Retail and real estate legend Joe Segal told Business in Vancouver last week that keeping operating costs low is key for local discount retailers to successfully compete with new Wal-Mart and Target locations.
One way to do that is for stores to own their underlying real estate, Segal said.
Discount department store chain Army & Navy, for example, is able to limit expenses by owning four of its six locations, he said.
Segal said there is undoubtedly an opportunity cost to doing that, but Army & Navy should be able to offer even lower prices than the world’s largest retailer.
“If a shirt is $18 at Wal-Mart, it will be $15 at Army & Navy,” Segal said.
This despite Wal-Mart announcing June 28 that it would lower prices on 10,000 products in July. Its executives say that sale is the largest in its 18-year history in Canada and would save customers an estimated $50 million this month.
Aberdeen Centre owner Thomas Fung is in a situation similar to Army & Navy’s.
He owns both the mall and Canadian master franchise rights to Japanese discount department store chain Daiso, which opened a 26,000-square-foot location in the mall in 2003.
Daiso’s sales have been so brisk that Fung has fielded plenty of offers from prospective franchisees who want to open Daiso locations across the country.
Fung, however, told BIV that he intends to expand Daiso in Canada on his own but that he has other priorities in the short term.
