Dep City: Montreal’s Convenience Stores

dep1.jpg

If Montreal seems saturated with dépanneurs, that’s because it is: 1,127 crowd the island, about one for every 1,500 people. Since they emerged in their current form in the 1970s, the descendants of tobacconists and once-ubiquitous corner grocery stores, dépanneurs have become an inextricable part of life in Montreal.

They also are an important but often overlooked aspect of the city’s economy. For business owners, many of whom are immigrants, dépanneurs represent a rare field of work that poses virtually no barrier to entry, aside from a relatively small amount of capital.

“An immigrant arrives in this country with a degree, with skills, but cannot find a job because he doesn’t have Canadian experience,” said Bakr Ibrahim, a professor at Concordia’s John Molson School of Business who specializes in small business and ethnic entrepreneurship. “For one reason or another, he cannot gain employment in mainstream (fields), so the first thing he knows is to start a business on his own.” Increasingly, however, independent dépanneurs are under pressure from corporate convenience-store chains and from supermarkets, so the independent operators need to be ever more nimble and attuned to the market they serve, which can be as small as a few blocks.

For example, Yodh Ubhi, who owns a dépanneur on Park Ave. in Mile End, has begun selling “heat and eat” Indian food made by Aliments Nutrifresh Ltd., a prepared-food supplier based in St. Laurent. He said the move was based on requests from customers who had travelled to Toronto and noticed many convenience stores there served prepared food.

In some neighbourhoods, dépanneurs have expanded their offering by selling fruits and vegetables, meat and ethnic products. That’s the case in Park Extension, said Ubhi, who has lived there since the early 1980s. “There’s very cutthroat competition” in that area, he said, adding that South Asians who operate dépanneurs know the competition’s prices because “they go to every different store and make their own prices cheaper. They buy bulk and they sell fresh meat, too.”

dep2.jpg

Profit margins in the dépanneur trade are thin. Alimentation Couche-Tard Inc., the Laval company that operates 5,600 convenience stores across North America – including about 360 in greater Montreal – reported $196.4 million in net income on $12.1 billion in revenue for its fiscal year ended last April. Figures for independent operators are hard to come by, though online listings for recently sold dépanneurs provide some indications. One dépanneur in Montreal West, which was recently sold for $349,000, claimed an annual gross revenue of $1.68 million and a profit of $166,560. Dépanneurs in less-affluent or lower-traffic areas often post far lower earnings.

In Montreal, where the density of dépanneurs is much higher than in the rest of Quebec, independent owner-operated stores predominate, adding a layer of complexity to the market that is sometimes missing in rural and suburban areas. According to the city of Montreal, the vast majority of dépanneurs in the city – 81 per cent – employ fewer than five people. Many independent owners work long hours and rely on family labour to keep costs down.

In Montreal, dépanneurs have long benefited from provincial laws designed to protect them from supermarkets. Since the 1970s, laws regulating store opening hours have given the advantage to small businesses with few employees. Minimum beer prices – currently fixed at $2.73 per litre of beer with five per cent alcohol by volume, or $5.81 for a standard pack of six bottles – have been established to prevent large stores from undercutting smaller ones.

Now, though, those laws are beginning to change. Last year, Quebec loosened its restrictions on store opening hours, allowing supermarkets to remain fully staffed until later in the evening. This spring, a new anti-tobacco law will force dépanneurs to remove their cigarette displays, which could potentially hurt business.

“We’ll always need dépanneurs in the neighbourhoods, but they have to adapt,” said Yves Servais, assistant director of the Association des marchands dépanneurs et épiciers du Québec, which represents about 1,000 independently owned dépanneurs across Quebec. “There’s an increasing number of corporate dépanneurs, so independent owners have to be aware of what’s going on. They need to offer good prices, a nice ambience.” Recently, the association has been advising its members to “personalize” their services. “They can offer prepared food, sell well-priced microbrewery beer,” Servais said. “There are ways to keep up.”

Concordia’s Ibrahim agrees. “Most successful dépanneurs know their niche very, very well and try to cater to that particular niche,” he said. “They’re serving the neighbourhood, they’re aware of the cutthroat competition from the large chain-food operations, but they’re positioning themselves to serve the market in a different way.”

dep3.jpg

This article was originally published in the February 9, 2008 edition of the Montreal Gazette

This entry was written by Christopher DeWolf , posted on Saturday February 09 2008at 08:02 pm , filed under Canada, Society and Culture and tagged , , . Bookmark the permalink . Post a comment below or leave a trackback: Trackback URL.

Comments are closed.