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Will food halls come back?

Once a staple in Canadian department stores, food halls are poised for a big revival as Saks comes north of the border with a plan to feed shoppers

REMEMBER FOOD HALLS? MAYBE YOU shopped at one with your grandmother when you were a kid.

You might have picked up Christmas candies at Eaton’s in Toronto or bought fancy, imported chocolates from La Maison Ogilvy in Montreal.

From roughly the 1950s to the ’80s, most downtown department stores in major Canadian cities had a food hall. The concept has long been popular in European department stores, where food halls traditionally sell fresh foods, such as pastries, prepared meats and cheeses, as well as home meal replacements and high-end packaged goods, such as jams and fine chocolates. They also usually house a café or restaurant, often both.

Most food halls disappeared from the Canadian retail scene when mall shoppers abandoned them in favour of the more affordable and culturally diverse cuisine available in food courts. But the food hall concept may be ripe for a resurgence here. And it seems Saks Fifth Avenue will be leading the revival.

When Saks opens its doors in Canada in spring 2016, it may be banking on the food hall concept to attract customers.

Saks has two food halls planned for the Toronto area: one in its Toronto Eaton Centre location, the other in Sherway Gardens mall. Both will be operated by Pusateri’s Fine Foods, which has three of its own stores in Toronto.

It’s likely Saks’ Sherway Gardens location will open its food hall first, but that depends on construction schedules, says Shawn Rusich, director of public relations at Butter PR, Pusateri’s agency of record.

Both locations are still in the early stages of planning and development. Saks, Pusateri’s and HBC (which acquired Saks for US$2.9 billion in July 2013) declined any comment on how much square footage will be devoted to the food halls.

The Saks at Toronto’s Eaton Centre will cover roughly 150,000 sq. ft. Retail Insider reported the Saks at Sherway Gardens will be an estimated 130,000 sq. ft., with a food hall of 25,000 sq. ft. Anthony Stokan, partner at Toronto-based retail consultancy Anthony Russell, predicts Saks’ food halls will be a bit smaller, covering 10% to 15% of square footage at most. In the case of Sherway Gardens, that would mean a food hall in the range of 13,000 to 19,500 sq. ft. “The footprint in these food halls is typically much smaller than what we would find in the European and American food market,” Stokan says.

European food halls, which are a vibrant part of the retail scene overseas, have developed astronomically over the past century. Harrods, which began selling dry goods and tea in 1834, now sells everything from fine pastries, cheeses and chocolates to local delicacies such as jellied eels, and imported treats such as beluga caviar.

Restaurants at Harrods offer everything from high tea to pub food to bespoke picnic baskets to take away. The food halls at Saks are likely to be modelled after their European counterparts, but not as extravagant as Harrods.

While none of the parties involved with Saks are sharing details on its upcoming food offerings, Rusich believes the concept “would be a little bit different from a Pusateri’s store, but maintain the brand.”

Pusateri’s is expected to do what it does best, says Maureen Atkinson, senior partner with J.C. Williams Group in Toronto, “by providing home meal replacements, finding things that are unusual and importing specialty items.”

Most analysts doubt Saks’ food halls will make much of a dent in traffic for grocery stores. A mom doing a weekly shop isn’t likely to fight downtown traffic and park at the Eaton Centre, even if there is a valet.

“The question is less about whether the average Canadian shopper will accept it, but how well it resonates with the affluent shopper,” says Kenric Tyghe, a consumer and retail analyst with Raymond James in Toronto. “The effect on grocery stores will be negligible at best.”

The food halls will likely drive some traffic into Saks, says Tyghe. But finding a way to make money from that traffic is key. If it can, it may whet the appetites of other retailers.

“It’s too early to tell whether or not Canadians will embrace the new model,” says Will McKitterick, an analyst for IBISWorld in New York. “But if the new food halls are a success, expect Saks’ competitors to react–perhaps with their own food halls.”

At least one analyst believes food halls are here to stay. “I think they’re coming back as a permanent fixture,” says Millie Ho of Retail Category Consultants, a Toronto-based retail strategy consulting firm. “You’re seeing a lot of online shopping now. Retail executives are thinking more about foot traffic. One way is to add more things that people need frequently, like food.”

It’s true: people gotta eat. But whether they’ll start leaning on food halls to do so remains to be seen.

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