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Chains add northern exposure

Queensborough lands Lowe’s home improvement store and Wal-Mart grocery; Canada’s strong economy luring more U.S. retailers north
Ramona Paul, manager of Lowe’s new store in New Westminster’s Queensborough district: “we believe that there’s plenty of room for good retailers in what is a good Canadian market”

Vancouver's strong economy and consumer demand for retail options has prompted American retailers to target the Lower Mainland for expansion even as they close stores at home.

North Carolina-based Lowe's Companies Ltd. (NYSE:LOW) plans to open its first B.C. store November 1 – two weeks after it announced store closures in the U.S.

The 1,725-location home improvement chain's big box outlet in New Westminster's Queensborough district will have 117,000 square feet of indoor retail space with another 31,000 square feet dedicated to an outdoor garden centre. The building and its 550 parking spots are on a 13-acre site.

Lowe's, which is the world's second largest home improvement retailer after Home Depot Inc. (NYSE:HD), announced October 17 that it would close 20 U.S. stores and lay off 1,950 of its 160,000 employees. The company added that it plans to slow expansion to a maximum of 15 new stores in 2012, down from its previously announced target of 30.

The moves were widely seen as acknowledgments that the brand grew too fast in the U.S. and is failing to lure enough market share from Home Depot in what is a lethargic economy south of the border.

"We believe that there's plenty of room for good retailers in what is a good Canadian market," said Ramona Paul, the manager of the chain's Queensborough store.

Paul has thus far hired 180 staff. Seasonal workers will be hired in the spring.

"There's a lot of existing retail in this area," she said, "and our site has great access and visibility from a highway. This is a great location."

Queensborough has grown through the decades from being primarily a site for lumber mills and canneries into what retail analysts such as Thomas Consultants managing principal Michael Penalosa describe as being a "suburban chore-shopping destination."

Area retailers target shoppers who want to stop in one neighbourhood to complete weekend errands.

"People are looking for convenience shopping and power centres, but it's not at all something to do for fun. It's not the same thing as going to the Village at Park Royal," Penalosa said. "You don?t linger. It's a sea of parking."

He added that Lowe's fits well in that milieu. So does Queensborough's eight-year-old, 120,000-square-foot Wal-Mart Canada store, which is slated to expand by 30,000 square feet on November 25 when it opens a grocery store that will sell produce, baked goods and meat.

The power centre that surrounds Wal-Mart has other big-box retail tenants such as Best Buy.

Penalosa noted that other large American retailers are looking to follow Lowe's strategy of expanding north because the economy is comparatively more vibrant.

Some chains to watch, he said, include:

•Nordstrom Inc. (NYSE:JWN);

•Dick's Sporting Goods (NYSE:DKS);

•Kohl's Corp. (NYSE:KSS); and

•J.C. Penny Co. Inc. (NYSE:JCP).

Lowe's spokeswoman Joanne Elson told Business in Vancouver that the company made opening a Metro Vancouver store a priority partly because it had done so well in other parts of Canada.

Her chain first opened a Canadian store in 2007 and expanded to Western Canada in 2010 with its first of what are now three Calgary locations. It opened outlets in Edmonton and Regina earlier this year.

James Smerdon, Colliers International director of retail and strategic planning, expects the store to do well because neither New Westminster nor south Burnaby have a Home Depot.

But he has reservations about how successful Queensborough has been as a retail destination.

"It's always been a bit of a question how successful Queensborough has been and what impact it has had on the consumer. The Market Crossing power centre on Byrne Road has gone in with hundreds of thousands of square feet in Burnaby," Smerdon said.

"If Queensborough was so successful, you would question whether or not Byrne Road would have taken off as much as it has." •