Closing Franchise Businesses in the Lower Mainland

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sj-roc
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Thu Jan 15, 2015 8:26 am

As per recent speculation, US retail giant Target announced today after less than two years in Canada that they will shut down all 133 of its stores on this side of the border.

http://www.vancitybuzz.com/2015/01/targ ... an-stores/
Target announced Thursday the company will close all Canadian stores, completely halting operations in the country.

Target Canada has also filed for protection under the Companies’ Creditors Arrangement Act (the “CCAA”) with the Ontario Superior Court of Justice (Commercial List) in Toronto, the company says.

All 133 Target Canada stores will be liquidated and closed down, leaving approximately 17,600 jobless. As part of the request to the court, Target Canada is seeking approval to establish an Employee Trust of C$70 million (approximately US$59 million) in order to pay their workers a 16-week severance package.

“The Target Canada team has worked tirelessly to improve the fundamentals, fix operations and build a deeper relationship with our guests. We hoped that these efforts in Canada would lead to a successful holiday season, but we did not see the required step-change in our holiday performance,” said Brian Cornell, Target Corporation Chairman and CEO.

Cornell said that following a review of the company’s performance in Canada, they were unable to find a way to be profitable until at least 2021.

“There is no doubt that the next several weeks will be difficult, but we will make every effort to handle our exit in an appropriate and orderly way,” said Cornell.
They never did set up shop in Vancouver as originally planned at the site of the former Zellers in Oakridge Mall at 41st & Cambie, which continues to sit vacant to this day. So the next question is what becomes of all the retail space Target leaves behind? Their stores, like the Zellers locations they succeeded, were mostly anchor tenants in large malls from what I understand. Is there another large (US-based?) retailer out there that would give it a go or is it more likely that all this space will get distributed piecemeal to smaller organisations?
Sports can be a peculiar thing. When partaking in fiction, like a book or movie, we adopt a "Willing Suspension of Disbelief" for enjoyment's sake. There's a similar force at work in sports: "Willing Suspension of Rationality". If you doubt this, listen to any conversation between rival team fans. You even see it among fans of the same team. Fans argue over who's the better QB or goalie, and selectively cite stats that support their views while ignoring those that don't.

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Sir Purrcival
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Thu Jan 15, 2015 6:59 pm

I had the same question. What now for some of these large retail spaces. I suppose it is possible that Walmart might take advantage of a few of the open spaces to position stores in better places or bigger places but there is a definite lack of big box retailers to just take over spaces of this size. Sears is struggling, the Bay is not going to take them over. I don't think you are going to see a JC Penny or Kohl's come up from the US after the Target experiment. So it is a big what now.

Never was all that impressed with Target. Seemed like another Zellers. I remember the big hoopla about the grand opening. People lining up like it was some kind of special day and here we are a year and half later. Probably one of the shortest lived, highest costing failures in the Canadian market by a retailer ever.
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KnowItAll
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Thu Jan 15, 2015 7:37 pm

cross border shopping doesn't help.

If you cross border shop a lot and you know somebody losing their job in retail, you owe them an apology.
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Sir Purrcival
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Thu Jan 15, 2015 8:19 pm

Cross border shopping wouldn't be an issue if prices were competitive. Those that put on the duties, those that put on outrageous markups, those that regulate the supply of commodities, they are the ones that should be doing the apologizing. I don't do a lot of shopping cross border but I do go probably once every couple or 3 months. When I can save 20% on purchases and fill up with a tank of cheap gas (not so relevant now) it adds up. Then there are the things I just can't get here. Do I feel bad for the average working guy, yes, but I consider myself one of those as well as are many of those who actually cross border shop regularly.
I find it quite laughable that retailers here were talking about increasing prices on imported goods (those from the US at least) because of the exchange rate. I guess that when the dollar was at par not so long ago, they didn't feel much of a need to lower prices on imported goods. By the same token, the fuel costs to deliver those goods has gone down considerably since even a year ago. Is that being taken into account when they are talking about raising prices. Not hearing much about that either are we. Nope, there is definitely a lot of speaking out of both sides of the mouth when it comes to pricing and competition. I don't swear by the almighty dollar but I do suggest that some of the angst about cross border shopping would be more properly addressed to the retailers, governments and regulatory boards that seemingly make it their mission to make the price of goods here in Canada so much more expensive than those of our nearby neighbours. They are best positioned to do something about it and that would make for far more effective motivation to shop at home than any "Buy in Canada" campaign.
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TheLionKing
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Thu Jan 15, 2015 9:35 pm

Most of us are on a fixed income. My loyalty rest with where I can get the most bang for my buck. I recently bought a fishing rod online for $50.00 less than the equivalent in Canada.

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KnowItAll
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Thu Jan 15, 2015 11:24 pm

we have pluses, economic and otherwise, that many in the USA would love to have, and we have higher prices.

one should take the bad with the good. People shouldn't be selfishly trying to get the best of both worlds.

It is selfish and ignorant to cross border shop. All it does is contribute to the very thing that people use as an excuse to cross border shop in the first place for.
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Sir Purrcival
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Fri Jan 16, 2015 1:14 pm

It's not that simple KIA and there is a fine line between "selfish and ignorant" and "stupid and exploited". The latter would refer to the consumer who never questions the way things are done and blindly continues to pay significantly higher prices for goods that are even manufactured in this country, let alone imported. Just because someone does some cross border shopping, doesn't mean they aren't pulling their weight up here. We still pay income taxes, home assessments which include school and transit contributions. No one shops exclusively in the US so there are still the sales taxes that we pay and the carbon and road taxes. I think most of us feel that we play plenty to afford the pluses you refer to and then some. I even get to pay two sets of assessments by virtue of an empty lot I inherited in the Valley. Oh had to pay a good bit of probate on that too. So to that end, do I think I am being selfish. Not a bit. I pay thousands every year for services many of which I get no benefit from. I don't begrudge it for the most part because someday, who knows what I may require. But for one person who has never claimed a day of assistance in his life from Government, who doesn't use transit, who doesn't have kids in the system either past, present or future, I am quite fine that every so often I can save a buck here and there by going south of the border. If businesses want my business, they are going to have to earn it and part of that is about convincing me that I am getting value for money. After all it is my money (what I have of it) and since I seemingly get no real say in how governments spend the money they do take off me, I am darn well gonna choose how I spend the money they graciously allow me to keep.

I don't know if you own your own place but my assessments both went up this year again. One to the tune of about 15%
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Robbie
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Sat Jan 17, 2015 10:13 pm

Sir Purrcival wrote:I pay thousands every year for services many of which I get no benefit from.
Canada may be better than the USA for the elderly and the retired....but America may be better for working professionals who get to save more for every cent you earn. There are many articles about how Vancouver is always one of the best cities to live in.....but that may be very subjective to each individual. For young working professionals who are looking for good-paying positions while trying to find a good first house to purchase....Vancouver may not be the best city for them given their limited career opportunities and the skyrocketing real-estate prices. It looks like those who move to Vancouver from other countries (specifically from China) they do so NOT to find employment. And it's fair to say there's an exodus from Vancouver to the USA for young working adults trying to establish a good career.
Sir Purrcival wrote: I don't begrudge it for the most part because someday, who knows what I may require. But for one person who has never claimed a day of assistance in his life from Government, who doesn't use transit, who doesn't have kids in the system either past, present or future, I am quite fine that every so often I can save a buck here and there by going south of the border. If businesses want my business, they are going to have to earn it and part of that is about convincing me that I am getting value for money. After all it is my money (what I have of it) and since I seemingly get no real say in how governments spend the money they do take off me, I am darn well gonna choose how I spend the money they graciously allow me to keep.
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祝你狗年行大運。

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jcalhoun
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Mon Jan 19, 2015 5:04 pm

Hey all,

I was going to be a smart arse, and say that as a loyal Canadian, I don't cross-border shop; I order from Amazon.com and they bring it to my door. But I thought it better to drop it --no sense in stoking an argument.

It was announced this afternoon that Chapters is closing their downtown location on Robson street, come June 30th.

Oh well. Apparently the rent increased. As a business, they used economies of scale to squeeze the profit margin down on new books, meaning small, independent bookstores couldn't compete. Now they have to deal with being squeezed themselves, in a market they can't afford to compete in. So it goes.

(I don't understand why anyone would buy books from a bricks and mortar Chapters store --their prices are about 15% cheaper online and frankly, they stopped being a "book" store some time ago).

Anyway, should be some good sales come June.

Cheers,

James

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Sir Purrcival
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Mon Jan 19, 2015 8:04 pm

Ahh arse away JC. At the end of the day this is always going to be one of those issues that has strong proponents on both sides. We could have the best economy and deals in the world and there would still be those who prefer to shop in the US. Just like the guy who will spend $10.00 driving across the city to save $5.00 on a part.
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sj-roc
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Tue Jan 20, 2015 8:20 am

jcalhoun wrote:Hey all,

I was going to be a smart arse, and say that as a loyal Canadian, I don't cross-border shop; I order from Amazon.com and they bring it to my door. But I thought it better to drop it --no sense in stoking an argument.

It was announced this afternoon that Chapters is closing their downtown location on Robson street, come June 30th.

Oh well. Apparently the rent increased. As a business, they used economies of scale to squeeze the profit margin down on new books, meaning small, independent bookstores couldn't compete. Now they have to deal with being squeezed themselves, in a market they can't afford to compete in. So it goes.

(I don't understand why anyone would buy books from a bricks and mortar Chapters store --their prices are about 15% cheaper online and frankly, they stopped being a "book" store some time ago).

Anyway, should be some good sales come June.

Cheers,

James
Apparently they're not abandoning the downtown area entirely but are looking for another location to move to before year's end. As for their present location Robson @ Howe location, it seems Sport Chek has already arranged to move in from their current Pacific Centre location after Chapters steps aside — and neighbouring Holt Renfrew will expand into the PC space that SC is vacating. Meanwhile Nordstrom is scheduled later this year to complete renovations and move into the old Sears location across Robson from Chapters.

http://www.vancitybuzz.com/2015/01/spor ... son-space/
Sport Chek to occupy massive Chapters Books Robson space

By Kenneth Chan | 9:21 pm PST, Mon January 19, 2015

Canadian Tire-owned FGL Sports has reportedly purchased the lease to the Chapters Books flagship location at Robson and Howe streets.

Business In Vancouver says it has received confirmation from Commercial Real Estate Services Canada that the Calgary-based company will move into the Infinity building’s 52,000 square foot commercial space managed by PCI Developments.

FGL Sports is based in Calgary and operates brands that include Sport Chek and Atmosphere. News of the sporting goods’ move into the three-storey space also coincides with recent chatter in the local retail industry that Holt Renfrew’s Vancouver flagship store is exploring the possibility of expanding into Pacific Centre’s Sport Chek and Atmosphere spaces.

This would increase Holt Renfrew’s area from 137,000 square feet to 180,000 square feet and allow the luxury retailer to compete with the upscaling of the Hudson’s Bay Company and the nearby Nordstrom flagship opening this fall.

It is not known how exactly the Robson space will be utilized by FGL Sports, but there is speculation that multiple brands will occupy the space. Sport Chek will likely consume the most space in the store while the remaining areas will be divided between Atmosphere and possibly other FGL Sports brands such as National Sports, Hockey Exports, S3 and Nevada Bob’s Golf.

Earlier today, Indigo announced it would be shutting the doors to its Chapters Bookstore Robson Street flagship location on June 30, 2015.

In a released statement, Indigo Chief Executive Officer Heather Reisman said rising rents were to blame, but it hopes to open another bookstore nearby later this year:
As we gain great momentum with Indigo’s transformation strategy we are continuing to review all elements of our operations. With a very significant rent increase recently at our Chapters Robson store, the new terms are simply untenable for us to stay in that location. An increase of this magnitude would quite simply make this vibrant, profitable store unprofitable. As a result, we are actively pursuing another location to serve the Robson trade area which we fully intend to open in 2015. In other key markets we are also looking at new real estate opportunities for Indigo that will best serve our unique needs.
Sports can be a peculiar thing. When partaking in fiction, like a book or movie, we adopt a "Willing Suspension of Disbelief" for enjoyment's sake. There's a similar force at work in sports: "Willing Suspension of Rationality". If you doubt this, listen to any conversation between rival team fans. You even see it among fans of the same team. Fans argue over who's the better QB or goalie, and selectively cite stats that support their views while ignoring those that don't.

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sj-roc
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Tue Jan 20, 2015 8:40 am

Sir Purrcival wrote:I had the same question. What now for some of these large retail spaces. I suppose it is possible that Walmart might take advantage of a few of the open spaces to position stores in better places or bigger places but there is a definite lack of big box retailers to just take over spaces of this size. Sears is struggling, the Bay is not going to take them over. I don't think you are going to see a JC Penny or Kohl's come up from the US after the Target experiment. So it is a big what now.

Never was all that impressed with Target. Seemed like another Zellers. I remember the big hoopla about the grand opening. People lining up like it was some kind of special day and here we are a year and half later. Probably one of the shortest lived, highest costing failures in the Canadian market by a retailer ever.
At least one observer seems optimistic for the future of this retail space, although they could be biased in their outlook, from the Georgia Straight:
Canadian Target closures will create new shopping opportunities, say experts
by Carlito Pablo on Jan 15, 2015 at 12:52 pm

The closure of Target stores in Canada will create new shopping opportunities and perhaps “more creative” alternatives to big box stores, according to real-estate experts.

James Shandro, vice president of retail, leasing, and sales at the Vancouver office of the commercial real estate services firm Avison Young, noted that consumer demand remains strong.

“We have some very sophisticated and savvy landlords and developers in this country who have experienced loss of anchor tenants off and on many times over their histories of mall ownership,” Shandro told the Straight in a phone interview following an announcement today (January 15) by Minneapolis-based Target Corporation to cease operations in the country.

“So while Target is a big name to be losing based on their place in the world landscape, I think ultimately, this will just create opportunities for other anchor tenants and maybe even some new, more creative solutions to take care of some of the big box spaces that will be coming back when Target leaves,” Shandro continued.

Target’s announcement came less than two years after the American retailer launched operations in Canada.

There are 133 Target stores across the country, employing about 17,600 people.

“Target Corporation’s cash costs to discontinue Canadian operations are expected to be $500 million to $600 million, most of which will occur in the Company’s 2015 fiscal year or later,” the retailer stated in a media release.

The company also announced that it filed an application before the Ontario Superior Court of Justice in Toronto for protection under the Companies’ Creditors Arrangement Act. According to a CBC report, the request was granted by the court.

Target has 19 stores in B.C., including one at Metrotown in Burnaby.

The American retailer previously acquired leases held by the Zellers chain to gain a foothold in the Canadian market.

Avison Young’s Shandro doesn’t think that there is an excess of retail spaces in Metro Vancouver and across the province.

“There’s still plenty more consumer demand for more retail,” Shandro said. “It’s just a matter of having the right mix of retailers that that demand is yearning for.”

Shandro anticipates that the spaces to be vacated by Target will host both big and small retailers.

“There is still lot of interest and demand from other American and other international retailers that, irrespective of Target’s decision, have great interest in entering the Canadian marketplace,” he said. “This will just now give them other opportunities to consider as far as where they want to locate. But I’m sure in other markets, some of these big spaces that Target will be vacating will be demised and carved up to accommodate multiple tenants, again depending on exactly what market you’re in.”

The Avison Young executive doesn’t see Target simply walking away from its leases.

“There are definitely going to be financial considerations and implications that Target will have to deal with, which will then of course give these landlords and developers time to sort out what their plans are going to be for these spaces,” Shandro said.

Real-estate consultant Peter Austin was following news about Target’s announcement when reached for comment at his Vancouver office.

“I would anticipate that if there isn’t another major chain coming from the States that wants to take over, the spaces will likely get split up,” Austin told the Straight by phone.

Austin doesn’t see the closure of Target stores giving pause to the development of new shopping spaces.

“People are still building shopping centres and expanding because the population is increasing, and and as population increases, in theory, you’ll need more square footage,” he said.

As for Target’s experience in Canada, Austin said that “it’s just a chain that has not done very well”.

“Obviously, their sales will now be divided up by other people,” Austin said. “That’s a positive for the other stores.”
I see there's a Canadian chain called Giant Tiger with most of its locations in ON & QC, a smattering of stores in most other provinces but apparently none in BC. Just noticed them on one of those flyer websites so I don't know much about them but they look like a Zellers style of discount department store. Wonder if they would consider breaking into BC, although I don't think they would last in Vancouver any more than Zellers could.
Sports can be a peculiar thing. When partaking in fiction, like a book or movie, we adopt a "Willing Suspension of Disbelief" for enjoyment's sake. There's a similar force at work in sports: "Willing Suspension of Rationality". If you doubt this, listen to any conversation between rival team fans. You even see it among fans of the same team. Fans argue over who's the better QB or goalie, and selectively cite stats that support their views while ignoring those that don't.

Blue In BC
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Tue Jan 20, 2015 10:18 am

I just heard that Ricky's and ABC family restaurants were sold recently. Not sure what company bought them but some of each brand locations are about to close.

The ABC near Coquitlam Center will close at the end of this month.

What the future holds for each brand is a little less clear. It will be interesting to know what company bought these chain restaurants.

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Sir Purrcival
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Tue Jan 20, 2015 10:50 am

Blue In BC wrote:I just heard that Ricky's and ABC family restaurants were sold recently. Not sure what company bought them but some of each brand locations are about to close.

The ABC near Coquitlam Center will close at the end of this month.

What the future holds for each brand is a little less clear. It will be interesting to know what company bought these chain restaurants.
That location has been death to Restaurants. It seems like it should be a good location but you simply don't notice it from the Barnet. I think that is the second or 3 incarnation of a Restaurant there.
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Blue In BC
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Tue Jan 20, 2015 11:13 am

Sir Purrcival wrote:
Blue In BC wrote:I just heard that Ricky's and ABC family restaurants were sold recently. Not sure what company bought them but some of each brand locations are about to close.

The ABC near Coquitlam Center will close at the end of this month.

What the future holds for each brand is a little less clear. It will be interesting to know what company bought these chain restaurants.
That location has been death to Restaurants. It seems like it should be a good location but you simply don't notice it from the Barnet. I think that is the second or 3 incarnation of a Restaurant there.
It was the 2nd go around for ABC at that location. In between it was a Frogstone and another name for a short time that escapes me at the moment.

EDIT: The owner of Ricki's and Master franchisor for Fatburgers was the buyer for ABC restaurants.

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