The Marine Building at 1411 Peel Street (at Ste-Catherine) in Montreal. Photo supplied
Located at the intersection of Sainte-Catherine and Peel Streets in downtown Montreal, the Marine Building offers boutique Class A office space across five floors, with three levels of retail at its base.
Constructed in 1989 by Sheldon Mintzberg, who continues to manage the building as owner and CEO of the Marine Group, this property combines high-quality materials with thoughtful design.
The office spaces are beautifully renovated, providing modern features in a historical context. Additionally, the building’s lobby has undergone recent upgrades, featuring escalators, marble walls and flooring, and unique artwork, adding to the professional atmosphere.
Available spaces include:
Third floor: 6,429 sq. ft. (suite 300)
Fifth floor: ~5,400 sq. ft.
Sixth floor: 2,984 sq. ft. (suite 600) and 3,046 sq. ft. (suite 602)
Seventh floor: 3,700 sq. ft. (suite 701)
The Marine Building is directly connected to downtown Montreal’s underground pedestrian network, offering indoor access to the STM Metro (Peel Station) and the upcoming REM system. Parking facilities are also available nearby, along with on-site parking connected to the Underground City.
For leasing inquiries, contact Kyle Mintzberg of the Marine Group:
Office lobby of the Marine Building at 1411 Peel Street in Montreal. Photo supplied.Office space at the Marine Building at 1411 Peel Street in Montreal. Photo supplied.Unique light show as part of the art in the office lobby of the Marine Building at 1411 Peel Street in Montreal. Photo supplied.
*Retail Insider has partnered with the Marine Group for editorial, including this advertisement ahead of ICSC@CANADA in Toronto next month. To work with Retail Insider, contact Craig Patterson at craig@retail-insider.com
Retail Insider is streamlining its Canadian retail news from around the web to include a handful of top news stories that can be viewed quickly during the day. Here are the top stories from the past 24 hours.
Canada Goose store in London. Rendering: Canada Goose
Canada Goose Holdings, Inc. is undergoing a strategic transformation in response to evolving market conditions. The company’s recent financial performance highlights both the challenges and opportunities it faces as it shifts focus from wholesale channels to a more direct-to-consumer (DTC) model, all within the context of a complex retail environment.
Financial Performance Overview
In the first quarter of fiscal year 2025, Canada Goose exceeded market expectations, reporting an adjusted loss per share of C$0.79, a result that outpaced consensus estimates. This was largely due to stronger-than-anticipated sales and more efficient management of selling, general, and administrative (SG&A) expenses. This positive outcome, during a traditionally slow period for outerwear sales, demonstrates the company’s resilience and operational prowess.
For the full fiscal year 2024, which concluded prior to the release of the Q1 FY2025 results, Canada Goose reported robust growth across all its major regions, showing improved profitability year-over-year. The final quarter of FY2024 saw adjusted earnings per share (EPS) of C$0.19, surpassing expectations once again, thanks to increased sales and strong SG&A management. Looking ahead, analysts project a cautious yet optimistic outlook for fiscal year 2025, forecasting an EPS of USD 1.13, with expectations for USD 1.23 in the subsequent year.
Canada Goose on Peel Street in Montreal. PHOTO: MAXIME FRECHETTE
Strategic Shift to Direct-to-Consumer Sales
Central to Canada Goose’s current strategy is its shift towards direct-to-consumer sales, a move that reflects broader retail trends. Wholesale revenues saw a significant year-over-year decline of 41.7%, as the company continues to pull back from traditional sales channels. While the drop in wholesale may initially seem concerning, it is a deliberate part of the company’s long-term plan to streamline operations, enhance customer engagement, and improve profit margins.
By reducing its reliance on third-party retailers, Canada Goose aims to take greater control of its brand narrative and product distribution. The DTC model presents opportunities for higher margins, better customer data access, and more personalized shopping experiences, all of which can contribute to long-term growth. As the company refines its DTC operations, it may also benefit from stronger pricing control and less dependency on markdowns and promotions often seen in wholesale partnerships.
This shift reflects one of the company’s strengths, being its ability to adapt quickly to a changing market while leveraging strong brand recognition in the luxury outerwear sector. Additionally, Canada Goose’s improved profitability and performance across regions highlight its operational efficiency. However, the significant drop in wholesale revenues also underscores a weakness, as the company has historically relied on these partnerships for stable, predictable revenue streams.
Canada Goose opens its doors in the city it calls home, Toronto Yorkdale (CNW Group/Canada Goose)
Regional Performance Variability
Canada Goose’s performance varies significantly across regions, with the Asia-Pacific (APAC) market leading growth in recent quarters. The brand’s strong appeal in luxury-driven markets in APAC, particularly China, highlights its potential to capture the growing affluence in the region. However, North America (NA) and the Europe, Middle East, and Africa (EMEA) regions have presented more mixed results, partially offsetting the gains made in APAC. As Canada Goose continues to navigate these mature markets, maintaining its premium brand positioning while addressing shifting consumer preferences and economic conditions will be key.
The APAC market presents a major opportunity for Canada Goose to expand its presence in luxury-focused regions. The company is well-positioned to capitalize on rising demand for high-end products, particularly in markets like China, where the appetite for luxury goods continues to grow. At the same time, however, challenges in North America and EMEA reflect a potential threat as the company works to maintain growth in more saturated and competitive markets. Economic uncertainties and changing consumer preferences in these regions could further complicate its expansion strategy.
EXTERIOR OF CANADA GOOSE STORE AT YORKDALE SHOPPING CENTRE. PHOTO: JM
Challenges and Growth Prospects
Despite a strong first quarter and overall fiscal year performance, analysts remain cautious about Canada Goose’s growth potential in the near term, primarily due to the sharp decline in wholesale revenue. The wholesale segment, which has traditionally provided a stable source of income, has seen its contraction accelerate as the company pivots towards DTC. This may lead to challenges in cash flow forecasting and could impact relationships with long-standing retail partners, affecting the brand’s visibility in certain markets.
Canada Goose’s heavy reliance on cold-weather apparel, while a hallmark of its brand, also presents a weakness and a risk. Seasonal fluctuations and the broader impacts of climate change could reduce demand for winter outerwear, complicating efforts to sustain growth. Furthermore, there’s the threat of increased competition in the premium outerwear market, as brands like Moncler and The North Face continue to innovate and appeal to the same luxury-oriented customer base.
Opportunities for Long-Term Profitability
The shift to a DTC model, while presenting near-term challenges, could enhance Canada Goose’s profitability over the long run. By eliminating middlemen, the company can capture a greater share of the retail price, improve inventory management, and maintain tighter control over brand experience. Direct interaction with customers via e-commerce and owned retail stores will provide valuable insights, enabling Canada Goose to adapt more quickly to market trends and consumer preferences.
Analysts also point to the potential for margin expansion as the company optimizes its DTC operations. With the opportunity to realize economies of scale in its retail and e-commerce channels, Canada Goose could see improved operational efficiencies. Furthermore, the reduction of wholesale business means less reliance on promotional activity, preserving the premium image of the brand and allowing for better pricing strategies. These opportunities for margin growth, particularly through optimized operations and global expansion, position Canada Goose well for long-term success.
As the company continues to focus on expanding into higher-margin product categories and exploring local production in key markets, there is potential for further margin growth. These efforts could help bolster profitability and support Canada Goose’s ambition to become a more agile and efficient luxury brand in a competitive global market.
Conclusion
Canada Goose’s ongoing transition to a direct-to-consumer model represents both an opportunity and a challenge for the company. While the sharp decline in wholesale revenues may cause short-term disruptions, the shift is strategically aligned with long-term growth and profitability. Success will depend on the company’s ability to navigate a complex retail landscape while leveraging its brand strength and customer loyalty to achieve sustained growth in the years to come.
Peak Achievement Athletics Inc. announced Monday that certain affiliates of Fairfax Financial Holdings Limited will acquire all the equity interests in Peak currently owned by Sagard Holdings Inc., giving Fairfax control over Peak and its stable of brands including Bauer Hockey, Cascade Lacrosse and Maverik Lacrosse.
Ed Kinnaly
“We couldn’t be happier that Fairfax has decided to acquire controlling ownership of our portfolio of brands. Fairfax has been an incredible partner over the past seven years, and we’re thrilled to solidify this new long-term relationship. Having Bauer Hockey remain with Canadian ownership reflects the importance of the sport within Canadian culture. With Fairfax’s ongoing support the opportunity for our business potential is limitless,” said Ed Kinnaly, Chief Executive Officer of Peak, in a news release. “We also want to thank Sagard for the partnership over the past seven years and their leadership in helping to grow Peak’s brands to the leadership positions they hold today.”
V. Prem Watsa (Photo from Horatio Alger Association of Canada website)
“We are very excited to increase our ownership in Bauer, led by Ed Kinnaly, which has over many years cultivated Bauer as the most iconic and successful hockey brand in the world,” said Prem Watsa, Chairman and Chief Executive Officer of Fairfax. “Ed and his leadership team have positioned Bauer for growth and continued success for many years to come. We are very thankful to Paul Desmarais III and Sagard for what has been a valuable and rewarding partnership in owning Bauer together, and we wish them all the best in the future.”
In 2017, Fairfax and Sagard purchased Peak, which has a portfolio of leading global brands that includes BAUER, CASCADE and MAVERIK. With its roots starting in Kitchener, Ontario, in 1927, Bauer Hockey is the leading hockey equipment and apparel manufacturer in the world and the No. 1 brand in the game. Cascade Lacrosse and Maverik Lacrosse combine to be the leader in lacrosse head protection and equipment.
The transaction is expected to close in the fourth quarter of 2024.
The union representing longshore workers at the Port of Montreal has initiated a three-day strike, significantly impacting operations at the port’s Viau and Maisonneuve Termont terminals.
Approximately 350 workers, affiliated with the Canadian Union of Public Employees (CUPE), are participating in the work stoppage, which began at 7 a.m. Monday morning. The strike, set to continue until Thursday, stems from ongoing contract disputes, as the workers’ agreement with the Maritime Employers Association expired on December 31, 2023.
The Maritime Employers Association (MEA) expressed its disappointment in a statement, indicating that despite efforts to avoid disruption—including mediation and an emergency meeting with the Canada Industrial Relations Board—negotiations have reached an impasse. The MEA emphasized that they had “tried all possible means” to avoid the strike, though these efforts proved unsuccessful.
This strike has the potential to disrupt trade significantly, as the Port of Montreal is a key point for Canadian imports and exports. The port handles approximately 40 million tonnes of goods annually, including consumer products for retailers, vital resources like fuel, and industrial materials. As the strike progresses, various industries dependent on the port’s supply chain may face delays, potentially causing ripple effects across the country.
Photo: Port of Montreal
The strike follows years of escalating tensions between the union and employers over working conditions, including wages, job security, and scheduling concerns. In 2021, the union launched a similar work stoppage that led to widespread delays and cost businesses millions in lost revenue. This latest strike threatens to replicate that impact, with the possibility of prolonged economic consequences if the dispute isn’t resolved swiftly.
Montreal’s port authority is urging both sides to return to the bargaining table to reach a resolution, as the strike adds pressure on an already strained supply chain. The global logistics industry has faced mounting challenges due to the pandemic and inflationary pressures, and additional labor disruptions could exacerbate these issues.
The union has stated that it remains open to further dialogue but maintains that their members deserve fairer working conditions. With the strike ongoing, the situation at the Port of Montreal remains critical, with all eyes on potential developments as Thursday’s deadline approaches.
The retail trade sector (+1.0 per cent) was the largest contributor to overall growth of Canada’s GDP in July, recording a second consecutive increase and the sector’s largest monthly growth rate since January 2023, reports Statistics Canada.
“Most subsectors expanded in July 2024 with motor vehicles and parts dealers (+2.8 per cent) contributing the most to growth, driven by higher retailing activity at new car dealers which more than offset the previous month’s decline. A contraction at gasoline stations (-1.8 per cent) tempered the overall growth in the sector,” says the federal agency.
In a recent report, StatsCan said real gross domestic product was up 0.2 per cent in July, following essentially no change in June. Despite negative impacts from wildfires on transportation and warehousing and accommodation services, the services-producing industries grew 0.2 per cent in July, driven in large part by increases in the retail trade sector, the public sector and the finance and insurance sector. Goods-producing industries edged up 0.1 per cent, with the utilities and manufacturing sectors contributing the most to growth within this aggregate. Overall, 13 of 20 sectors expanded in July.
“Advance information indicates that real GDP was essentially unchanged in August. Increases in oil and gas extraction and the public sector were offset by decreases in manufacturing and transportation and warehousing. Owing to its preliminary nature, this estimate will be updated on October 31, 2024, with the release of the official GDP by industry data for August.”
Toronto’s Union Station, Canada’s busiest transit hub, is undergoing another phase of its ongoing transformation with the expansion of its Foodie Aisle this October.
Located on the lower level with direct access to Scotiabank Arena, the Foodie Aisle serves as a key part of the station’s revitalization, bringing a diverse selection of chef-driven, market-style eateries to the heart of downtown Toronto.
Azul at Union Station on September 30, 2024. Photo: Dustin Fuhs
The latest rotation of vendors, the first since the Foodie Aisle opened in 2021, introduces new culinary options that its landlord says reflect Toronto’s vibrant food culture.
Among the new additions are Azul, Tut’s Egyptian, and Blondies Pizza, each contributing unique offerings to the diverse mix of international and local cuisines:
Azul, led by Executive Chef Joao Medina, aims to redefine quick-service Mexican food with a focus on authenticity and quality. Known for bold flavors, Azul will offer a selection of traditional Mexican dishes tailored for busy commuters and sports fans.
Tut’s Egyptian, which has already made a name for itself with locations in King & Portland, Mississauga, and Oakville, specializes in Egyptian sandwiches. This will be the vendor’s first foray into the downtown core, where it aims to introduce a modern take on Egyptian street food.
Blondies Pizza, a rising star in Toronto’s pizza scene, will bring its New York-style pizzas to Union Station in November. Since its founding in 2018 in Leslieville, Blondies has become known for its innovative approach to classic pies, utilizing high-quality toppings and ingredients.
Tut’s Egyptian at Union Station in Toronto on September 30, 2024. Photo: Dustin FuhsMightyBird Union Station in Toronto (Image: MightyBird)
The new vendors join returning favourites, such as Mean Bao, known for its pillowy bao buns filled with savoury ingredients like pork belly and braised beef, and MightyBird, offering premium fried chicken dishes that have become popular for their bold flavours.
Part of a Broader Revitalization
The Foodie Aisle is just one element of Union Station’s larger redevelopment. The multi-phase project is transforming the station into a cultural and commercial hub, with plans to host over 75 retail and food vendors by its completion.
Mean Bao at Union Station in Toronto on September 30, 2024. Photo: Dustin Fuhs
The revitalization has already attracted international brands, including Sephora, Decathlon, %Arabica and Nespresso, while the newly opened Fresh Market provides groceries and specialty items from local vendors.
“Union is becoming a destination for food lovers,” said Lawrence Zucker, CEO of Osmington Inc. “Toronto is one of the best food cities in the world, and visitors and residents alike will now find high-quality food options at Union that reflect our city’s diverse culinary landscape”.
Toronto Union Station (Image: Dustin Fuhs)
A Culinary Gateway
Union Station’s strategic location between the Financial District, Scotiabank Arena, and the waterfront makes it a natural gathering place for both commuters and visitors.
The food hall concept emphasizes convenience while offering diverse options that range from dim sum and tacos to smash burgers and rotis. The ease of access to food has helped position Union Station as a culinary destination in its own right.
Halifax’s luxury watch and jewellery store, Touch of Gold, is now on a prime corner on Spring Garden Road. The company has been on Spring Garden Road for over 40 years now, but jumped at the opportunity to move to a storefront location and includes a designated Rolex boutique along with other luxury watch brands.
“For us, Spring Garden is home. Our customers know it, and from a pedestrian traffic perspective – there is just a lot of activity down here. We are a five minute walk to the waterfront, we have universities within a ten minute walk, two major hospitals a block away, and the new convention centre just two blocks from us. It is a very useful hub of the city. It is just a young, vibrant city and has seen a lot of growth, so we just feel like we are in the middle of it down here,” says Mike Foran, president and co-owner of Touch of Gold.
Luxurious and welcoming environment
Inside Touch of Gold’s store, showcasing its new comfortable and welcoming design.
The new 3,500 square foot location is on the corner of Spring Garden and Birmingham, offering more visibility and traffic. Launch by Design, a Toronto-based firm, created the store’s interior, while Rolex’s own designers created the dedicated Rolex section.
“We are pleased with not only the number of people that have come in the store, but also the reaction people have. You can take this store and you could plop it on the high street in any major city in the world, and it would fit in.”
Rolex showroom
Foran says the store dedicates 700 square feet to its Rolex showroom.
Touch of Gold’s designated Rolex boutique
“Having represented Rolex in Halifax for more than 40 years, we are proud to expand the brand’s presence, upholding the highest standards of quality and service. We are much larger, more than twice our size of our old store, and we are much more branded.”
In addition to Rolex, Touch of Gold also has dedicated branded areas for Omega, Tudor, and Breitling watches. The store also carries Longines, Montblanc, and Watch Winders. Touch of Gold also carries an jewellery products such as bracelets, earrings, necklaces, and engagement rings.
Beyond selling luxury watches
Touch of Gold goes beyond selling luxury items; they have created a space where people feel welcome and comfortable.
A shopping section in the back with a welcoming space for visitors
“People can come in, they can feel welcome, and they can feel comfortable. We will find people coming here throughout the day to meet their friends, to look at new watches, and to look at new pieces of jewellery,” says Foran. “Jewellery is a very personal business from that perspective. We have so many great stories of customers who buy things to memorialize an event for so many different reasons, and we get to share that.”
Touch of Gold also has strong ties within the Halifax community. Over the years, they have been supporting local charities, particularly those focusing on mental health, youth sports, and underprivileged communities.
“In the last number of years, we have given millions of dollars back to our community in the form of charitable giving. That is an important part to us, myself, my wife, and my sister, as owners. It is an important part to our staff that they are connected to the community, and it is important to our customers that they know the store they are supporting is also supporting the community around them.”
Staying relevant in the luxury watch market
To stay on top of luxury watch trends, Touch of Gold keeps a close eye on new trends and maintains strong relationships with clients. The company’s dedication is to understanding what their consumers are looking for and reflect it in its inventory.
“Our plan is evolution, not revolution. I have owned this business for over 20 years, it has evolved to a much more brand-centric and customer-centric business where we are providing a service and a product to our customers that is relevant. I can’t prescribe to you today what we are going to be selling in five, six, or ten years in time, but we will be listening to our customers and offering them a product that they want and what is relevant.”
Additionally, Foran says they go to international watch fairs and jewellery trade shows. Each year the team travels to events such as the Watches and Wonders watch fair in Geneva, as well as jewellery trade shows in the United States and in Europe. These events keep the company informed about the latest trends and innovations.
“Jewellery and watches are timeless in that the products we sell are generational, and they are passed on from one generation to another generation, and that touchstone is quality. What we have seen in times when there is uncertainty in the world, people have turned to things that they believe have performance. There is more than just a monetary value to it – there is a sentimental value that can’t be measured.”
Louis Vuitton at Royalmount in Montreal. Photo: Brad Dickson
Louis Vuitton has unveiled its first freestanding store in Montreal at Royalmount, Quebec’s largest private development. It’s one of the largest Louis Vuitton stores in Canada, spanning more than 9,000 square feet.
The new Royalmount Louis Vuitton location offers a full spectrum of the Maison’s prestigious métiers, including accessories, leather goods, ready-to-wear, fine jewelry, fragrances, and its most coveted bespoke items.
The Royalmount store represents Louis Vuitton’s second location in Montreal, complementing its existing downtown concession space at Holt Renfrew Ogilvy. It also marks Louis Vuitton’s 10th store in Canada, reinforcing the Maison’s growing footprint across the country.
The new opening is part of a broader series of fall initiatives for Louis Vuitton in Canada, including an exclusive Trunk Show in Toronto held in September, and the highly anticipated release of the City Guide Toronto next month, available both in print and digitally.
Louis Vuitton at Royalmount in Montreal. Photo: Brad DicksonLouis Vuitton at Royalmount in Montreal. Photo: Brad Dickson
A Grand Destination of Craftsmanship and Art
Louis Vuitton’s Montreal location offers what it says is an immersive experience that marries the brand’s heritage with forward-thinking design. The two-toned limestone façade of the store draws inspiration from the iconic Damier pattern, originally created by Louis Vuitton in 1888. Unique to North America, the architectural detail sets the Royalmount location apart. Inside, the inviting ambiance is enriched by the use of natural materials, such as petrified wood, shell, and stone, giving the store an organic yet modern feel.
Complementing the design is a curated collection of contemporary art that transforms the retail environment into a gallery-like experience. Works by renowned artists, including Lautaro Cuttia, Heidi Spector, and Benna Holden, energize the space with bold colours and abstractions.
Particularly striking is a piece by Canadian artist Jonathan Forrest, whose rainbow-hued acrylic chevrons add vibrant depth to the space. Additionally, vintage Louis Vuitton advertisements and catalog entries from the brand’s Paris archive are displayed, creating a dialogue between the brand’s storied past and its innovative present.
Design-build firm SAJO was responsible for bringing the store to life. SAJO also is building the new Tiffany & Co. at Royalmount that will open in several months.
Louis Vuitton at Royalmount in Montreal. Photo: Brad DicksonLouis Vuitton at Royalmount in Montreal. Photo: Brad Dickson
Presence in Canada
Louis Vuitton’s presence in Canada spans several decades and includes a growing network of stores in key cities. The first Louis Vuitton location in the country opened in 1983 at 110 Bloor Street West in Toronto. The store marked the beginning of the brand’s expansion in the Canadian luxury market. Over the years, Louis Vuitton upgraded its Toronto footprint, moving to an 18,000 square-foot Maison at 150 Bloor Street West in 2012. The flagship location, which remains the brand’s largest store in Canada, showcases Louis Vuitton’s full range of products, from accessories to ready-to-wear.
Vancouver was the next major city to host Louis Vuitton when a concession opened at Holt Renfrew in 1987. The brand’s first standalone store in Vancouver followed in 1996, located at the Fairmont Hotel Vancouver. This store was significantly expanded in 2010 to a 10,000 square-foot space, making it the first Louis Vuitton Maison in Canada.
Montreal’s relationship with Louis Vuitton dates back to 1989, with the opening of a concession at Ogilvy. Louis Vuitton has maintained a presence in the building, now Holt Renfrew Ogilvy, since then.
Louis Vuitton also operates concessions at Holt Renfrew in Vancouver and Toronto (Bloor Street and Yorkdale). A source told Retail Insider that earlier this month, a high jewellery purchase of about $5 million was made at Louis Vuitton’s Vancouver concession at Holt Renfrew, breaking records for the brand.
The existing infrastructure, particularly near rapidly growing urban centres, relies on outdated systems plagued by lost mileage and inefficiencies. Distribution centres with cooling and freezing capacity are few and far between, forcing trucks to cover unnecessary distances, often resulting in higher costs and delays.
The lack of adequate cold storage facilities near large urban centres often leads to redundant transportation, with products traveling back and forth between locations. For example, food might bypass nearby stores en route to a distant cold distribution centre before being redistributed back to those same stores, adding excessive mileage and causing delays.
While grocers like Walmart and Kroger are experimenting with promising new distribution models, the overall cold chain is challenged by high construction costs, sustainability concerns, and complex regulations that make it difficult to build and upgrade cold storage facilities to meet changing demographics and consumer demand.
How lost miles add up
Many of the existing cold storage facilities were built 20 to 30 years ago, following the ‘hub-and-spoke’ model, similar to the Sears distribution system in Industrial America. In this model, grocery retailers and their third-party logistics (3PL) partners rely on a few major distribution centres spread across the country, each serving as a central hub for all their stores.
This outdated grocery supply chain model has not kept pace with changing demands in the U.S., where online grocery sales are predicted to grow at a compound annual rate of 4.5 per cent over the next five years, more than three times the 1.3 per cent growth rate expected for in-store grocery sales, according to a Brick Meets Click’s forecast. As grocers expand into fast-growing U.S. markets like the Sun Belt, cold distribution inefficiencies are becoming more pronounced. The distance from stores to central cold storage hubs has grown, making older facilities less effective for modern supply chains.
Peter Kroner
“Many of the cold distribution centres for grocery retailers are significantly older and more outdated compared to what we’re seeing elsewhere in the supply chain,” said Peter Kroner, Director, Industrial / Supply Chain and Logistics Market Intelligence for Avison Young.
Canada faces similar challenges, especially in metro areas like Greater Toronto. Population growth over the past five to 10 years has outpaced the development of cold chain infrastructure, creating a lag in distribution.
Flash-frozen vegetables, for example, might be processed at a rural manufacturing facility, sent to a nearby 3PL, and then transported hundreds of miles to a major retail distribution centre—only to be sent back to another 3PL in the wrong direction before finally reaching the stores.
People generally prefer not to have food production facilities like hog farms near their homes. The separation between agricultural zones and populated areas further compounds ghost miles.
The fast expansion of e-commerce has led to more sophisticated and reliable supply chain models built on layered distribution systems—from hefty central hubs to smaller peripheral and last-mile fulfillment centres—although the cold supply chain for grocery items has been slow to adapt, increasing carbon emissions and fuel costs. Grocery retailers are now beginning to address these lost miles and inefficiencies as part of their ESG (Environmental, Social, and Governance) initiatives.
Warren D’Souza
“There will always be some ghost miles, but right now, we’re seeing a lot of redundancy, which happens because gaps in the network need to be filled. If the nearest distribution centre is 200 miles away, you have no choice but to go there. By building closer facilities, we’re creating new stopping points.” said Warren D’Souza, Senior Manager, Market Intelligence, National Industrial Lead for Avison Young.
Advancing the cold chain system and eliminating ghost miles
While progress is slow due to the high costs of developing cold storage facilities, some large grocers are beginning to lessen their reliance on faraway distribution centres by building multiple facilities that better serve growing urban areas. In Canada, major chains like Loblaw are adding cold storage on the periphery of cities, anticipating population growth in the next 20 years.
In the U.S., Walmart is opening five automated cold storage and freezer facilities, each costing over US$1 billion. The distribution centres are strategically located, with more storage capacity and cost-effective operations, to address sustainability issues and overhaul the old cold chain logistics models.
In addition, Walmart is using its existing store locations as fulfillment centres, with floor space dedicated to collecting orders, packing for delivery, and curbside pickup. Using stores for fulfillment can reduce lost miles, but grocers need to ensure it doesn’t deplete shelves for in-store shoppers.
Meghann Martindale
“The biggest challenge for retailers is balancing convenience with maintaining the in-store experience. When online orders are fulfilled directly from the store floor, it can deplete shelves and frustrate in-store shoppers. Grocers are faced with the difficult task of growing delivery and curbside pickup options without compromising the ease and experience of shopping in-store,” said Meghann Martindale, Principal, Director Market Intelligence, Retail for Avison Young.
Grocers are trying to find the right mix. Some, like Trader Joe’s, focus solely on the in-store experience, while others, like Kroger, are investing in fully automated fulfillment centres with freezing and cooling capacity and on-demand delivery. With its Ocala series in Groveland, Tampa, and Jacksonville, Fla., Kroger can service the entire Florida market without having any physical storefront locations.
Modern cold storage buildings are taller, with 70 to 80-foot clear heights that allow for higher racking systems, maximizing storage capacity. These fully automated ‘dark facilities’ require minimal human intervention. Features include insulated floors and advanced cooling technologies to prevent ground freezing and ensure consistent temperatures throughout the cold chain, enhancing food safety from the warehouse to the stores and consumers.
What’s next?
As these modern, strategically located cold storage facilities come online, they have the potential to eliminate inefficiencies and lost miles by reducing unnecessary transportation and helping grocers meet sustainability goals.
For grocers looking to stay competitive and meet evolving market demands, investing in a modern cold chain logistics system is crucial for securing future success.
