Until he began a hiatus last year, Mitch Goldhar spent a decade teaching at the University of Toronto, first in the geography department, and more recently at the Rotman School of Management. Even though he’s brutally busy, he loved interacting with students and furnishing them with some real-world acumen; indeed, when he holds forth in an interview about the shape and texture of Canada’s retail landscape, it’s not hard to imagine him in a lecture hall.
Goldhar argues that a burdensome tax structure in Canada squeezes disposable incomes for most families so much that they’ve become acutely budget-conscious. That creates a prerogative to strip the excess cost out of retail development and keep rents low. “Will Canadians be prepared to pay $20 a week more for basics and groceries so they can buy it in a place with archways?” he asks, taking a dig at Loblaw.
In the bull pit of SmartCentres’ conspicuously austere, open-concept head office in Vaughan, there are dozens of cubicles lined with thick binders packed with the company’s deep-dive statistical assessment of where to build its malls. Goldhar’s analysts, planners and leasing managers pore over demographic data, watching closely to see if there’s a lot of traffic and spending at a particular retail property—usually a reliable indicator that there’s room for a SmartCentre nearby.
SmartCentres’ statistics-driven MO draws heavily on Walmart’s playbook. The partnership is intimate. Goldhar provides quarterly briefings to Walmart’s top brass, and works hand-in-hand with the retailer’s Canadian arm. Senior officials from the two firms have monthly “family meetings” to review the progress of each new project, with Walmart’s target opening dates of paramount importance. Goldhar stresses that he doesn’t go over the heads of Walmart Canada executives if disputes arise.
When SmartCentres began focusing on Salmon Arm, it had more than just the city’s 17,000 residents in its sights. The town, whose population has been growing at a modest pace of 1.5% per year, sits at the heart of a rural region with about 45,000 people. With SmartCentres located in Vernon and also Kamloops (about an hour away from Salmon Arm), the company’s analysis showed that many locals routinely left the Salmon Arm region to shop for items like consumer electronics, children’s clothing and even groceries.
Municipal officials and many local merchants already knew this story well. A 2009 study done for the city by Urbanics Consultants, a Vancouver-based retail consultancy, found that about $200 million to $300 million in consumer spending leaves the Salmon Arm area every year (WA:TER questioned both Urbanics’ numbers and its methodology). “The bottom line,” says Bootsma, “is that a lot of money does go out of town.”
Indeed, given a development slump following the 2008 economic crisis, the benefits of the $50-million SmartCentre project loomed large. Nathan Hilde-
brand, the company’s project manager, says the mall will create 450 full- and part-time jobs, and generate $1 million in annual property taxes (about 7% of the city’s total). Since the population is growing so slowly, some residents predict the new mall’s growth will invariably come at the expense of existing retailers in downtown Salmon Arm, not to mention SmartCentres’ own locations in Vernon and Kamloops. Yet Urbanics president Philip Boname, who has been doing these kinds of studies for years, says major “traffic generators” like Salmon Arm’s future Walmart permanently alter shopping patterns. “Money spent in that establishment causes money to be spent elsewhere in Salmon Arm.”
As for the concern of residents like Bill Remphrey that a Walmart-anchored mall will suck money and vitality out of Salmon Arm’s downtown, apparently the numbers tell a different tale there, too. Jim Kimmerly, the head of the city’s chamber of commerce, says his organization researched the impact of Walmart in other Western Canadian cities, like Portage la Prairie, Brandon and Prince George. The conclusion: “Those cities had problems with their downtowns before SmartCentres/Walmart ever got there.” The parallel to Salmon Arm’s currently healthy downtown is not clear.
The more likely victims of SmartCentre’s arrival are not the downtown retailers but the city’s two vintage shopping plazas, one of which features a dimly lit Zellers that seems not to have been upgraded in a generation.
Follow us on Twitter: