Big-box retailing and the urban retail structure: the case of the Toronto area1

Journal of Retailing and Consumer Services 7 (2000) 233}247

Big-box retailing and the urban retail structure: the case of the Toronto area Ken Jones *, Michael Doucet
Centre for the Study of Commercial Activity, Eaton/NSERC/SSHRC Chair in the Management of Technological Change in Retailing, Ryerson Polytechnic University, 350 Victoria Street, Toronto, Ont., Canada M5B 2K3
School of Applied Geography, Ryerson Polytechnic University, 350 Victoria Street, Toronto, Ont., Canada M5B 2K3

Abstract This paper examines the growth and impact of power centres and `big-boxa retailers through the 1990s in the Greater Toronto Area (GTA). The data reveal that 72% of big boxes were added in the previous nine years and that twice as many opened in the suburban fringe as compared to the equally populated central area. Of all big-box locations, 59% are on industrial lands and close to expressways. Of all postal codes in the GTA, 11% account for 47% of the big-box locations and a 19% versus 7% of 1989}1995 sales growth. Average annual sales per store in the heavily dominated big-box areas is $2#million versus $1.4 million in non-box areas and market shares for the dominant big-box retailers range between 19 and 33% in their respective retail categories. In eight retail sectors in direct competition with big-box retailers, there is an overall decline of !7% in share of total stores. Between 1993 and 1997, the proportion of retail employment within 2 km of a big-box increased from 28 to 43%. This increase is accounted for by additional retail and service "rms.  2000 Elsevier Science Ltd. All rights reserved. Keywords: Big-box/power centre development; Retail location impacts and store closures; Toronto; Canada

1. Introduction The most signi"cant structural change to the North American urban retail economy in recent years has been the introduction of a variety of new retail formats * normally called `big boxesa or `category killersa. Typically, these retailers group together in new aggregations known as `power centres/power nodesa. These large-scale retail operations incorporate various information technologies into fundamental areas of retail management including logistics, inventory control, ordering, category management, product scanning, relational marketing, and advertising. The integration and application of these technologies permit big-box retail outlets to generate lower product prices and margins, while still maintaining an acceptable level of pro"t. These retail formats have introduced a new form of competition to almost every retail category. For the consumer, a new set of destina* Corresponding author. Tel.: #1-416-979-5000 ext. 7612; fax: #1416-979-5378. E-mail addresses: [email protected] (K. Jones), mdoucet @acs.ryerson.ca (M. Doucet).  This paper is based on a revised and condensed version of Jones and Doucet (1999).

tion retailers has been introduced to the retail landscape (e.g., Price Club, Home Depot, Superstores, IKEA, Toys R Us, O$ce Depot, Chapters, Michaels). Collectively, these "rms continue to alter the map of retailing. Recently, the phenomenon has received attention from several researchers, operating in a diversity of spatial settings and from a variety of perspectives. In some instances, the focus has been on the relationship between the globalization of retailing and the emergence of large format retailers (Burt, 1991; European Retail Digest, 1996; Guy, 1999; Wrigley, 1992, 2000). More typically, this research has examined the impact of the introduction of new entries, such as Wal-Mart, into a local retail environment (Daniels and Keller, 1991; Lusch and Zizzo, 1995; Stone, 1995; Finn and Timmermans, 1996; Guy, 1996; Arnold et al., 1998; Fernie, 1998; Arnold, 1999). In other cases, the focus has been on the impact of these new retail forms on land use planning/development (Solomon, 1993; Guy, 1994; Tomalin and Pal, 1994; Hallsworth et al., 1995; Toderian, 1996). Most noteworthy, however, is the fact that only recently have government statistical agencies begun to de"ne, monitor, and measure the importance of the big-box phenomenon to the national economy (Genest-Laplante, 1998, 1999).

0969-6989/00/$ - see front matter  2000 Elsevier Science Ltd. All rights reserved. PII: S 0 9 6 9 - 6 9 8 9 ( 0 0 ) 0 0 0 2 1 - 7

234

K. Jones, M. Doucet / Journal of Retailing and Consumer Services 7 (2000) 233}247

Despite the scope of the existing literature, one area of research has received little attention; namely, the impact of these new formats on the dynamics of the existing retail structure. The major reason for this gap has been the lack of any comprehensive, time-series data that relate to the retail commercial structure. This paper addresses this need by examining the impact of the introduction and growth of the big-box phenomenon on retail structure in the Greater Toronto Area (GTA). But before attempting to analyse the impact of big boxes on more traditional retail forms, it is important to de"ne the term `big-box retailinga. In general terms, the big boxes are large-format stores that typically range in size from 20,000 to over 150,000 ft. The de"nition of `biga is, however, relative, and must be related to the product category in question (Genest-Laplante, 1999). The key point is that `big-box, category-killera stores are several times the size of a traditional outlet in their category. This case study is organized into three parts. First, a brief examination of the history of big-box development in the GTA is presented, with an emphasis on the temporal and spatial patterns associated with this retail phenomenon (Jones and Doucet, 1997, 1998). The second section examines the impact of big-box retailing on Toronto's retail system. Here, such issues as retail store closures by type, shifts in retail sales, and job loss/creation are issues are examined within the general context of power centre/big-box development. The "nal focus here is on future trends and various policy implications.

2. Big-box development While it is tempting to think in terms of big-box retail outlets exploding onto the map of the Greater Toronto Area within the past few years, a truer analogy would be a series of outbursts of activity scattered over both time and space. The data reveal that 96 or 27.7% of the 347 big boxes that ever had been opened in the region by 1998 could be dated to the period prior to 1990. While a brand new development in most retail categories, bigbox development in the grocery, toys, and furniture "elds dates from at least the early 1970s. Big-box growth was very slow in the recessionary years from 1990 to 1991, with fewer than 10 new locations opened in each of these years, but began to accelerate in 1992, with 20 outlets added in that year, and 33 in both 1993 and 1994. Activity peaked in 1995, when 56 new big-box outlets  The introduction and growth of the big-box/power centre phenomenon has been systematically tracked and quanti"ed by the Centre for the Study of Commercial Activity at Ryerson Polytechnic University since the early 1990s. This research interest has resulted in the development of an extensive retail database and the publication of three reports (Jones et al., 1994) and (Jones and Doucet, 1998, 1999).

Fig. 1. The Cumulative Growth of New Retail Formats and Associated Floor Space in the GTA: 1973}1998.

were opened. This fell to 42 new locations in 1996, a year in which a record 15 such outlets were closed, for a net gain of just 27. While growth continues to the present, only 29 new locations emerged in 1997, with 8 closures, and 21 openings have been recorded to date in 1998. At present, there are 320 big boxes in operation in the Greater Toronto Area, collectively housing some 13,265,500 ft of space (Fig. 1). The growth from 1990 onwards accounted for 72.3% of all big box stores. For purposes of this analysis, we have divided the big-box retailers into six categories * food, fashion, home furnishings and appliances, automotive, general merchandise, and other retail. Wal-Mart, a discount department store that exhibits some big-box-like features and poses an equal threat to traditional retailers, is not included in this analysis. These six categories vary greatly in terms of their temporal and spatial patterns of development and overall level of activity. In the food category, which contains 13.3% of the outlets and 20.9% of the space, most of the development occurred prior to 1990. Some 73.9% of the food big boxes date from that period, a time when the area's leading grocery chains underwent enormous rationalization, with many older, smaller outlets closed and replaced with large-format stores. Only a dozen new grocery stores have opened in the GTA during the 1990s, with two closures. With an average size of some 63,650 ft, the food outlets fall midway along the big-box size spectrum. Size, however, may be increasing. The 8 newest stores that have been added to the retail fabric of the GTA since 1995 have averaged 74,250 ft, compared to the pre-1990 locations which averaged just 61,000 ft. Fashion represents almost the same number of big boxes as the food category, but these enterprises tend to be housed in much smaller facilities. This category accounts for 13.5% of the outlets, but just 6.2% of the total space. About one-third of the stores have existed

K. Jones, M. Doucet / Journal of Retailing and Consumer Services 7 (2000) 233}247

since at least 1989. This category has one of the highest failure rates for any big-box activity. Eight stores, 17.0%, have been closed since the end of 1995, with the re-organization of the B.B. Bargoons chain in 1996 accounting for three-quarters of this loss. Stores in this category are at the lower end of the big-box size spectrum, averaging just 18,300 ft, with the pre-1990 outlets averaging some 13,500 ft, and the ones added during the 1990s averaging almost 21,000 ft. The home furnishings and appliances category has been an area of considerable growth and relatively little failure. It accounts for 20.7% of the big box outlets and 19.4 per cent of the space, with 27.7% of the stores dating from at least 1989. In contrast with trends in most of the other big-box categories, the oldest home furnishings and appliances outlets averaged 57,275 ft, with those added since 1989 averaging just 30,337 ft. This seeming contradiction is explained by the very early entrance into the GTA of the largest players in this category; namely, the enormous furniture warehouse outlets operated by the likes of Leon's, The Brick, Idomo, and Ikea. Newer entrants generally have been smaller. For example, Computer City arrived in the GTA in 1994. Its current three locations each average just over 21,000 ft. Overall, 38 of the stores in this category (52.7%) have been opened since the beginning of 1994. Only two outlets were closed during the 1990s. Unlike the other groupings, the automotive big-box category contains but a single player in the GTA; namely, the Canadian Tire Corporation. It currently operates 11 big-box outlets in the region and accounts for some 4.3% of big-box space. Only four of the large-format Canadian Tire stores pre-date 1990, with almost half of the outlets added since the beginning of 1996. The early stores average just 30,000 ft, while the newer outlets are more than double that size at 69,857 ft. While no large-format Canadian Tire stores have been closed in the 1990s, at least two smaller stores have been shut in response to the opening of massive new stores in close proximity. The general merchandise category has been the most volatile of those under consideration here. With a total of 23 outlets, it accounts for just 6.6% of the big boxes in the GTA and 10.8% of the total #oor area. Only one general merchandise big box, Toronto's "rst Price Club, existed prior to 1990. More than 80% of the outlets were opened between the beginning of 1993 and the end of 1995, with 43.5% of them appearing in that latter year alone. Only one general merchandise big box, however, has opened in the GTA since the end of 1995, with no activity at all in 1997 or 1998. With the demise of Consumers Distributing in 1996, six stores (26.1%) were eliminated from this

 In this analysis B.B. Bargoons was classi"ed in the fashion category to be consistent with the Canadian Standard Industrial Classi"cation (SIC) grouping that places fabrics in the Fashion (61) class.

235

category. The remaining 17 stores in this group average some 80,618 ft in size. The "nal category, other retail, contains some two dozen "rms ranging from shoe superstores to merchants specializing in pet supplies, o$ce supplies, hardware, crafts, books, records, sporting goods, and toys. This category represents 42.7% of big-box locations and 38.4% the space occupied by such facilities in the GTA. Not surprisingly, the players within this category display large variations in both size and number of outlets. Business Depot operates the largest number of outlets, 23, and an average of about 20,200 ft per store. The 16 White Rose craft and garden stores average about 18,400 ft each, while the ten Michaels craft stores average about 22,000 ft each. In contrast, the dozen Home Depot locations in the GTA each contain an average of 140,700 ft, a "gure surpassed only by the largest furniture warehouse stores. A number of other "rms in this category operate single stores in the 15,000}25,000 ft range * Hallmark, Petstu!, The Rubbery, and Nike. Most of the outlets in this category are products of the 1990s, with just 14.2% persisting from at least 1989. Not unexpectedly, given the size of this category, development patterns mirror those for big boxes in general, with the greatest years for growth occurring in 1995 and 1996, and with slower growth both before and after those dates. The earliest stores in this category averaged just 28,571 ft in size, with those added since the beginning of 1995 averaging 39,544 ft. Only 9 stores in this category were closed during the 1990s, with the 1997 withdrawal of the US retailer, SportMart accounting for 77.8% of the closures. It is convenient, and increasingly commonplace, to think of the spatial structure of the GTA as a two-part entity, consisting of an inner core and an outlying suburban fringe (Simmons et al., 1998). The former is synonymous with the old Municipality of Metropolitan Toronto, now the amalgamated City of Toronto, while the latter is associated with the rest of the GTA; namely, the Regional Municipalities of Halton, Peel, York, and Durham. According to the 1996 census, the population of the GTA, 4.595 million, is now almost equally split between these two areas. As the map illustrates, however, such parity does not apply to the development of new format retailing in the GTA (Fig. 2). Only 30% of the power centres in the GTA, for example, are located in the core area, even though the

 Wal-Mart entered the Canadian market in 1994 through the purchase of selected Woolco outlets. In the GTA, this gave the "rm an instant presence of a dozen stores, with an average size of almost 128,000 ft. In the intervening years, "ve new outlets have been built from scratch. These new stores are similar in size to the old Woolco properties, averaging 124,000 ft each. If included in the de"nition of big-box retail, Wal-Mart would account for about 4.7% of all such outlets, and 13.3% of all big-box space in the GTA.

236

K. Jones, M. Doucet / Journal of Retailing and Consumer Services 7 (2000) 233}247

instance, retail inventory data assembled for the 1993}1997 period were used to explore the relationship between big-box retailing and the competitive health of selected retail categories along traditional retail streets. Second, an evaluation of the recently released small area retail trade estimates (SARTRE) data will be used to assess the growth in retail sales in power centres between 1989 and 1995. Finally, an analysis of the retail employment data collected for the Metropolitan Toronto Employment Survey for 1993 and 1997 will allow us to de"ne the impact of the development of big-box retailing on the employment base of nearby retail strips.

Fig. 2. Power Centres and New Formats in the GTA.

"rst of these, the Crossroads Centre, opened in the Weston Road-401 area in 1987. For big-box outlets, 34.6% are located in the new City of Toronto. Spatial development patterns, however, have #uctuated over time for these facilities. For the oldest big boxes, those in operation before 1990, some 37.5% were located in the central area. New developments in that part of the GTA have exceeded 40% of the annual growth total twice * 47.2% in 1992}1993 and 40.9% in 1998 * and fallen below 25% in two other years * 23.5% in 1990}1991 and 22.7% in 1996}1997. In 1994}1995, when 101 big boxes (including Wal-Marts) were added to the GTA's retail structure, 34.7% were located in the City of Toronto. Overall, then, about two big boxes have been opened in the fringe for every one in the central area. Within the GTA, then, new format retailing continues to be predominantly, but by no means exclusively, a suburban phenomenon.

3. Big-box impacts In this section, focus is placed on the measurement of the impact of big-box retailing, and the associated development of power centres, on the retail structure of the Toronto area (Table 1). The e!ect of the big-box phenomenon on the retail sector of Toronto's economy will be documented through an evaluation of changes in a trio of key variables * store closures, the redistribution of retail sales, and retail job creation/loss. In the "rst

 The recent locational strategies employed by Wal-Mart illustrate this trend. When Wal-Mart entered the Toronto market in 1994 with the acquisition of 12 Woolco stores, 5 were located in the City of Toronto while 7 were situated in the rest of the GTA. However, 4 of the 5 new Wal-Mart locations added to their Toronto network since 1994 have been opened in the fringe area. The core and fringe in Toronto now are also frequently distinguished by their telephone area codes, 416 for the former and 905 for the latter.

4. The impact of big-box retailing on the retail structure of major strips Since the arrival of big-box retailers in the Toronto area, there has been a protracted debate concerning the impact of such retail formats on the health of the city's numerous retail streetfronts. Local merchants certainly made a concerted e!ort to portray the potential negative in#uence of a big box before the Ontario Municipal Board (OMB) in response to an application from Home Depot to place a new outlet in Toronto's port lands area. In the Fall of 1999, the OMB rejected that argument, but it also rejected the Home Depot application because it did not conform with the City of Toronto's long-range plans for the port lands. The decision was hailed in some quarters as a `waterfront victorya (Immen, 1999; Prittie, 1999; Graham, 1999; Toronto Star, 1999). One way of measuring the big-box impact is to examine changes in the functional composition of acknowledged retail strips in the Toronto area. In Toronto, as elsewhere, strip retail areas are dominated by independent retailers, and often provide a social, cultural, and economic focus for their surrounding neighbourhoods. Indeed, one of the major distinguishing features of the Toronto area is the health, diversity, and vibrancy of its retail streets. In total, the urban area is served by a network of over 200 retail strips that provide the citizens of the city with access to over 18,000 retail shops, restaurants, and personal and business services. One fundamental measure of retail restructuring can be derived through an examination of changes in the economic role of retail areas and the relative growth/ decline in vacancy rates. For the 1994}1997 period, data on the retail/commercial structure of Toronto's major retail streets, including vacancy rates, were collected and tabulated by the Centre for the Study of Commercial Activity for some 25 retail, "nancial, and service activities (Table 2) (Centre for the Study of Commercial Activity, 1997).  1997 Strip Retail Survey, Centre for the Study of Commercial Activity.

K. Jones, M. Doucet / Journal of Retailing and Consumer Services 7 (2000) 233}247

237

Table 1 Big-box development in the GTA Number opened

Number closed

Square feet (000s)

Number presently opened

Square feet (000s)

Total development (excluding Wal-Mart) Pre-1990 96 4216.0 1990 9 412.0 1991 8 352.5 1992 20 1004.5 1993 33 1177.5 1994 33 1010.0 1995 56 2280.5 1996 42 1354.5 1997 29 1256.0 1998 21 905.0 Total 347 13968.5

0 0 0 1 0 1 2 15 8 0 27

0.0 0.0 0.0 17.0 0.0 35.0 63.5 272.5 365.0 0.0 753.0

96 105 113 132 165 197 251 278 299 320

4216.0 4628.0 4980.5 5968.0 7145.5 8120.5 10337.5 11419.5 12310.5 13215.5

Total development (including Wal-Mart) Pre-1990 96 4216.0 1990 9 12.0 1991 8 352.5 1992 20 1004.5 1993 33 1177.5 1994 45 2541.0 1995 56 2280.5 1996 44 1621.5 1997 31 1481.0 1998 22 1035.0 Total 364 16121.5

0 0 0 1 0 1 2 15 8 0 27

0.0 0.0 0.0 17.0 0.0 35.0 63.5 272.5 365.0 0.0 753.0

96 105 113 132 165 209 263 292 315 337

4216.0 4628.0 4980.5 5968.0 7145.5 9651.5 11868.5 13217.5 14333.5 15368.5

Totals by category Category No. opened

No closures

Square feet closed ('000s) 90.0

Presently open (000s) 46

Square feet open (000s) 3018.0

Food, Liquor and 48 Pharmacy Fashion 47 Home Furnishings 72 and Appliances Automotive 11 General 23 Merchandise Other Retail 146 Total 347 Total Including 364 Wal-Mart

Square feet (000s)

Square feet ('000s) 3108.0

2

863.5 2723.0

8 2

84.0 52.0

39 70

779.5 2671.0

609.0 1514.0

0 6

0.0 143.5

11 17

609.0 1370.5

5151.0 13968.5 16121.5

9 27 27

383.5 753.0 753

137 320 337

4767.5 13215.5 15368.5

The data suggest that, during this period of signi"cant big box and power centre development, the relative importance of retailing on the retail streets of Toronto, as measured by the proportion of all occupied stores, declined from 53.7% in 1994 to 49.5% in 1997. In addition, certain key retail categories that compete directly with a major big-box format either declined (e.g., Hardware * 10.4%; General Merchandise * 3.9%) or remained relatively stable (e.g., Food !0.8%, Pharmacy #0.4%, and Furniture/Housewares #1.7%). The signi"cant declines in men's and women's fashion correspond with the growth of discount department store chains (in particu-

lar, Wal-Mart and Zellers) and the re-mixing of the traditional department stores. Complementing these changes was the trend toward a general increase in the importance of restaurants and personal and business services. These functions experienced a 24.1% growth in the number of stores over the study period. If the "nancial category is included, services now account for more occupied streetfront units than retail activities. It is also worth observing the steady decline in the "nancial category on Toronto's retail strips during this period; a change that would, without question, accelerate if proposed mergers between some major Canadian banks

238

K. Jones, M. Doucet / Journal of Retailing and Consumer Services 7 (2000) 233}247

Table 2 Number of stores and changes in the economic role of toronto's major retail strips: 1994}1997 Activity

1994

1995

1996

1997

Growth rate 1994}97

Food Liquor Pharmacy Shoes Men's clothes Women's clothes Other clothes Furniture/housewares Automotive General merchandise Books/stationary Florists Hardware Sports Music Jewellery Other retail Total retail % Retail

1694 67 238 199 184 565 414 720 410 254 179 180 222 156 264 171 1076 6992 53.7

1692 69 244 207 173 551 441 723 426 253 184 185 216 152 272 178 1143 7172 52.3

1681 73 245 203 167 539 429 712 428 255 180 187 209 151 275 179 1155 7095 51.0

1681 79 245 210 168 515 445 732 428 244 184 181 199 158 279 195 1206 7149 49.5

!0.8% 17.9 0.4 5.5 !9.5 8.7 7.5 1.7 4.4 !3.9 2.8 0.5 !10.4 1.3 5.7 14.0 12.1 2.2% ⴚ7.8%

Financial % Financial Restaurants Medical Hair/beauty Recreation Cleaning Other personal Business services

615 4.7 2531 405 798 179 367 615 524

597 4.4 2676 475 900 227 380 680 613

582 4.2 2823 502 950 247 382 749 678

575 4.0 2953 515 1002 259 397 836 762

ⴚ6.5% ⴚ14.9% 16.7 27.2 25.6 44.7 8.2 35.9 45.4

Total services % Services Total activity Vacancies % Vacancies Total stores

5419 41.6 13026 1259 9.7 14285

5951 43.4 13720 1440 10.5 15160

6331 45.2 14008 1490 10.6 15498

6724 46.5 14448 1392 9.6 15940

24.1% 11.8% 10.9% 10.6% ⴚ1.0% 11.6%

were to be approved by the Federal Government. The inclusion of ATMs in Wal-Mart and many big-box outlets further underscores the potential of new format retailing to alter streetfront activities in major parts of the tertiary sector. Finally, the data suggest that the overall health of street retailing in Toronto has declined somewhat over this four-year period, as the number of vacancies increased by 10.6%. Actual vacancy rates, however, continue to #uctuate due primarily to the more rapid growth of total storefronts than vacancies during this time frame. These "gures, however, may well mask real changes to the overall `qualitya of the shopping experience provided along particular retail streets. Business leaders have suggested to us that the shift from traditional retail activities, such as clothing stores and hardware shops, to dollar stores and doughnut shops,

while better than vacancies, is not always a positive change. Table 3 presents an aggregate view of the changing structure of streetfront retailing in Toronto over the  These views were conveyed to us during a meeting of the Toronto Association of Business Improvement Areas, that was held at Metro Hall on 4 November 1998. Particular concern was expressed about changes in The Junction and Town of Weston areas. The former lies just south of the emerging Stockyards power node, while the latter is south of the Crossroads power centre. The Junction retail area has been in decline for some time, probably, in large part, because it was the last `drya area in Toronto. Residents voted in favour of licenced restaurants in the municipal election of 1997, and the "rst such establishment opened in November of 1998 (Immen, 1998). This only serves to underscore the complexity associated with the apparent decline along some retail strips. It will be interesting to monitor subsequent changes to the character of retailing along this strip over the next few years.

K. Jones, M. Doucet / Journal of Retailing and Consumer Services 7 (2000) 233}247

239

Table 3 Change in the composition of retail strips in the categories most impacted by big boxes: the Metropolitan Toronto experience (based on 4-digit SIC codes) 1994 Category

Supermarkets Sporting goods Books O$ce products Hardware Toys Electronics Pet stores All eight categories Total stores

No. of Stores

1997 % Share

253 104 120 35 142 79 188 61 982

1.94 0.80 0.92 0.03 1.09 0.61 1.44 0.47 7.30

13,026

14,448

1994}1997 period for selected retail categories. These categories re#ect the areas of retailing that are in direct competition with the dominant `big-boxa retailers currently in operation (for example, Hardware * Home Depot; Books * Chapters; Ozce Products * O$ce Place/Business Depot; Electronics * Future Shop and Adventure; Sporting Goods * Sports Authority; Toys * Toys R Us; Supermarkets * PriceCostco and the various superstores; and Pet Stores * PetSmart and Pet Valu). The table examines the change in the relative share of these various categories over the four-year time frame. Over this period, the total number of stores on Toronto's retail strips grew from 13,026 to 14,448 an increase of 10.9%. But for the eight selected categories, the number of stores experienced only a 2.9% increase, from 982 to 1010. And the total share of all stores captured by the eight categories fell from 7.3 to 6.8%. What is evident from a closer analysis of these "gures is that, in all eight categories, the share of these store types declined by an average of 7.0%, with the largest declines found in o$ce products (!23%) and hardware (!16.5%). Even categories that have only recently been a!ected by big-box competition experienced a decline in their streetfront locations (e.g., books (2.2%) and pet stores (!2.1%)) during the years in question. Given the relatively brief time period for which data are available, these changes to the retail structure of Toronto shopping streets are striking. Table 4 examines the same database to trace the change in the number of independent retailers in the same eight categories. In this case, two categories of retailer were more a!ected than the others * hardware and electronics, which su!ered losses of 11 and 8 stores, respectively, between 1994 and 1997. There was also

No. of Store

% Share

Change in relative share by category (1997/1994) (%)

261 111 130 33 131 83 195 66 1010

1.81 0.77 0.90 0.023 0.91 0.57 1.35 0.46 6.79

!6.7 !3.8 !2.2 !23.3 !16.5 !6.6 !6.3 !2.1 !7.0

Table 4 Changes in the number of all independents and those who compete with big-box retailers on Toronto retail streets: 1994}1997 (based on 4-digit SIC codes) Category

Number of Stores 1994

Change

1997

% Change

Supermarkets Sporting goods Books O$ce products Hardware Toys Electronics Pets

225 91 99 32 107 73 171 39

220 100 118 31 96 82 163 55

!5 9 19 !1 !11 9 !8 16

All eight

837

865

28

3.3

11096

12646

1550

#13.9

All independents

!2.3 9.9 19.2 !3.1 !10.3 12.3 !4.4 41.0

a slight reduction in the number of independent o$ce products retailers and supermarkets during this interval. Independent retailers in the remaining categories experienced some growth between the years in question, most notably book sellers, sporting goods, toys, and pet stores, with net gains of 19, 9, 9, and 16 establishments, respectively; a re#ection of growth trends in these retail sectors. Overall, independent stores on Toronto's retail strips grew by 13.9% during this period, a marked contrast to the trends for the selected categories which, together, experienced only a 3.3% increase. This di!erence underscores the vulnerability of the independent retailer in the face of competitive pressures from large format stores.

240

K. Jones, M. Doucet / Journal of Retailing and Consumer Services 7 (2000) 233}247

5. The arrival of the big boxes and shifts in retail sales With the release of Retail Chain and Department Stores: Fiscal Year End March 31, 1997 by Statistics Canada (Fall, 1998), for the "rst time data were presented on the performance of the big-box phenomenon at the national level. According to Statistics Canada, for the 1989}1996 period, the number of big boxes in the supermarket category in Canada nearly doubled and their share of total retail sales in the food sector increased by 13%, to account for 35% of the national total. These grocery superstores now generate sales of approximately $520/ft (1996) * about 20% higher than in smaller, more traditional supermarkets. Similarly, Statistics Canada reported that big-box specialty retailers recorded proportional increases in number of locations, sales, and #oor space over the 1989}1996 period. By 1996, the big-box specialty retailers accounted for 25% of specialty retail sales, 29% of specialty retail space, but only 5% of specialty retail outlets in Canada. The specialty retail categories that experienced the most rapid growth over the 1989}1996 period included sporting goods, electronics, men's clothing, and shoe stores. Until quite recently, it has been impossible to examine retail shifts in Canada at any spatial scale beneath that of the Census Metropolitan Area. However, with the release of SARTRE data by Statistics Canada, a much "ner level of geographical detail within metropolitan areas is now possible. SARTRE combines the Retail Chain Location "le developed by Statistics Canada with the taxation records of Revenue Canada. The resulting data base captures retail sales data for all incorporated retailers in Canada. These data can be grouped according to a retailer's location (at the postal code level) as well as by industry classi"cations (SIC code). For the GTA, the retail sales data for six retail categories * Food (SIC 60); Shoe, Apparel, and Fabric (SIC 61); Furniture and Appliances (SIC 62); Automotive (SIC 63); General Merchandising (SIC 64); and All Other Retailing (SIC 65) were assembled for each of the 184 three-digit postal codes (Forward Sortation Areas or FSAs) in the region. Currently, these data are available for the years 1989}1995. In order to evaluate the impact of the big-box phenomenon on the distribution of retail sales, the 20 FSAs in the Greater Toronto Area with the greatest concentration of big-box retailers were identi"ed (Table 5). Only six of these areas were located within the City of Toronto, with the remainder in the outer regions. These 20 areas, that represented only 11% of the postal areas, captured 47.4% the big-box outlets in the GTA in 1995, and collectively accounted for over 3.3 mft (53.5%) of bigbox expansion during the 1989}1995 period. What is particularly noteworthy is that these 20 FSAs experienced an 18.6% increase in retail sales between 1989 and 1995. That compares with a growth of just 9.2% for the entire GTA for the same interval. In addition, some of the

most impressive sales' growth occurred in the region's emerging power nodes (Fig. 2): Highways 400 and 7 (214%), Orion Gate (37%), Thickson Ridge (19%), Hyde Park (22%), and Heartland (3940%). Each of these nodes experienced a growth of at least 200,000 ft of big-box space between 1989 and 1995, and collectively, these "ve power nodes accounted for 1.4 mft of new, big-box retail space, or 22.2% of the total growth. In comparison, the residual FSAs associated with Toronto's traditional retailing * streetfronts and shopping centres experienced more limited sales' growth of just 6.8% (Jones and Doucet, 1999, p. 21). This pattern is not likely to change in the near future, given both the continued growth of big-box retailing and its spatial concentration. Indeed, big boxes continue to be developed in this group of 20 FSAs, to the extent that in 1998 they accounted for 53.4% of all such establishments in the GTA. For the GTA, the average retail establishment (excluding automotive) generated annual sales of some $1.4 million. In contrast, in the twenty areas with the highest proportion of big-box development, average annual sales per store averaged just over $2 million, a 49% higher performance rate (Jones and Doucet, 1999, p. 20). Again, the areas with the highest sales per store are associated with the GTA's major power nodes * Heartland (3.2 times the average), Crossroads (2.2 times the average), Orion Gate (2.1 times the average), Warden Woods Power Centre (1.9 times the average), and Erin Mills (1.7 times the average).

6. The impact of the big boxes on the retail structure of Toronto's retail streetfronts This section examines the competitive pressure that big-box retailing has placed on the retail strips in Toronto over the 1994}1997 period. By using the annual inventories of street retailing, the number and probability of store closures for each of the retail categories in direct competition with big box retailers was calculated for each year (Table 6). Over the study period, the number of big-box retail categories in competition with the street retailers increased from 5 (supermarkets, electronics, o$ce products, sporting goods, and toys) to 8 with the introduction of Home Depot (hardware), Chapters (books), and PetSmart (pet stores) into the competitive mix in the Toronto market. There was a 15.9% chance that retailers operating on streetfront locations in Toronto in 1994 in the supermarket, electronics, o$ce products, sporting goods, or toys categories would be closed within one year. The sectors with the highest store closure rates were o$ce products and electronics. In these two categories there was a 20% failure rate. For the 1994}1995 period, those locations in closest proximity to a competing big box experienced the greatest impact. In aggregate, those stores in the selected categories within

K. Jones, M. Doucet / Journal of Retailing and Consumer Services 7 (2000) 233}247

241

Table 5 Major Concentrations of big-box retailing in the GTA Name of node

Orion Gate Woodbine & 7 Crossroads Thickson Ridge Pickering Warden & Ellesmere Heartland 400 & 7 Hyde Park Burlington SW Etobicoke Central Mississauga Oakville Unionville/Markham Yorkdale Rosart Centre Ikea Warden Woods Erin Mills Yonge/ Richmond Hill Big-box nodes Total GTA Residual

FSA

Sales index

% Increase in sales 1989}1995

Big-box growth 1989}95 (000s of sq. Feet)

No. of boxes 1995

1998

L6W L6G M9N L1N L1V M1R L5R L4L L6H L7N M9B L4Z L6M L3R M6A L7T M2K M1L L5L

2.46 N.a. 1.82 2.15 3.29 1.58 1.47 3.31 1.31 0.95 2.89 0.64 0.58 5.19 4.65 0.64 2.09 2.07 2.17

37% N.a. 7% 19% 16% 20% 3940% 214% 22% !3% 74% 23% 343% 30% 10% 79% !16% 9% 13%

353 387 32 229 71 314 238 295 272 36 200 194 50 60 102 200 0 101 21

11 10 10 9 9 3 7 6 8 5 3 3 8 6 6 1 1 6 5

14 14 11 16 10 3 9 18 14 5 3 5 9 7 6 4 1 8 10

L4C

2.39

24%

180

2

4

3335 6237

119 251

171 320

$4,702.3
$21,454.8
$16,752.5


18.6% 9.2% 6.8%

Based on the 20 FSAs with the greatest big-box square footage in 1995. The sales index values for each FSA were normalized to assure con"dentiality. These values show the relationship between sales in each of these FSAs and average sales in all FSAs in the GTA. An FSA with sales equal to the average for all FSAs, would have a sales index value equal to 1.00.
Expressed ($millions) includes all retail sales minus automotive sales (SIC 60, 61, 62, 64, 65).

2 km of a competing big box had a closure rate of 18.5%, with the probability of failure declining to 14% when the nearest big-box competitor was located more than 4 km away. Among these activities the category that had the greatest distance sensitivity was electronics, and the category with the least was toys. Home Depot entered the Toronto market in the 1995}1996 period. For this interval, the probability of store closure in the a!ected categories increased from the 15.9% "gure recorded for 1994}1995 to 19%. Again, electronics retailers su!ered the greatest closure rate, with a loss of 24% of the existing store base. Like the previous year, a noticeable distance-decay e!ect existed, with closures in the 0}2 km band running at 22% and declining to 15% in locations where the direct competition was located greater than 4 km away. Certain retail categories (e.g., toys, sporting goods, and supermarkets), however, seemed to be more or less indi!erent to the `distance e!ecta.

In comparison to the previous two years, the 1996}1997 period showed an overall decrease in the rate of store closures in the categories under examination. This can be attributed to a number of possible causes * an improvement in the health of the retail economy, the maturation of the big-box system in most categories, the competitive response of street-based retailers to the big-box threat, or a slight shift in consumer preferences and behaviours away from big-box retailing. However, the Toronto retail street system still experienced a closure rate of 14% in the eight categories under investigation. Only one category experienced a year-over-year increase in store closures (hardware * 14.3% compared with 11.8% in the previous year). This category also experienced an extremely high-distance sensitivity e!ect, with a 31% hardware store closure rate within 2 km of a Home Depot location. Table 6 provides several insights into the competitive impact of big-box outlets on street retailing. Over the

242

K. Jones, M. Doucet / Journal of Retailing and Consumer Services 7 (2000) 233}247

Table 6 Number and probability of retail closures and distance from the nearest competing big box Category

1994}1995 Supermarkets Electronics O$ce products Sporting goods Toys

Probability of closure by distance band 1995}1996 Supermarkets Electronics O$ce products Sporting goods Toys Hardware

Probability of closure by distance band 1996}1997 Supermarkets Electronics O$ce products Sporting goods Toys Hardware Books Pet stores

Probability of closure by distance band

Distance to the nearest big box competitor

Probability of closure by category

0}2 km

2.01}4 km

'4 km

15/92 (0.16) 21/91 (0.23) 2/13 (0.15) 2/13 (0.15) 3/23 (0.13)

17/135 (0.13) 11/54 (0.20) 4/15 (0.27) 1/7 (0.14) 3/31 (0.10)

2/26 (0.08) 5/43 (0.12) 1/7 (0.14) 13/84 (0.15) 5/25 (0.20)

0.185

0.148

0.140

0.159

17/102 (0.17) 25/86 (0.29) 2/14 (0.14) 3/15 (0.20) 6/25 (0.24) 3/16 (0.19)

28/133 (0.21) 15/62 (0.24) 3/13 (0.23) 5/23 (0.22) 6/33 (0.18) 4/40 (0.10)

6/26 (0.23) 6/44 (0.14) 0/6 (0.00) 11/65 (0.17) 5/25 (0.20) 10/88 (0.11)

0.195

0.217

0.188

0.150

0.190

11/135 (0.08) 14/80 (0.18) 1/13 (0.14) 1/16 (0.06) 3/25 (0.12) 5/16 (0.31) 7/42 (0.17) 1/2 (0.50)

16/107 (0.15) 13/61 (0.21) 0/12 (0.00 ) 3/22 (0.14) 7/29 (0.18) 6/42 (0.14) 5/39 (0.13) 0/2 (0.00)

7/17 (0.41) 9/49 (0.18) 1/7 (0.14) 11/64 (0.17) 2/24 (0.08) 9/82 (0.11) 4/47 (0.09) 2/59 (0.03)

0.131

0.131

0.154

0.135

three years for which data were available, street retailers in the eight categories in direct competition with the selected big-box retailers experienced a closure rate of 16.2%. This "gure compared to a 14.8% closure rate for all other retail categories. The analysis suggests that over

0.134 0.196 0.200 0.154 0.139

0.239 0.150 0.184 0.205 0.118

0.189 0.063 0.147 0.136 0.143 0.125 0.048

0.139

time there has been a competitive adjustment to the big-box phenomenon. In the initial years of competition, the closure rate in a category is high as the `less competitivea retailers are forced out of business. This adjustment phase appears to have taken place in a variety of

K. Jones, M. Doucet / Journal of Retailing and Consumer Services 7 (2000) 233}247

categories * especially food, o$ce products, and toys. Other categories such as hardware, books and pet stores, at the time of the analysis, had yet to experience the full impact of the big boxes. Furthermore, the competitive pressures in some categories (e.g., electronics) appears to be always high * a function of the dynamic nature of the product lines in these retail categories. A number of forces, then, can be seen to in#uence the impact of bigbox retailers on local retail communities * time, distance, product category, and the health of the retail economy.

7. Changes in the retail employment patterns of Toronto's retail streets Another way of assessing the impact of the big-box phenomenon is to examine changes in retail employment. To examine this relationship, the Metro Toronto Employment Survey data for 1993 and 1997 were analysed. In aggregate, retail employment in the city of Toronto fell from 91,469 to 90,260 over the 5 year period * a 1.3% decrease, closely mirroring general changes in the retail composition of Toronto over the 1993}1997 period. During that time, a number of retail categories su!ered employment losses and, by inference, sales declines. These included declines in employment in catalogue stores (!86.5% * associated with the closure of Consumer's Distributing, Canada's major store-based catalogue retailer); lumber yards (!82.3%), fashion (!2.5% associated with a general decline in fashion expenditures), department stores (!12.2% associated with pressures from new forms of competition), and variety stores (!18.7% associated with the changes in consumer preferences). Other categories experienced a growth in employment. These included sporting goods and toys (#23.8%), shoe retailing (#7.6%), furniture/electrical (#13.9%), and specialty retailing (#4.5%). These data also can be used to examine the direct e!ect of big-box retailing on job creation or loss across the entire Toronto area. This allows one to examine all retail activity * street fronts, strip plazas, major shopping centres, and isolated store locations. For comparative purposes the data were analysed by the same distance bands and similar retail categories to those that were examined in the previous section. Table 7 examines shifts in employment in relation to the proximity of big-box competition between 1993 and 1997. Using this indicator, one can suggest that the degree of competitive pressure in the local markets, de"ned as the total employment within 2 km of a compet This survey of employment for 1993 and 1997 was based on a 100% `samplea of the retail establishments in the former Metropolitan Toronto collected, annually, by the Metropolitan Toronto Planning Department.

243

ing big box, has increased signi"cantly in four of the "ve categories (e.g., supermarkets #12.6%; electronics #28.5%; hardware #8.0%; and books and o$ce equipment #9.4%). More revealing is the radical shift in the total retail employment, in the "ve categories, that is now facing direct big-box competition. In 1993, only 28% of the total employment in the "ve retail categories was found within 2 km of a big-box competitor, while 40.9% of the employment base was located at least 4 km from the nearest big}box competitor. Remarkably, by 1997 those ratios had been reversed as the big-box retailers sought out more inner city locations, and/or new big-box formats, such as Chapters and Home Depot, entered the Toronto market, thus isolating more and more employment in these categories within 2 km of a big-box competitor. Competitive forces, brought about by this expansion of the big-box network, may well alter these "gures downward in the future, as less e$cient, independent retailers succumb to the pressures of Toronto's new retail reality. Finally, while big-box employment in these categories grew by 60.9% between 1993 and 1997, employment in the non big-box formats in the same 5 categories fell from 21,335 to 20,883 * a decline of 2.1% in the City of Toronto.

8. Big-box retailing: locational strategies and the spill-over e4ects The history of big-box/power centre locations points to a rather simple, but e!ective, site selection strategy in the Toronto market. Two of the basic locational principles were (1) minimize the cost of land and (2) maximize car accessibility. The optimum locations based on these two criteria were those found in areas that were zoned industrial and in close proximity to a major expressway(s). Overall, 58.8% of the big-box locations in the City of Toronto are located on land previously zoned for industrial uses (Fig. 2). Given the locational history and the current distribution of big-box retailers, it is possible to formulate a list of `potentiala future `big-box/power centrea locations by simply relating `gaps in the mapa to the older, central city /inner suburb industrial lands with ready access to expressways. One major competitive outcome of the growth of the big boxes has been the development of several power nodes within the Greater Toronto Area. These retail concentrations subsequently have generated a retail `spillover e!ecta, in essence becoming major retail destinations. To assess the nature of the extent of this spillover e!ect, the number of retail and consumer-based activities that were located within a 1 km radius of 12 major power nodes, and the agglomeration of `baby boxesa associated with each of these power centres, has been collected. Overall, these nodes are attracting a number of additional retail and service activities to their immediate

244

K. Jones, M. Doucet / Journal of Retailing and Consumer Services 7 (2000) 233}247

Table 7 Shifts in retail employment in selected retail categories by distance from nearest big-box competitor in Toronto: 1993}1997 Employment by distance to the nearest big-box competitor 0}2 km 2.01}4 km

Category Supermarkets Electronics Hardware Toys/sports Books/o$ce Total employment All "ve categories Total big-box employment

'4 km

1993

1997

1993

1997

1993

1997

2966 (26.6%) 1218 (22.8%) 357 (9.2%) 715 (55.8%) 1306 (64.4%) 6662 (28.0%)

4354 (39.2%) 3116 (51.3%) 679 (17.2%) 929 (55.5%) 1505 (73.8%) 10583 (42.5%)

5371 (48.2) 930 (17.4) 271 (7.0) 377 (27.9) 469 (23.1) 7418 (31.1%)

4431 (39.7) 1599 (26.3) 824 (20.9) 583 (34.8) 320 (15.7) 7757 (31.2%)

2803 (25.6) 3186 (59.7) 3241 (83.8) 260 (19.2) 254 (12.5) 9744 (40.9%)

2369 (23.3) 1362 (22.4) 2439 (61.9) 163 (9.7) 215 (10.5) 6548 (26.3%)

2489

4005

Toronto grew by 60.9% between1993 and these same categories fell from 21,335 in 1993 to 20,833 in 1997, a decrease of 2.1%. Overall employment in these categories grew from 23,824 to 24,888 over the same period, an increase of 4.5%. Percentages in this table represent proportions of all employment in that year found within the designated distance band.

vicinity. Smaller `specialtya fashion retailers have adopted `baby-box formatsa and are either entering the power centres themselves or are locating in close proximity. To date, nine fashion "rms have adopted a powercentre location strategy, and other major baby-box/ big-box synergies have emerged in the electronics, home decor/furnishing, pet supply, and entertainment "elds (Jones and Doucet, 1999, p. 28}31). What is evident is that the big boxes/power centres are acting as magnets for a whole set of ancillary retail and service activities. The landscape adjacent to these power centres is starting to resemble a type of retail sprawl reminiscent of many US cities. Until the 1990s, the development of this type of landscape was regulated, in Ontario, through the application of rather stringent planning controls that were typically exercised through the rulings of a quasi-judicial provincial regulatory board, known as the Ontario Municipal Board (OMB). In this legal and regulatory environment, the planned shopping centre became the ideal agent for the introduction of major retail facilities. The shopping centre format controlled the negative externalities and internalized a number of the problems typically associated with shopping (e.g., parking, tra$c congestion, noise) and helped to deal with issues associated with competitiveness (Jones and Simmons, 1993, p. 395}405). But the 1990s have witnessed the emergence of a more permissive form of commercial development policy in many of our municipalities. One of the byproducts of this

new regulatory environment is the growth of the power centre/big-box nucleations that now ring Toronto.

9. Future prospects and market share estimates In order to generate estimates of the market share associated with the big-box phenomenon in the GTA, Statistics Canada data on the performance of Canadian big-box retailers in 1996 were utilized and then combined with the big-box square footages in the GTA. These two databases were then analyzed to provide the estimates of big-box market share. Based on a conservative interpretation of these data, we estimate that 16.2% of the total retail sales in the GTA (excluding automotive) are generated by the existing network of big-box retailers. If a slightly more optimistic set of sales-per-square-foot numbers is used, to re#ect the importance, retailer power, and consumer spending concentration of the GTA, the big box share increases to 20.6%. Another means of assessing the impact of the big-boxes on selected retail sectors is through an analysis of projected sales-per-square-foot levels. Based on this

 Based on the data provide by Statistics Canada in `Big-Box Storesa cited in Retail Chains and Department Stores, 1997, Catalogue 63-210XPB.

K. Jones, M. Doucet / Journal of Retailing and Consumer Services 7 (2000) 233}247 Table 8 Estimated sales and market share for selected big-box retailers in the GTA Retailer

Estimated GTA Sales

Estimated GTA market share

Wal-Mart

$538.2 million

Home depot

$455.9 million

Ikea

$210.0 million

Toys R Us

$75.4 million

25% Of the department store sector. 33% Of the retail hardware/lumber home repair sector. 19% Of the furniture/household furnishings sector 25% Of the toys and hobbies category.

information, in combination with current square footage of big-box stores in the GTA and retail sales and annual family expenditure estimates for particular categories, annual sales and market-share estimates for selected major big-box retailers and Wal-Mart were calculated (Table 8). The data also suggest that these retail giants now dominate their respective categories. It is estimated that Wal-Mart, Home Depot, Ikea, and Toys R Us now control between 19 and 33% of retail sales in their respective sectors in Canada's largest retail market. Furthermore, the continuation of their remarkable growth rates, signals that the development of the big-box retail phenomenon will continue to be a major element in almost every retail category.

10. Conclusion and 5nal comments Toronto was the "rst metropolitan area in Canada to experience the full impact of new format retailing and the metropolitan region now is home to over 15 mft of big-box retail space. Despite the accepted view that the phenomenon peaked by the mid-1990s, current data suggest that a new wave of development occurred in the 1998}1999 period, consistent with a resurgence of the local economy toward the end of the 1990s (Yeates, 2000). The growth of new formats has not abated as many retail analysts had predicted. Indeed, the study estimates that approximately 20% of non-automotive retail trade now takes place in big-box formats in the Greater Toronto region and, in certain categories, international retail giants such as Wal-Mart, Ikea, Home Depot and Toys R Us now are dominating the market. This study has con"rmed that big-box retailers have both a direct and incremental impact on the competitive environment. The research has demonstrated that in a number of categories, (e.g., hardware, computers, o$ce products) those retailers in closest proximity to a big-box

245

are most a!ected. However, due to the size and extensive market draws of these big-box formats, even retailers several kilometres away will experience small losses in sales. In aggregate, the eight retail sectors in direct competition with the big-box formats experienced a 7% decline in share of total stores, with the number of store closures greatest in o$ce products (!23%) and hardware (!17%) groups. The study also quanti"ed a number of trends that have been associated with big-box and power centre development in the Greater Toronto Area. Seventy-two percent of the big-box retailers open today were added to the retail stock in the 1990s. In addition, two-thirds of bigbox development took place in the suburban fringe municipalities comprised of the Halton, Peel, York and Durham regions. The impact of these big-box/power centre developments is concentrated in 20 districts that account for 47% of the region's big-box stock and collectively experienced a retail sales growth, for the 1989}1995 period, that was 2.7 times the GTA average. From a land-use perspective, 59% of existing big-box retailers are located on land previously zoned for industrial uses. What is clear is that the big-box/power centre phenomenon has altered dramatically the retail structure of Canada's largest market in less than a decade. Traditional shopping centres and retail streets have become more service oriented as their proportion of retail tenants has declined. Certain retail categories have experienced major losses in employment and/or number of outlets (e.g., hardware stores, catalogue stores, lumber yards, fashion retailers and general merchandisers). Few retail areas are now immune from direct big-box competition. For the "ve retail categories studied, the total retail employment within 2 km (i.e., in direct competition) of a big-box competitor increased from 28 to 43% from 1993 to 1997. Conversely, the total retail employment base that was insulated from direct competition (i.e. '4 km away) declined from 41 to 26%. In the Toronto market, the proliferation of big-box retailing has been associated with three factors (i) the rapid expansion of US retailers as a consequence of the implementation of the North American Free Trade Agreement; (ii) the growth of the Toronto economy in the 1990s, and (iii) the vulnerability of Canadian retailers with respect to price and selection. When the economy is strong, these small shocks can be more easily absorbed, but in periods of declining sales, these resulting sales losses may make the di!erence between an independent retailer or local chain staying in business or closing. As a result, given the vibrancy of the Canadian economy in the late 1990s, the "ndings of this study may underestimate the long-term impact of big-box development on the urban retail system. Existing local retailers, however, can minimize the impact of big-box competition. In some categories, such as books, the best strategy may be to locate in close

246

K. Jones, M. Doucet / Journal of Retailing and Consumer Services 7 (2000) 233}247

proximity to a big-box outlet, in order to take advantage of the increased tra$c associated with the large-format bookstore, while o!ering customers an alternative shopping opportunity through a strategy such as the provision of a highly specialized product line. This approach may help create specialty product areas. In newly developing central-city power nodes, the opportunity exists for independent retailers to cluster in close proximity, thus creating large retail agglomerations similar to those that have emerged in the suburbs. For many independent retailers, the ultimate key to successfully competing with the big-box formats is di!erentiation. Increasingly, the successful retailers will need to provide specialized products, cater to particular customer needs, and provide a higher level of service and product knowledge. As the population ages these factors may become more important. In a more competitive retail environment, only the best will survive. At the same time, however, there are important policy considerations that need to be debated and resolved by all stakeholders in the retail economy. To what extent, for example, is there a civic obligation to preserve the vitality of traditional inner-city retail areas, especially given their importance to the health of surrounding neighbourhoods? What can be done to enhance the ability of local business improvement areas to remain as competitive and vital components of the city's retail system? Finally, how best to determine the overall most-"tting set of uses for formerly industrial land in the inner city? Until these issues are resolved, the piecemeal approval of big-box proposals for the Toronto region may prove to be both short-sighted and not in the long-term best interests of the city, especially if such approvals were later found to have impeded the maintenance of diversity in the urban retail structure. Acknowledgements The authors would like to acknowledge the generous contributions of the Eaton/SSHRC/NSERC Chair for supporting the research activities that resulted in the publication of this paper and the professional editorial advice that was provided to the authors by the reviewers of our original submission. References Arnold, S.J., 1999. Research note: Wal-Mart in Europe. International Journal of Retail and Distribution Management 20 (3), 48}51. Arnold, S.J., Handelman, J., Tigert, D.J., 1998. The impact of a market spoiler on consumer preference structures (or what happens when  Business Improvement Areas (BIAs) are formally organized retail strips that in Ontario can assess members annually to support a variety of initiatives such as marketing, street improvements, signage, and lobbying. In Toronto there are over two dozen such business associations.

Wal-Mart comes to town). Journal of Retailing and Consumer Services 5 (1), 1}13. Burt, S., 1991. Trends in the internationalisation of grocery retailing: the European experience. International Review of Retail, Distribution and Consumer Research 1 (4), 487}515. Centre for the Study of Commercial Activity, 1997. The changes in retail strips: Metro Toronto 1993}1996. Research Report C12, Ryerson Polytechnic University, Toronto. Daniels, T.L., Keller, J.W., 1991. What do you do when Wal-Mart comes to town? Small Towns 22, 14}18. European Retail Digest, 1996. Spring feature: power retailing in Europe (with special reference to American Power Retailing, Toys `Ra Us, B&Q, Pet City and Decathlon. European Retail Digest 10, 13}30. Fernie, J., 1998. The breaking of the fourth wave: recent out-of-town retail developments in Britain. International Review of Retail, Distribution and Consumer 8 (3), 303}317. Finn, A., Timmermans, H., 1996. A Wal-Mart anchor as a repositioning strategy for suburban malls: cross-shopping and the impact on image. Journal of Shopping Center Research 33 (2), 7}27. Genest-Laplante, E., 1998. Big-box stores. Cited in Retail Chain and Department Stores, Fiscal year ending March 31, 1997. Statistics Canada (Catalogue No. 63-210 XPB), Ottawa. Genest-Laplante, E., 1999. Specialized big-box stores. Cited in Services Indicators, 2nd Quarter 1999. Statistics Canada (Catalogue No. 63-016-XPB), Ottawa. Graham, I., 1999. OMB Rejects Home Depot on Waterfront. Novae Res Urbis 3, 7}8. Guy, C., 1994. Retail change in urban Britain: a case-study of grocery store development, closures, and impacts in Cardi!. Cardi!, Department of City and Regional Planning, University of Wales. Guy, C., 1996. Corporate strategies in food retailing and their local impacts: a case study of Cardi!. Environment and Planning A 28, 1575}1602. Guy, C., 1999. Internationalisation of large-format retailers and leisure providers in Western Europe: current constraints and opportunities. 23rd Applied Geography Conference, Charlotte, NC. Hallsworth, A.G., Jones, K.G., Muncaster, R., 1995. The planning implications of new retail format introductions in Canada and Britain. Services Industry Journal 15 (4), 148}163. Immen, W., 1998. Junction's 94-year-long dry spell over: drinkers toast end of prohibition as restaurant in historic area posts "rst liquor licence. Globe and Mail, A17. Immen, W., 1999. OMB Rejects Plan for Megastore on Waterfront. Globe and Mail, A11. Jones, K., Doucet, M., 1997. Shopping centre dynamics in the greater Toronto area. Centre for the Study of Commercial Activity, Research Report 4. Ryerson Polytechnic University, Toronto. Jones, K., Doucet, M., 1998. The big box, the big screen, the #agship and beyond: impact and trends in the Greater Toronto area. Centre for the Study of Commercial Activity, Research Report 1998}7. Ryerson Polytechnic University, Toronto. Jones, K., Doucet, M., 1999. The impact of big-box development on Toronto's retail structure. Centre for the Study of Commercial Activity, Research Report 1999}1. Ryerson Polytechnic University, Toronto. Jones, K., Evans, W., Smith, C., 1994. New formats in the Canadian retail economy. Journal of Shopping Center Research 1 (1), 161}208. Jones, K., Simmons, J., 1993. Location, Location, Location: Analyzing the Retail Environment, 2nd Edition. Nelson Canada, Toronto. Lusch, R.F., Zizzo, D., 1995. Warehouse home centers and wholesalers: the battle for the business customer. International Trends in Retailing 12 (1), 63}74. Prittie, J., 1999. Waterfront plans for home depot shot down by panel. National Post A20 and A23. Simmons, J., Montgomery, D., Simmons, S., 1998. The retail structure of the Greater Toronto area. Centre for the Study of Commercial

K. Jones, M. Doucet / Journal of Retailing and Consumer Services 7 (2000) 233}247 Activity, Research Report 1998}2. Ryerson Polytechnic University, Toronto. Solomon, B., 1993. Power centers: the new face of retailing. Management Review 83, 50}53. Stone, K.E., 1995. Competing with the Retail Giants: How to Survive in the New Retail Landscape. Wiley, New York, NY. Toderian, B., 1996. Big-box retailing: how are municipalities reacting? Plan Canada 36, 25}28. Tomalin, C., Pal, J., 1994. Local authority responses to retail change: the case for town centre management. International Journal of Retailing and Distribution Management 22 (6), 51}56. Toronto Star., 1999. Waterfront Victory. Editorial, Toronto Star A26.

247

Wrigley, N., 1992. Antitrust regulation and the restructuring of grocery retailing in Britain and the USA. Environment and Planning A 30, 15}35. Wrigley, N., 2000. The globalization of retail capital: themes for economic geography. In: Clark, G., Gertler, M., Feldman, M. (Eds.), Handbook of Economic Geography. Oxford University Press, Oxford. Yeates, M., 2000. The GTA @ Y2K: the dynamics of change in the commercial structure of the Greater Toronto area. Centre for the Study of Commercial Activity, Research Report 2000}1. Ryerson Polytechnic University, Toronto.

Ken Jones is the Chair of the Eaton/NSERC/SSHRC Chair of Retailing and is the Director of the Centre for the Study of Commercial Activity (CSCA), a university research centre is attached to Ryerson Polytechnic University in Toronto, Canada. CSCA operates as a partnership of Canadian retailers, developers, "nancial institutions, real estate companies, professional associations, consultants and government. The mandate of CSCA is to provide information to increase the fundamental competitiveness of the Canadian retail sector and to provide education and training programs to improve the strategic capabilities of the retail community. In addition, Dr. Jones is a professor in the School of Applied Geography and has co-authored three books that relate to the contemporary North American retail system } Speciality Retailing in the Inner City (1984), Location, Location, Location (1987, 1992) and The Retail Environment (1990). Dr. Jones has contributed chapters for a variety of university texts and has been published in various of professional journals on a variety of topics that related to the retail environment. These works have discussed issues associated with retail site selection methodologies, market area analyses, retail corporate concentration, speciality retailing, and future trends associated with Canadian retailing. Dr. Jones coordinated the the Ontario Retail Sector Strategy and is a member of the Research Advisory Task Force of the International Council of Shopping Centres, the Research Management Committee of the Geomatics National Centre of Excellence and the Management Committee of the Eaton Chair in Retailing. Michael Doucet is a Professor in the School of Applied Geography at Ryerson Polytechnic University in Toronto, Canada. In addition, he is a Research Associate at the University's Centre for the Study of Commercial Activity and President of the Ryerson Faculty Association. His research interests include the changing retail and demographic structure of the Toronto area and Toronto's changing status within the global urban hierarchy. Results of his research have been published in a variety of books, professional journals, and research paper series.