Saturday, February 2, 2013

Best Buy/Future Shop preparing for Brentwood arrival?

The recent closure of Best Buy and Future Shop stores across Canada may be a sign that smaller is better for major retailers looking to have presence in denser, more urban areas.  For the past 25 years, big box retailers like Best Buy and Future shop have been establishing themselves in the suburbs by taking advantage of lower real estate prices and relying on consumers to drive long distances to shop there.  With the trend heading towards denser neighbourhoods, and less car use coupled with increased online shopping, big box stores (particularly electronics stores) may be attempting the shift to a smaller "boutique" format to gain a foothold in those denser, more compact neighbourhoods.

This begs the question, is Best Buy / Future Shop preparing to enter Brentwood Mall as its redevelopment begins to move forward in North Burnaby?  Currently, the only store specializing in electronics at Brentwood Mall is The Source (formerly Radio Shack).

(News story below)

One Future Shop and five Best Buy big box stores closing in B.C.

Canadian retailing giants Best Buy Canada and Sears Canada announced layoffs Thursday and B.C. locations were among the hardest hit.
Five Best Buy stores in B.C. will close immediately, including the Queensborough store in New Westminster, the south Surrey location and all three stores on Vancouver Island (Nanaimo, Victoria, Langford). The Future Shop in west Kelowna was the only B.C. Future Shop to be closed.
Best Buy, Canada's biggest seller of home electronics, laid off an estimated 900 employees nationally and announced the closure of 15 big-box stores representing about 10 per cent of its square footage in this country.
Sears Canada, trying to staunch years of falling sales and profits, laid off 700 employees, about 360 at its department stores, 300 from distribution centres, and the remainder at head office and support areas.
The layoffs come as Best Buy faces pressure from online electronics retailers such as Amazon and Apple and as it follows in the step of its U.S. parent, with plans to open multiple smaller stores that are less expensive to operate, like the new North Vancouver Future Shop.
Target is also weeks away from opening the first of its 124 Canadian stores in what is shaping up to be a turbulent and competitive year for the country's retail sector.
"The retail landscape continues to change and our success is dependent upon our ability to evolve along with it," Mike Pratt, president of Best Buy Canada, told the Financial Post. "By taking a proactive approach in transforming our operations now, I have no doubt we will be in the best position to continue innovating our store experience for consumers and grow into the next decade."
Best Buy will close a total of eight Future Shop and seven Best Buy locations nationally, reducing the company workforce of 17,000 by a little under five per cent.
Over the next three years, the company will begin to open an unspecified number of smaller Future Shop web stores and Best Buy Mobile locations -- such as the North Vancouver Future Shop, which opened in October.
At 5,000 square feet, that store is less than one-fifth the size of a typical 27,000-square-foot Future Shop. It carries only 1,000 of the retailer's top-selling products, with shoppers able to order another 60,000 products through for delivery to that store, to another Future Shop or for home delivery.
Target's move north is creating a ripple effect at retailers across the country, from Walmart to Canadian Tire, and more strategic changes are ahead as consumers increasingly shop online or seek out more tailored service from small stores, according to retailing consultant Wendy Evans.
"There is going to be a restructuring and a right-sizing in retail," said Evans, president of Toronto-based Evans and Co. Consultants Inc., who has tracked the steady migration of U.S. retailers into Canada over the past three decades. "Electronics and books are on the forefront of that, with specific names and brands that you can compare anywhere and buy online. I think that fashion is next."
Before the rise of online merchandising, with its low overhead and endless array of colour and size options, big-box stores were known as "category killers," with the best available selection and the lowest prices.
"It has been quite a profligate use of space," Evans said. As the country emerged from recession, traditional enclosed shopping malls have been fighting back by remodelling and leasing increasingly large spaces to their tenants. Traditional department store Sears "also has too much space to be competitively productive, and there are other issues there," she said.
Best Buy's move comes almost a year after the company's embattled U.S. parent announced it would close 50 outlets and open 100 smaller mobile stores with a greater emphasis on smartphones, tablets, and e-readers. Sales at stores open for more than a year were flat over the nine weeks ended Jan. 5 in the U.S. -- higher than analysts expected them to be.
But the company said same-store sales fell 6.4 per cent internationally because of declines in Canada and China — two markets called out by the U.S. parent for sales declines in the first three quarters of 2012. Year-end and fourth-quarter results are due out Feb. 28.
At Sears, the layoffs come amid a tough winter for the Canadian department store chain and as the company approaches its fiscal year-end. They are "part of our initiative to right-size the organization which is working in concert with other initiatives to make Sears successful," spokesman Vincent Power said in an email.
Last winter, the retailer laid off 470 employees. Sears, which has seen its annual sales and profits fall since 2006, now has a Canadian workforce of 29,300. Sears has also exited underperforming locations, closing three stores in Vancouver, Calgary and Ottawa last year and selling the leases back to landlord Cadillac Fairview Corp. Ltd. for $170 million.
With files from Canadian Press and Gillian Shaw, Vancouver Sun

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