Giant Tiger and other discounters in expansion mode

Whenever Anna Maria Afable travels from British Columbia to visit her friends in Ontario, she makes a point to stop in at a Giant Tiger store.

"We don't have it in B.C.," says Afable, as she browses through the fashion section at a location in Barrie, Ont, the newest of the discount chain's 200 stores across the country. "When we see a Giant Tiger, we drop by and see the price. They have very good prices, very low, affordable for middle-class people."

Ian Ferguson lives in Barrie and is a Giant Tiger regular. "The prices are awesome," he enthuses.

Shoppers like Afable and Ferguson are driving a boom in discount retail. Giant Tiger better known in rural and suburban Canada than it is in big cities will add 10 to 15 stores this year, with more to come. Meanwhile, Costco is midway through a seven-store expansion. And the biggest of them all, Dollarama, is adding 60 to 70 new locations this year to its 1,000-store national network.

"At Christmastime you're going to put gold balls on your Christmas tree. Does it matter if they're Ralph Lauren, or the ones you get from Dollarama?" asks Marvin Ryder, a professor of business at Hamilton's McMaster University. "They both look the same."

Slowest economic recovery in history

Ryder believes that debt-burdened consumers remain nervous about the economy, and are therefore cautious about spending

"We had a recession in 2008 but we haven't recovered from it, we're in the longest period of Canadian economic recovery. We bounced back faster from the Great Depression than we did from that recession," he says, adding that the slow recovery has affected people's behaviour. "Consumers are more value conscious."

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Average Canadian incomes have barely risen over the last year, according to Statistics Canada. For workers in retail, accommodation, and food services, wages have actually fallen by about twoper cent.

Ottawa-based Giant Tiger was founded in 1961 by Gordon Reid, a travelling salesman who had seen discount stores in the United States and believed the Canadian market was ripe for something similar. He's now in his 80s and still comes into the office every day.

"He still calls 10 or 20 store owners every day to find out what's going on in their community," says company president Thomas Haig, with a smile. "He wants to know how can we, in our home office, help."

Typical customer is a 'busy mom'

Although the word "giant" is in the company's name, Giant Tiger locations are relatively small for a department store, not quite the size of a Canadian football field. Haig says that means shoppers can find what they want quickly, as opposed to hiking through a massive superstore that could be five times as big.

"For the busy mom, it's a convenient shop," he says. "You're in and out in no time at all. It's all about convenience."

Housewares, groceries, fashion and hardware are all on display at the newest Giant Tiger location in Barrie. Brand names are in evidence Hanes, Conair, Crayola, Energizer and Sunbeam, for example. The company won't disclose how much merchandise is sourced offshore, saying only that it varies by department. "For example, food is very different than clothing."

Haig insists low prices are an essential part of the Giant Tiger brand. "Everybody loves a deal, so our buyers are constantly on the marketplace looking for a name brand deal that we can bring in at a phenomenal savings to the consumer."

Empty Target stores a prime location

Haig himself loves a deal, and freely admits that a big factor in the drive to expand is the real estate Target left behind. The American chain abandoned 133 stores and 15 million square feet of retail space when it left Canada in April 2015. Leasing agents have had to scramble to replace lost revenue, and are still calling Giant Tiger with enticing offers. Many even promise to reconfigure the space to suit the chain's needs.

"We are getting some very good deals," says Haig, "We've taken advantage of it, so that's why we're expanding 10 to 15 stores over the next three to five years."

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RioCan, one of Target's largest Canadian landlords with 26 properties, recently announced that thanks to its leasing teams "diligently working," the majority of its empty real estate will be filled by the end of 2017.

But no one chain or even one single store has solved the vacancy problem. Like other real estate companies in the same predicament, RioCan has signed multiple tenants to fill the former Target locations. For example, at Toronto's Lawrence Square mall, Marshalls, Homesense and PetSmart have moved into the almost 90,000-square-foot space formerly occupied by Target. Even so, 15,000 square feet are still available.

Giant Tiger has taken over one former Target location and has three more in the works. It's also taken advantage of vacancies created as other retailers have moved to Target locations.

Walmart versus Giant Tiger

Business professor Ryder wonders if Giant Tiger's focus on smaller communities will become a problem, as the Canadian population grows.

"I honestly think you might see a Giant Tiger close at some point if Walmart thinks a suburb has now become big enough for them," he explains. "I'm not sure the town is always big enough for both of them."

Thomas Haig disagrees. "We actually are in most locations where there is a Walmart," he says. "We love competition and thrive in that marketplace, because I think we offer a unique shop to consumers."

Either way you slice it, with stagnant wages and ongoing anxiety about the economy, there's no question Canadians will be seeking out bargains wherever they can find them for the foreseeable future.