‘Store wars’ challenge big-box retailers

By Glenn Kauth | Publication Date: Monday, 06 July 2009

In one of the latest acts of what planning lawyers call the “store wars,” the City of Owen Sound [Ontario, Canada] has rejected Wal-Mart’s bid to expand its location there with its so-called Supercentre grocery offerings.

The decision follows bids to halt similar proposals in other cities, including Thunder Bay and Woodstock [Ontario, Canada]. In Thunder Bay, city council recently approved the expansion over protests from an environmental group, while in Woodstock, the issue went to the Ontario Municipal Board, which last year approved the retailer’s plans.

In Owen Sound, local politicians based their rejection of what was a 39,000-square-foot addition to its store on the need to protect the city’s downtown. In particular, they worried about the impact on a grocery store owned by Metro Ontario Inc.

“Allowing the expansion will increase the risk that the downtown store will close,” according to minutes of a city council meeting where a Metro executive gave dire warnings about the impact of Wal-Mart’s plans.

Such battles aren’t new, of course. Residents in Guelph, along with the city council there, fought against a Wal-Mart store for years until a compromise a few years ago finally allowed the retailer to proceed.

But Eric Gillespie, a Toronto lawyer who was part of the battle against the Guelph location, suspects the scales have tipped at least somewhat against big-box development proposals. As a result, while Wal-Mart isn’t appealing Owen Sound’s decision, he feels the city would have a better chance of defending it before the Ontario Municipal Board due to changes to the Planning Act in 2007.

“Under the current Planning Act, more weight has been given to the decisions of municipal councils. So, it is reasonable to think that, just as in the Leslieville case, . . . the City of Owen Sound denial might also well be upheld,” he says, referring to the recent battle between the City of Toronto and a developer over a proposed big-box project near its east-end industrial lands.

In Owen Sound’s case, councillors based their decision in part on the city’s official plan, which emphasizes maintaining the viability of the downtown.

“There certainly seems to be more of a trend where councils are giving greater consideration to their existing businesses without automatically saying all new development is good,” says Gillespie, who also fought against the Leslieville proposal on behalf of two community groups.

Wal-Mart, however, denies it’s meeting more opposition. “As a company, we’re still growing. We’re seeing a huge welcome mat in most communities,” says company spokesman Kevin Groh, who points out that Wal-Mart has 25 to 30 projects in the works in “Ontario and beyond.”

As in Owen Sound, the issue over a Wal-Mart grocery expansion in Woodstock centered on alleged threats to downtown businesses as well as claims that allowing it to go ahead near a competitor’s planned store would create too much retail capacity.

But last year, the OMB rejected those arguments, ruling instead that opponents produced too little evidence that the Wal-Mart would jeopardize another grocery store downtown. In doing so, it noted that in order to prove a competing store’s risk of closure, it would need to provide financial information as well as hear testimony from one of its operators.

Click here to read the entire article

© Canadian Lawyer Magazine Inc., 2009