 10 percent below those of the competition. He suggests that T&T will realize higher returns by owning its store sites, as national supermarket companies are increasingly doing (the store at Yaohan Centre, in Richmond, is company-owned), and reaching out to more mainstream customers. But expert personnel with Asian background will be needed to serve the core customer base, so the company’s ability to recruit such help may determine how fast and how much it can expand, Leung says.

Supermarket competitors may be targeting a larger share of the Asian shopping basket. Ivanhoe Cambridge’s Castle says some mainstream supermarkets in British Columbia are becoming more oriented to the ethnic Asian niche market with tanks of live fish and the like. And Leung estimates that Loblaw’s Real Canadian Superstores now allot as much as 5,000 square feet of their 100,000 square feet of floor space per store to Asian foods.

[MTL-514]

^ very interesting

[SSLL]

Sobeys talks tough on Ontario
Thursday, September 8, 2005 Page B9
Canadian Press

STELLARTON, N.S. -- Sobeys Inc., Canada's second-largest supermarket chain, says it's ready to take a bite out of the competition -- particularly in the cutthroat Ontario market -- with an aggressive merchandising plan that helped it ring up a higher first-quarter profit.

CEO Bill McEwan, addressing shareholders at the company's annual meeting yesterday, said he's "bullish" about the future in that key market despite sharpened competition -- a veiled reference to rival Metro Inc.'s recent acquisition of 236 A&P Canada stores.

"Irrespective of the recent changes in the competitive landscape," Mr. McEwan said, "we remain committed to executing our food-focused strategy while continuing to invest aggressively in the growth of our business in Ontario."

Industry observers say Sobeys lost out in bidding for A&P Canada as Metro shelled out $1.7-billion and solidified its standing as the country's No. 3 player.

But Toronto retailing analyst John Winter said it could take Metro years to fully absorb its acquisition, giving Sobeys and Loblaw Cos. time to improve efficiencies.

In the meantime, he said, Sobeys and Loblaw will likely look to expand their respective holdings in key markets with small tuck-in acquisitions. Prospective targets include Highland Farms and Safeway.

Earlier yesterday, Sobeys reported its profit rose to $48.2-million or 74 cents a share from $46.6-million or 71 cents a share during the year-ago quarter. Sales jumped nearly 10 per cent to $3.3-billion from $3.01-billion on company-wide merchandising efforts. Three new stores were opened and three expanded.

[Kilgore Trout]

T&T is the best supermarket chain in canada. not only does it have all the best asian products -- including a lot of japanese stuff that is actually cheaper than you'd find in asia (excluding japan, of course) -- it is an overall bargain. their produce is top-notch and bakery fantastic.

i really hope they seriously consider opening a store in montreal. we have the third-largest asian population in canada. that should count for something!

what's the source for the T&T article, by the way? it reads like it was written for a foreign audience. large, clean and well-stocked ethnic supermarkets are not news to anyone who lives in canada's biggest cities.

[SSLL]

The source is ICSC (International Council of Shopping Centers). It's a US-based trade publication. I went to my parents' nearby T&T and was blown away by how clean, organized and big it was! I would argue that all three (large, clean and well-stocked) are not always in ethnic supermarkets, maybe one of the above, or two of the above, but not all three... T&T had their own food court and an Assamiea (formerly TenRen) bubble tea café. I thought Calgary had the third-largest Asian population in Canada (or is that Chinatown)? They only recently made the foray into Ontario, I guess they're trying to open a few more stores in Greater Toronto and Ottawa, before going further east.

[Kilgore Trout]

I would argue that all three (large, clean and well-stocked) are not always in ethnic supermarkets, maybe one of the above, or two of the above, but not all three...

you're absolutely right -- many ethnic supermarkets have great selection and great prices, but are cramped and dingy. most cities have had some hallmark ones that are T&T-like for awhile, though. of course, what distinguishes T&T is that it's a chain and it's so consistently nice.

montreal has the third-largest asian population in raw numbers, but calgary's is almost as large. since it's a much smaller city, though, the asian population's proportion is much higher. i also believe the chinese community in calgary is a lot wealthier than the one in montreal, so that is probably a factor to consider.

[SSLL]

Sep. 14, 2005. 01:00 AM
Retailers may create a Calgary stampede
DANA FLAVELLE
BUSINESS REPORTER

Watch out Toronto. Some U.S. retailers looking to open stores in Canada are seriously considering making Calgary their first stop.
Call it oil-patch economics. The Alberta city draws on a population of 1 million people who enjoy the lowest unemployment rate, highest household income and top retail sales per person in the country.
"We're talking to a lot of U.S. retailers ... who are looking at making Calgary their first stop," said David Pidgeon, asset manager for Deerfoot Meadows, a sprawling mall, whose construction is scheduled to begin next year in Calgary.
It's not as if new retailers are flocking en masse to western Canada. Coincidentally, Swedish cheap chic fashion retailer H&M, which chose Toronto as its first stop last year, announced yesterday it's continuing to invest in the city, opening three more stores in Greater Toronto Area malls this fall.
In fact, most major international retail chains that have come to Canada in the last few years have started out in Toronto. Think Zara, the Spanish fashion retailer, Best Buy, the leading U.S. consumer electronics chain, or Sephora, the European cosmetics company.
The opening of U.S.-based companies' stores in Calgary "is not going to be a tidal wave," said John Torella, a senior consultant with Toronto-based J.C. Williams Group. "I think there are going to be some because the market is so buoyant and Deerfoot is offering some pretty attractive (leasing) deals.
"But Toronto has so many other benefits," said Torella. "Just the sheer size of the market, the diversity of the market, the vibrancy of the market. That's all pretty attractive,"
Still, Calgary is undeniably attractive and there are signs the market is shifting.
"The city is really hot right now," Pidgeon said during the International Council of Shopping Centres conference in Toronto yesterday.
"We've got three or four international tenants who are looking at this and saying, `Wow,'" added John Marino, a leasing consultant for Deerfoot.
The Calgary project is the size of four Yorkdale shopping centres and will be one of Canada's first "lifestyle destination centres," the next generation of shopping mall development, Marino explained.
This new style of mall combines big-box stores with a stylish boardwalk featuring mid- to high-fashion outlets and better restaurants, and some condo or hotel development. They're aimed at affluent, older adults, who have time to stroll and shop and are willing to pay for more ambience, Marino said. About 70 such malls have been built in the U.S.
And now, one's coming to Calgary, the heart of a province with $100 billion in new investment committed over the next decade to develop the oil sands.
Toronto, and more broadly, Ontario, meanwhile is lagging the national average in retail sales growth and shopping mall performance, the conference heard. Retail sales in Alberta rose 11.4 per cent in the first half of the year, while Ontario lagged the national average with 5.4 per cent growth, Statistics Canada has said.
Among malls, fashion-forward Montreal enjoyed the strongest growth, up 5.9 per cent, followed by Calgary, at 5.4 per cent, and then Toronto, at 1.6 per cent, according to mall industry data.
For the country as a whole, economic conditions remain favourable with retail sales running ahead of last year's pace, up 6.8 per cent, said the mall group.
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Outside retailers flocking to Canada, ICSC meeting told

U.S. and European retailers are entering the Canadian market drawn by the strength of its economy, forcing local retailers to become more competitive, panelists at the 2005 Canadian Convention in Toronto said today.
“The margins of Canadian retailers are being squeezed by competition from big discounters like Wal-Mart,” said Ed Sonshine, president and CEO of Toronto-based RioCan Real Estate Investment Trust. “For a long time, the Canadian market seemed very protected. But it's good for us as landlords, because we have more choices for tenants.”

The arrival of new international retailers is “one of the most exciting” developments in the Canadian retailing scene, said René Tremblay, president and CEO of Toronto-based developer Ivanhoe Cambridge. “They are bringing a lot of great concepts.”

Observers say about 50 U.S. retailers have entered Canada in the past five years. The influx signifies that the Canadian economy is in good health, most panelists agreed. So far the economy has shrugged off high oil prices, Sonshine said, and Tremblay predicts retail sales growth of 3 percent to 4 percent in coming years.

To take advantage of this economic vigor, some Canadian developers are considering formats more common in the U.S., such as lifestyle centers. But lifestyle centers are likely to have only a “limited market,” in Canada, said L. Peter Sharpe, president and CEO of the Toronto-based Cadillac Fairview Corp. Only a few areas in Canada have the household income to support the high retail price points that such centers demand, he said.

Developers looking to build in Canada would do well to consider the province of Alberta, said Doug Porter, deputy chief economist and managing director of BMO Nesbitt Burns, a Toronto-based bank. Alberta's retail sales make the province look like “an area on steroids,” he said. The province's booming economy is also drawing immigrants from other parts of Canada, with about 13,000 arriving last year.

But there may be economic storm clouds ahead, others said. Rising energy prices will “be the biggest risk for Canadian consumers,” said Porter. “Growth will remain solid, but it is slowing.”

Developers agreed that there are challenges on the way. A rise in inflation could cause “a downturn, and then we will see a massive correction,” said K. Sahi, chairman and CEO of Morguard Corp., a Toronto-based real estate and financial services firm. The current economic expansion “will run out of steam,” said Sharpe, which will hurt “the electronics and home improvement industries that have been the mainstay of our sales.”