Nfld. & Labrador

Retail in flux: How the ride down Stavanger Drive is going to get bumpier

The question is: how difficult will it be to fill those massive spaces left behind?

Bowring and Bombay add to exodus from retail wonderland

Tom Cooper is an associate professor in Memorial University's faculty of business — an expert in corporate strategy and risk management. (Ariana Kelland/CBC)

With the impending closure of Rona, Costco's big move to Galway and a few other smaller stores closing down, the Stavanger Drive area in St. John's is about to undergo a transformation.

The question is: how difficult will it be to fill those massive spaces left behind?

Next to Costco's massive space is another largely vacant building left over from Target's failed launch in Canada.

And Rona, off Torbay Road and White Rose Drive, is set to close on Jan. 27, leaving another large empty building behind, and employees in the lurch. 

"When [the building is] so big, there is limited choices in terms of what you can fill unless you do what the Avalon Mall has done which is tear it down," said Tom Cooper, an associate professor at Memorial University's faculty of business.

"That's one option, and then rebuild something more fit for purpose, or alternatively see if you can subdivide." 

There are other bigger retail players but St. John's would possibly have to compete with other American cities, Cooper said. 

Price Club — now known as Costco — was the first big business to open its doors on Stavanger Drive in St. John's east end, in 1995. 

A little further up Stavanger Drive, there is even more retail woe. After years of financial warnings, home decor chains Bowring and Bombay have gone into liquidation mode. 

But it's not as dismal as it seems. In fact, a left turn off Stavanger Drive will bring you filled parking lots, new businesses and buildings under construction. 

A lot of times, it depends on who the landlord is.- Tom Cooper

Walmart has expanded its selection to offer groceries, and White Rose Drive and Hebron Way have relatively new businesses — Mastermind Toys, Little Caesars and Orangetheory Fitness, to name a few. 

Nearby, billboards advertise opportunities on land that has not yet been developed. 

"A lot of times, it depends on who the landlord is, and how aggressive the landlord wants to be in terms of the rents that they're providing and the leases that companies can get, " Cooper said. 

What about Lowe's?

Cooper said he's not surprised that U.S.-based Lowe's decided to close all Rona locations on the island — even newer, busier locations — while also shuttering locations across Canada as well as in the States. 

"They're at the end of the supply chain. It's not like Nova Scotia and New Brunswick where they can bring in materials in and out from specific provinces, and share from there," Cooper said.

In 2016, U.S. home improvement chain Lowe's bought Rona, then headquartered in Quebec, in a deal valued at $3.2 billion.

Lowe's Companies Inc. is reducing its Canadian footprint by closing 27 properties across the country in a bid to streamline its business. (Ryan Remiorz/THE CANADIAN PRESS)

What are the chances Lowe's will eliminate unionized Rona to make way for Lowe's branded stores?

Cooper's cynical side — while speculative at this point — thinks it may be a way to get rid of the union. But he said, Lowe's is known to close stores.

"They look at profitability, they look at individual stores and how well they're doing. That is their business model. They run a very tight financial ship," Cooper said.

When Lowe's took over Rona, it was interested in rural stores especially where there were no other hardware competition. In the Stavanger neighbourhood alone, there is plenty of competition from Canadian Tire and Kent. 

Cooper describes the current business climate as "shaky."

"There [are] some strong indicators that the economy will be improving in the next couple of years," he said.

"It really depends on where these companies are in terms of the life cycle, in terms of the industry life cycle, especially in the oil and gas industry." 

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About the Author

Ariana Kelland is a reporter with the CBC Newfoundland and Labrador bureau in St. John's.