Changing dynamics of retail On a June weekend in 1990, a visitor walking down Village Stroll would have passed several T-shirt stores before crossing paths with locals, on their way to the Pharmasave, liquor store or some other business in the Village Square area. In June 1995, a visitor and a local are less likely to meet in Village Square — another liquor store and Pharmasave having opened in Marketplace, as well as the post office, a bank and the IGA Plus grocery store. The development of Marketplace, with its hundreds of free parking spaces drawing locals and weekenders, is one of the factors that has changed the dynamics of the retail business in Whistler in the last five years. "The change is dramatic in the shoulder season," says Alan Hannebauer, owner of For Keepsakes and For Nature’s Sake in the village. "Our stores cater to locals and visitors. We’re now missing the impulse buying from locals." Not all retailers have felt as big an impact from Marketplace. Indeed, many do not count on sales to locals at all. But one point virtually all retailers agree on is that despite a record winter for skier visits, sales are down this year. "That’s the feeling I’m getting," says George Koning, owner of Seasons and several other clothing stores. "The bars and restaurants don’t seem to have lost any business, but consumer spending is down across the country. I’d say locally (the decline in sales) is 50 per cent due to lack of confidence in the economy and 50 per cent due to the number of new retail businesses." Hannebauer and others concur. "There are twice as many people competing for a marginally bigger pie," he says. "People are spending the same number of dollars, they’re just spending it in more stores." Exactly how good or bad the retail business is in Whistler is difficult to measure. Most retailers are secretive about their sales, afraid to give their competitors an advantage. The one constant in the retail business — as in so much of Whistler — is change. From 1991 to 1993 retail space in Whistler jumped from 10,666 square metres to 17,010 square metres. Since then the Whistler Village Centre has brought on nearly 2,900 square metres of retail space. This summer Market Pavilion, Whistler Town Plaza and the Tyndall Stone Lodge will add another 8,100 square metres of retail/commercial space to the village-Village North area — a total of 11,000 square metres in just over a year. While retail space doubled in three years and will increase by more than one-third again this year, the number of public beds has not kept pace. Public beds are critical to retailers because the destination visitors who occupy them generally spend considerably more in shops than do locals or weekenders. "Landlords in Whistler seem to still have this notion that all retailers are getting rich," says Jayson Faulkner, co-owner of the two Escape Route stores. "I look at the growth in the volume of retail in the last two years and I have serious concerns about the future. I think there will be a big crunch next year." Koning says "landlords won’t realize it’s a myth (that all retailers are making a killing) until people start defaulting on their rent." With the accelerated build out of Village North and the new retail space in Whistler Village Centre shop owners will never see the ratio of retail space to public beds they enjoyed two or three years ago. But by next winter, following three summers of dynamic expansion, the ratio should begin to stabilize. And most retailers who have been here a while will admit that new competition among retailers has improved the business. Store owners now have to be more creative in what they sell and how they present it. Says one: "Five years ago you didn’t have to be a good retailer, people came to you regardless." Retailers have also had to sharpen their pencils; today there is probably better value in Whistler retail stores than ever before. But increased competition in retailing comes just as lease rates are going up — as high as $65 per square foot, plus triple-net at $13 per square foot, in some places. Lease rates in the village had been about $35 per square foot, but as leases expired in the last couple of years store owners have found the renewal rate is $45-$50 per square foot. So, at a time when there are more businesses competing for the same consumer dollars, the cost of being in business is going up. As well, labour costs are going up, through the increase in the minimum wage but also through competition to keep staff. The difficulty in finding affordable housing and in keeping good personnel has forced some retailers to buy or lease houses, which they then sub-let to staff. It can be a significant expense for a business that still has to make its profits in just four or five months of the year. However, some see signs that the retail picture is maturing. "In the past there's never been too much retail space because people who see Whistler as a golden opportunity have always been coming in from the outside," says another retailer. As a result, demand for retail space has always outstripped supply. But the amount of retail space now available — and the option in Whistler Town Plaza and Market Pavilion for business owners to buy retail space rather than lease it — suggests it may not be too long before the law of supply and demand kicks in and retailers have a say in lease rates. Also, up until recently when a village retail business changed hands there was always key money involved. The value of a village location was so high that merchants going out of business could receive in the order of $100,000 just for their location. The increase in retail space is bringing that practise to an end. The current mix of retail stores in Whistler is regarded by most retailers as better than it was three or four years ago, but everyone agrees not all stores are going to survive. "The thing to do is focus on who you are, what you are doing in the marketplace," says Scott Carrell, who has been responsible for Blackcomb's sport shops division but was recently promoted to vice president and general manager. "You niche market, but your niche has to be a big enough market." And niches aren't constant. Most retailers say the average winter sale is two-and-a-half to four times the value of the average summer sale. That forces many retailers to take a shotgun approach to sales in the summer, hoping to appeal to a wide variety of shoppers with T-shirts, souvenirs and fewer specialty items. "As long as the economy stays up visitors support a diverse collection of shops," says Koning. "When there's a recession people only buy souvenirs." For Koning, destination visitors are the crucial people to reach, yet destination visitors make up less than 40 per cent of the skier visits. However, he feels the present mix of shops is persuading more locals to shop in Whistler. Faulkner says at least half of Escape Route's business is with locals, which helps smooth out the highs and lows over the course of a year. The recent appearance of national and international chain stores is strongly opposed by Faulkner. "That's not what people come to Whistler for," he says. "It's the developers' responsibility to create an eclectic mix of shops. I think if landlords continue to accept the quick buck, in the long term it's going to hurt Whistler." Most retailers acknowledge that while the overall quality of retail has gone up in Whistler, there's still resistance to the real high-end retail items that can be found in Vail or Aspen. An indication of how upscale those resorts are is found in the fact that Vail has substantially more retail space than Whistler, but roughly the same skier visits. At Aspen, a show of wealth last July 4 weekend was at the airport, where 74 personal and corporate jets were lined up. Still, shopping in Whistler is a much different experience than it was five years ago. There are now fewer T-shirt shops (as one retailer puts it, there aren't too many T-shirt shops, there are too many shops selling T-shirts), a number of art galleries and some innovative mixes of retail with entertainment and/or food, as at Essentially Blackcomb, Cows and Whistler Backroads/Moguls. These combination stores provide more entertainment and value, but as Carrell points out they also reflect what retail is all about: "if you can retain someone in your store longer they will buy more."