Living/Working

May 25, 2018

Zero-waste retail game plan gaining traction in Vancouver

Second bring-your-own-container store set to open as Vancouver bans single-use plastics

Nada buyer and supplier relationship manager Alison Carr at the new Vancouver store: “no plastic or paper bags, only reusable items” | Chung Chow

Vancouver’s zero-waste movement could be more economically viable than merely trendy as Nada, a grocery store where customers bring their own containers, is set to open on the corner of Fraser Street and Broadway in June.

The zero-waste store will be the second such venture in the city, following the Soap Dispensary/Kitchen Staples expansion into groceries in September of last year. They join other stores across Canada, including West Coast Refill in Victoria, Nu Grocery in Ottawa and Épicerie Loco in Montreal.

The success of these businesses could demonstrate that low- to no-waste shops can survive and thrive in a rapidly evolving and increasingly environmentally aware retail marketplace.

The City of Vancouver recently passed motions banning single-use plastics such as straws and foam containers by June 1, 2019, with aims to reduce plastic bags and coffee cups as part of a drive to be the world’s greenest city by 2040.

Stores like Nada are the embodiment of the zero-waste movement and are eager to help consumers and businesses see alternatives to single-use plastics. The store, which operated as a monthly pop-up in Kitsilano for two years, won’t have any disposable containers for walk-in customers looking to get produce or other groceries.

“No plastic or paper bags, only reusable items,” said Alison Carr, Nada’s buyer and supplier relationship manager, in a conversation with Business in Vancouver.

She said the store will encourage customers to bring containers and work with organizations to provide reusable bags.

“[Owner] Brianne Miller started the pop-ups to test the model,” said Carr. “We were doing incredibly well; with only a few hours and a few volunteers we covered costs and then some.”

But groceries are a low-margin industry, which entrepreneurs attempting to run zero-waste stores are quick to recognize.

For Linh Truong, owner of the Soap Dispensary/Kitchen Staples on Vancouver’s Main Street, that means looking for alternative revenue sources.

“I realized immediately that we can sell food but [should] offset that with merchandise,” said Truong.

Her store sells spices, oils and other pantry goods alongside higher-margin items like lunch-box sets and reusable toothbrushes.

“It’s not that different from a conventional grocery store,” said Truong. “You have chocolate bars right at the till to offset that broccoli.”

Truong started operating Soap Dispensary in 2011 as a bring-your-own-container store for soaps and shampoos. She added food products in 2015.

From the beginning, she could tell there was a demand for stores following a similar model despite difficulty starting out.

“I had people reaching out to me from around the world asking me to franchise within the first month. We lost money for the first three months of running the store, but people wanted me to franchise? It was encouraging.”

Truong added that she sees other zero-waste stores opening to immediate success and receives weekly requests for help from entrepreneurs looking to start their own stores, including Nada and two other businesses opening in Chilliwack.

“Everywhere I look, I see [zero-waste stores] thriving and expanding.”

Truong’s store expanded to 2,000 square feet from 500 in seven years, and newer stores like West Coast Refill doubled their space in only six months.

But compliance with Vancouver Coastal Health (VCH) regulations prevents a lot of conventional grocers from allowing reusable containers in their stores and was a key reason Truong did not expand her store into grocery sales earlier.

“In 2013, [VCH told me] that they would shut down a business that has customers bringing their own containers,” said Truong, “but I talked to a different agent in 2015, and they were super supportive.”

Although there is no law preventing customers from bringing their own containers to use in grocery stores, it’s up to individual health inspectors to determine what is unhygienic.

Stores like Whole Foods Market, which once allowed customers to bring their own containers, are therefore at the mercy of different health inspectors. Truong said that some suppliers didn’t want to work with her store because they didn’t want to get in trouble with VCH.

In an email to BIV, VCH affirmed that it’s working with the City of Vancouver to amend food safety and sanitation plans to accommodate reusable containers.

Until then, businesses considering moving to reusable containers should contact VCH to avoid any potential problems or failed inspections, which is what Nada did.

Like Soap Dispensary, Nada will also seek cash flows outside of groceries, but each store has a different focus. Nada will also sell products like reusable containers and straws, but a new initiative will be a snack and smoothie bar, which Carr said also allows the store to use produce that’s not perfect for shelves.

The City of Vancouver’s recent decision on single-use plastics has many businesses looking for such alternatives, and, according to Lisa Papania, a professor at Simon Fraser University’s Beedie School of Business, businesses will be lowering costs in the process.

“It’s five times cheaper to use reusable containers,” said Papania, citing a Government of Quebec study on reusable coffee cups.

Papania has been lecturing on business strategy and innovation for 15 years and has been running her own zero-waste business, Lupii Cafe in Champlain Heights in Vancouver, since 2015.

She understands that for businesses, the upfront investment necessary to have reusable containers can seem insurmountable.

“I was in the same position when we were starting up,” said Papania. “A dishwasher for $1,000 and reusable cups for $1,000 is high [for a startup], but a month from now it’s a no-brainer.”

Papania noted that upfront investment can generate significant reductions to marginal per-cup costs and that stores will have made their money back within 43 uses of a cup. In her eyes, the onus is on banks and the government to allow startups the room to make these investments.

“We make it impossible for startups.”

Papania added that the government should again offer to match funds for some startups, and that banks shouldn’t limit them with onerous restrictions.

news@biv.com

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Trending
 
Spending

PNE releases concert line-up for Summer 2018

Acts include the Village People, Boyz II Men, the Goo Goo Dolls, Burton Cummings and Cyndi Lauper

The Village People are set to appear September 2 at the PNE | Shutterstock

Vancouver’s Pacific National Exhibition (PNE) has released its concert schedule for this year’s fair, and acts run the full gamut from pop, country, R&B and rock to throwback 80s and 90s concerts.

 

The concerts run every evening that the PNE is open, starting August 18. Shows are free with fair admission, but reserved seating is available for a fee at www.pne.ca.

 

This year’s schedule:

 

Saturday, August 18:

Boyz II Men

 

Sunday, August 19:

Air Supply

 

Tuesday, August 21:

Dean Brody

 

Wednesday, August 22:

Goo Goo Dolls

 

Thursday, August 23:

I LOVE THE 90S TOUR – Featuring Salt-N-Pepa with Spinderella, All-4-One, Color Me Badd and Young MC

 

Friday, August 24:

Wilson Phillips

 

Saturday, August 25:

Marianas Trench

 

Sunday, August 26:

LOST 80S LIVE – Featuring A Flock of Seagulls, Men Without Hats, Wang Chung, Farrington & Mann, Animotion and Nu Shooz

 

Tuesday, August 28:

112 featuring Slim

 

Wednesday, August 29:

Kool & the Gang

 

Thursday, August 30:

Jann Arden

 

Friday, August 31:

Burton Cummings and Band

 

Saturday, September 1:

Chicago

 

Sunday, September 2:

Village People

 

Monday, September 3:

Cyndi Lauper

 

For more information about this year’s attractions, visit www.pne.ca.  

 
Exploring

What are we reading? May 25, 2018

Shutterstock

Each week, BIV staff will share with you some of the interesting stories we have found from around the web.

 

Kirk LaPointe, editor-in-chief, vice-president of Glacier Media

The future of a driving tax in our region is in the pages of the Mobility Pricing Commission's final report:

https://www.itstimemv.ca/uploads/1/0/6/9/106921821/mpic_full_report_-_final.pdf

 

Darryl Pinckney examines the phenomenon of Ta-Nehisi Coates - The New York Review of Books

http://www.nybooks.com/articles/2018/06/07/ta-nehisi-coates-afro-pessimist-temptation/

 

The Atlantic summarizes the rise and fall of Lil Tay, the Vancouver-based child rapper - The Atlantic https://www.theatlantic.com/technology/archive/2018/05/the-lil-tay-saga-reaches-its-logical-conclusion/561116/

 

Timothy Renshaw, managing editor:

From the stranger than fiction file: Arctic Today item on how re-introducing mammoths into northern landscapes could help reduce arctic carbon emissions - Arctic Today
https://www.arctictoday.com/resurrecting-mammoths-help-stop-arctic-emissions/

EIA report on the potholes in the road to electrified vehicle adoption: Electrified vehicles continue to see slow growth and less use than conventional vehicles - U.S. Energy Information Administration
https://www.eia.gov/todayinenergy/detail.php?id=36312&src=email#

 

Glen Korstrom, reporter:

This CBRE report discusses the expansion of retail around the globe – what sectors have the brands that are most expanding, and to what locations. Vancouver had the second-most, new international brands and they tended to be in the luxury segment. Getting this report requires registration but it is a free download here - CBRE

https://researchgateway.cbre.com/PublicationListing.aspx?PUBID=6235b51c-9f82-4212-a72e-88bee3d7cf86#

 

Albert Van Santvoort, reporter:

There is a lot of confusion surrounding how money is created and the differences between money the government creates and money the government borrows through issuing bonds. In this two-part World Bank blog post, the authors present an accounting perspective on the creation of money and help explain how private banks and governments create money. - World Bank blog

http://blogs.worldbank.org/allaboutfinance/accounting-view-money-money-equity-part-i

https://blogs.worldbank.org/allaboutfinance/accounting-view-money-money-equity-part-ii#one

Often the spending debate in Canada surrounds whether the federal government should be spending money rather than how it spends money. Working off of ideas highlighted in the World Bank Blog posts about taking an accounting view of money, this post from the Director of Health Policy at the School of Public Policy, University of Calgary, Jennifer Zwicker discusses how we spend healthcare dollars should be considered. Zwicker highlights how social spending is needed to provide better healthcare outcomes, more efficiently.- HuffPost Canada

https://www.huffingtonpost.ca/jennifer-zwicker/social-services-improve-health_a_23434453/ .

 

Tyler Orton, reporter:

Starbucks previews anti-racial bias training curriculum - Seattle Times

https://www.seattletimes.com/business/starbucks/starbucks-previews-anti-racial-bias-training-curriculum/

 

UK military fears robots learning war from video games - BBC

www.bbc.com/news/uk-politics-44217246?ocid=socialflow_twitter

 

Under The Skin: Why That 'Arrested Development' Interview Is So Bad - NPR

https://www.npr.org/sections/monkeysee/2018/05/24/614009165/under-the-skin-why-that-arrested-development-interview-is-so-bad

 

Emma Crawford Hampel, online editor:

Are Quebec media slightly ahead of our time? While most outlets, English and French, are feeling pressure, French language news outlets face an added strain in that they are seen as being responsible for cultural preservation  - Globe and Mail

https://www.theglobeandmail.com/canada/article-are-quebec-media-slightly-ahead-of-our-time/

 

Carrie Schmidt, editorial researcher:

The Holy Grail of Video Game History is Probably an Office Memo - Atlas Obscura

https://www.atlasobscura.com/articles/video-game-history-foundation-grail-preservation-ephemera

 

Anna Liczmanska, editorial researcher:

Summer reading list from Bill Gates – Fast Company

https://www.fastcompany.com/40574793/these-are-the-books-bill-gates-says-to-read-this-summer

 

Nelson Bennett, reporter:

Europe’s Freezing Winter May Exacerbate Global Warming - Bloomberg

https://www.bloomberg.com/news/articles/2018-05-24/gas-supply-crunch-thwarts-europe-s-plans-to-kill-off-coal-power

Cooke Aquaculture in New Brunswick to use Norwegian 'thermoslicer' to treat fish with sea lice – Truro Daily News

http://www.trurodaily.com/business/cooke-aquaculture-gets-high-tech-sea-lice-treatment-206116

 
Leading

Don’t let private equity misconceptions ruin a good business deal

When it comes time to sell your business, private equity inevitably becomes a hot topic of conversation.

I’ve had clients express many different views on private equity – some favourable, some not so favourable – and perceptions are often based on a variety of anecdotes, myths and misconceptions.

It doesn’t help that private equity (PE) got its start in the 1980s as the “leveraged buyout” approach. At the same time, Michael Douglas left a lasting impression on baby boomers when he famously portrayed Gordon Gekko in Wall Street. “I’ll be swimming with sharks” is the prevailing fear about getting involved with PE, but it’s not always justified.

In a typical PE transaction, you sell 75% of your business at today’s value and keep 25% to be sold in the future (the PE firm buys using a combination of equity and debt). After the transaction, you and your management team continue to run the business for the next five years. Together you expand the business over that time, then sell the company for more money, and everyone wins. That’s an oversimplification, but you get the idea.

The success of this formula has created almost 4,000 private equity firms globally, targeting almost every industry. And, given the large number of PE funds currently out there chasing transactions, it’s time to clear up the common misconceptions. Here are the top five we see in our advisory practice:

1) Private equity firms are all the same

Private equity suffers from a differentiation problem. Firms tend to get lumped together, when in reality their differences can be dramatic. The most important differentiator is the people. Business owners should never make a selling decision based on valuation alone and should always meet with a few firms to determine the right fit. The right PE partner should share your goals, support your growth plans and be a good fit for you personally.

2) There’s so much money out there, PE will buy anything (and overpay)

I wish this one were true, but in reality, private equity is highly selective and careful about valuation. In fact, most businesses are not a fit for private equity based on size parameters alone (for “platform” investments – meaning their first investment in a sector – most PE firms are targeting businesses with $5 million of earnings and up). For the most part, PE firms are financial investors, not operators. Without synergies or an existing investment in your industry, their valuations are bound by the reality of return requirements, cost of capital and growth expectations. While solid and competitive, PE valuations can be somewhat clinical.

3) PE will ruin my business with debt

This one can be a risk, but most reputable PE firms that enjoy successful partnerships with business owners will use leverage conservatively and intelligently. So, if the valuation from a private equity investor seems too good to be true, check the fine print. It’s probably due to soul-crushing debt assumptions.

4) When PE buys my business, I lose control and everyone quits or gets fired

It’s true that when you sell a majority (which most PE firms prefer), you lose technical control. However, consider this: they don’t run the business day to day, and the success or failure of the investment is essentially in your hands. So, who’s really in control? Good PE firms value the management team and people above all else (that is, in fact, who they’re backing with their money).

5) They’ll nag me more than my in-laws

Most entrepreneurs are not used to having a boss. The good news is that strong PE firms are not micromanagers. While reporting and governance structures can be an adjustment, my clients have found that oversight can create a better management structure and add value. After all, the CEO job can be lonely, and PE can bring senior and strategic insight to a private business.

In 2017, PE firms invested in an estimated 8,000 businesses globally, and they have more than $700 billion of capital to invest. The industry has evolved significantly from its early years. In my practice, about 45% of sale transactions involve a PE purchaser, so they’re an important category of buyers.

The right PE partner will offer more than money. A strong PE firm can enhance your management team, help find and fund new markets, and provide operational support and the equity capital needed to expand the business. So, rather than accepting misconceptions about private equity, it’s better to explore the options for yourself. 

Ken Tarry is co-founder of Sequeira Partners in B.C. He has more than 18 years of experience advising clients in Western Canada in diversified sectors on a wide range of transactions.