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Entertainment Exchange in Winnipeg.
Entertainment Exchange in Winnipeg.

Case Study

Wal-Mart has left the building. Now what? Add to ...

THE CHALLENGE

No doubt about it, there were fewer people walking around. Neil Thorndycraft had reason to be concerned.

His store, Entertainment Exchange, located in south Winnipeg's Grant Park Shopping Centre, had benefited from the walk-by traffic that the "big box from Bentonville" had attracted to the mall. But Wal-Mart had just announced it would be closing its Grant Park store and relocating to a new retail complex near Kenaston Crossing in the southwest part of the city. This was not good news for the mall's small retailers, including Mr. Thorndycraft, who needed an anchor to draw customers.

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THE BACKGROUND

During the late 1960s Mr. Thorndycraft worked part-time as a shipper-receiver for a Winnipeg-based music wholesaler that marketed Warner-Elektra-Atlantic records across the prairie provinces. Working in music gave the high-school student access to some great music, which led him to pursue a career in the music industry.

During the 1970s he took the first step toward making his dream a reality by opening The Record Baron, the first of what would become an 11-store western Canadian retail chain. With stores in places such as Calgary, Prince Albert and Brandon, as well as a half-dozen locations in his native Winnipeg, things appeared to be moving along nicely.

However, in 1997, Mr. Thorndycraft decided to sell his operation. As part of the deal he also took a job working for the new owner - this was not nearly as much fun as working for himself. Something had to change. So Mr. Thorndycraft began to look for other opportunities.

One that caught his eye centred on the emerging market for used compact discs and DVDs. Not too long after, he launched his second venture, Entertainment Exchange. The operation quickly grew to four stores across the city.

One them was located in a regional Winnipeg mall, the Grant Park Shopping Centre. In choosing his new store's location within the mall, Mr. Thorndycraft quite intentionally chosen a central spot that was equidistant to the two anchors - Wal-Mart and Safeway - and directly across the hall from McNally Robinson Booksellers' flagship store.

But a few years later Wal-Mart announced it was relocating its store about 10 kilometres away to join a new development at Kenaston Crossing. Given the extent to which he needed the big stores to bring in big numbers of customers Mr. Thorndycraft was more than slightly concerned that his walk-by traffic was going to take a hit.

What could he do?

THE SOLUTION

Shortly after Wal-Mart's announcement Mr. Thorndycraft noticed that a smaller spot was available at the other end of the mall. The space was right by the main entrance leading to Safeway and en-route to the Manitoba Liquor Commission store. In addition, the space was just a few yards from the mall's two favourite coffee spots - a Tim Hortons and a Starbucks, which was just inside Safeway.

Sweetening the deal further was an Autopac outlet (Manitoba's automobile insurance agency), a photo shop, a hair salon and a dollar store, all within steps of the empty space's front door.

Mr. Thorndycraft also discovered that the space was significantly smaller - 1,000 square feet - meaning a significant drop in monthly rent and common-area costs. Not only that, the previous tenant had left some wall fixtures that could easily be adapted for displaying DVDs. In short, aside from spending a few bucks on a new rug and a fresh coat of paint, he could relocate his store overnight into what was potentially a much better spot.

THE RESPONSE

Eight years later, Mr. Thorndycraft reports the decision to relocate has been one of the best moves he's made for the store. Even though Wal-Mart's space was eventually taken by Zeller's, the change in location helped a lot. While sales remained about the same for the first few months, within about six months, volume had increased by 50 per cent.

While part of the increase is due to some changes in product mix (the store recently began acquiring and selling vinyl), the store's experience has confirmed the old maxim: Location, Location, Location.

With people stopping by for a quick look while picking up groceries or a bottle of wine, the Entertainment Exchange has become something of a habit. And these kinds of stops, while easily made now, were not happening when the store was just 150 metres down the hall.

It just goes to show that being in a mall isn't enough if you're in the wrong part of it.

Special to The Globe and Mail

Reg Litz is a professor in the Asper School of Business of the University of Manitoba.

This is one of a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Your Business website.

 

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