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Plug being pulled on poor-performing S.S. Kresge stores.

Plug being pulled on poor-performing S.S. Kresge stores

Evolution will finally catch up with a number of retail operations later this summer.

Seven Northern Ontario communities will see the mainstays of their respective downtown areas sell off their stock and shut their doors, as 12 S. S. Kresge stores in the country are removed from the corporate ledger of parent K-Mart Canada Ltd.

An official with the Brampton-based K-Mart Canada said the decision is "purely financial" and is based on the fact that the operations were either losing money or were barely making a profit.

"We review the performance of each operation every year," said James Ingram, general counsel for K-Mart Canada. "The operations were either marginally profitable, or had been losing money for a number of years.

"They were not doing the amount of sales necessary to achieve an acceptable level of profit, and there isn't any prospects of the situation turning around."

He added the decision was made at the corporate level, after a lengthy analysis.

"Closing stores is not a quick or an easy thing for a retailer," said Ingram.

Among the stores scheduled to close in August are ones located in Sault Ste. Marie, Kapuskasing, Kirkland Lake, Thunder Bay, Atikokan, Timmins, Elliot Lake and North Bay.

The closures will put between 75 and 100 people out of work, although some of the workers have be offered positions with other operations.

Most of the stores date back to the 1950s, a factor which presented some nostalgic charm for consumers and, inevitably, resulted in their demise.

Ingram pointed out that the stores were located in the respective communities' downtown areas, which meant "little or no parking," and inhibited expansion and profitability.

"It's all part of the evolution of the five-and-dime stores," said Ingram. "They were really the stores of the fifties."

Kresge operations first expanded into Canada in 1929 and continued to expand across the country until 1963 when the parent company, K-Mart, opened its first Canadian operation.

Ingram said the establishment of a K-Mart outlet helped market the retailing trend away from downtown areas towards suburban malls.

Ingram said the future of retailing in the coming years lies with larger operations, as well as with promotional discount stores such as Bi-Way and Bargain Harold's.

As Kresge operations are wound down, the K-Mart official said the company will be directing a majority of its attention to developing new K-Mart operations.

However, the news will do little for the communities which are about to lose Kresge outlets. Most of the communities are too small to support a K-Mart (corporate policy requires a population of between 40,000 and 50,000) and the larger centres - Timmins, North Bay, Sault Ste. Marie and Thunder Bay - already have such operations in place.

Ingram said there is still the possibility the company will put a new operation into some of the communities. K-Mart also owns the Bargain Harold's chain of stores which it purchased five years ago. Ingram said K-Mart Canada has set a population criteria of between 10,000 and 15,000 for the establishment of operations.

"We opened three new Bargain Harold's stores this year and two of them are in Ontario," he said. "There is a very good chance we'll be looking at the communities again."

In the meantime, however, the communities will have to survive with the void left by the pull-out of the retail establishment.

"For consumers, the lack of competition is not good," said Pierre Millette, economic development officer for Kapuskasing. "(For the community) in the end, there is going to be much more leakage to other centres."

The loss of Kresge leaves the community with only one major retailer. Woolco. Millette added his office usually directs its efforts towards attracting industrial operations to the community and isn't prepared to go after retail establishments.

"It's hard to hunt for competitors to existing businesses," he said.

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Author:Krejlgaard, Chris
Publication:Northern Ontario Business
Date:Jun 1, 1990
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