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Are big box retailers doomed?

Tags: Retail, Toys R Us
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As family budgets shrink and online shopping grows, could the big box store be going the way of the Betamax?

"I think big box has to reinvent itself. It has to move towards experience, service and I think some unique products. And most of the successful big box players have been doing that," Larry Stevenson, Managing Director, Callisto Capital tells BNN. "Toys R Us started to reinvent itself by bringing in private label…brands. So you can't find those products elsewhere."

Some retail sectors have felt the sting of the online world more than others. Chapters Indigo, for instance, adapted to digitization of books by concentrating more of its effort on the web.

"If you start with the basic premise that the days of being able to sell in excess to consumers who just want more and more are fundamentally over," says Doug Stephens, founder, Retail Prophet. "Then everyone, whether they're online or brick and mortar, are going to have to do something remarkable and stand out in the market place… I think they have to start with the experience in-store."

One saving grace for big box discount retailers may be young families on tight budgets who are looking for cheap deals all in one place, says Mark Satov, founder Satov Consultants.

"It's worthy of some debate what happens when a younger generation that's more urban has a family and has constrained income," says Satov.. "In my view, a lot of the values they love to adhere to when they're a bit younger and have more freedom, both financial and otherwise, kind of go out the window when they struggle with a family and I think there's always an allure to a place where, first of all, you can get everything you need and, second of all, the absolute lowest price."

What will the megastore look like in 10 years? One expert is predicting a seismic shift in strategy, where big box retailers will build small offshoot stores in urban markets.

"Going forward I would look for more and more big box stores to try and penetrate urban markets, to try and redefine the model in smaller spaces," says Retail Prophet's Stephens. "It will present supply change issues because now you're really no different than the other guy that's operating a whole chain of small stores, so it puts you on an even footing."

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