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Nordstrom Rack Plans Canadian Debut

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Nordstrom President Blake Nordstrom has revealed that off-price Nordstrom Rack will enter the Canadian market in the fall of 2017. This is a considerable delay, as Nordstrom Rack initially intended to open Canadian locations not long after Nordstrom opened its first full-priced store at Calgary’s CF Chinook Centre in September of 2014. 

Nordstrom says that it plans to open as many as 20 Canadian Nordstrom Rack stores. It will face competition from Saks Fifth Avenue‘s Saks OFF 5TH, which plans to open approximately 25 Canadian stores. Nordstrom has indicated that much of the product carried in its Canadian Rack stores will be from its full-line Canadian stores, as opposed to OFF 5TH which primarily carries made-for-outlet product. 

Landlords have told us that they have been in talks with Nordstrom Rack, and that several Canadian locations have recently been under negotiation, particularly in Western Canada. We have been asked not to discuss these locations at this time. 

In 2013, sources told us that Nordstrom Rack had secured several Canadian locations, with its first to open at Ottawa Train Yards. In the spring of 2014, Nordstrom announced that it was delaying bringing Nordstrom Rack to Canada, citing rapidly expanding Target‘s struggles with its Canadian operations.

Saks recently revealed that it would open a 30,000 square foot OFF 5TH at Calgary’s CrossIron Mills in September of 2016, and sources say that OFF 5TH has secured space in all three major Western Canadian metropolitan areas, with announcements expected to be made shortly. Saks OFF 5TH’s first Canadian locations will open next spring in Ottawa (Tanger Outlets Ottawa), Niagara-on-the-Lake (Outlet Collection at Niagara) and at Vaughan Mills, north of Toronto.  

Innovate or Die: Empire Club Talk with Canadian Tire’s Michael Medline

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By Manny Alamwala

The Canadian Tire Corporation is a Canadian retail legend. It has survived the ups and downs that economy has thrown at the retail industry in the past 70+ years; recessions, international competition, digital revolution. As the old adage goes, the only thing harder than getting to the top is staying at the top. This is what current CEO and Canadian Tire veteran, Michael Medline, knows all too well. We have seen it too often with companies at the top of their game, only to a note in history books (example: the great Canadian retailer Eaton’s).

On October 14, 2015, Michael Medline delivered a talk at the Empire Club of Canada around the theme “Innovate or Die”.  At the end of the talk he made a bold statement of Canadian Tire’s new vision:

“To be the most innovative retailer on the planet.”

It is no secret that Mr. Medline is a great advocate for pushing innovation, which can be seen by massive changes that have occurred at Canadian Tire and all its brand in the last 3 years: $300 million investment towards digital, creating tech labs all over Canada (especially in the tech hub of Waterloo).  He noted the investment will only continue in the next 3 years as Canadian Tire pushes to lead instead of follow.  The investments are starting to show outstanding results which is positively affecting the bottom-line:

  • Digitally enhanced customer experiences at Sport Chek flagship locations,
  • Moving Sport Check to a completely digital flyer,
  • 140,000 sq ft interactive showcase Canadian Tire flagship store in Edmonton,
  • Digital loyalty program with 8 million members,
  • Click and collect,
  • Enhanced eCommerce site,
  • First retailer in Canada to have an innovation lab.

Innovation is about disrupting business models and finding new ways to delight customers, Mr. Medline highlighted 3 things innovative companies do well:

  1. Leapfrog the competition: If retailers in Canada play catch-up, they will get crushed. Being a follower is too slow in the fast changing world of retail today. Mr. Medline mentioned that the CTO is just as important as the CFO.
  2. Play your own game: Take advantage of your own competitive advantage instead of looking at others. Just because Amazon is testing drones, doesn’t mean that Canadian Tire will be jumping on that as well.  Leverage your own assets.
  3. Dream big, act old: If your vision is not called a little crazy, you’re not trying hard enough.

Michael Jordan missed thousands of shots, missed, failed and that is why he succeeds.  Retailers must be willing to take a lot of ‘shots’ to win.  Stepping out of the comfort zone and taking risks is the only way innovation will happen.

Mr. Medline is not scared of the future, but rather embraces it and takes control of it.  Brick and mortar stores are here to stay, retailers must not look at eCommerce as a threat, but as an opportunity. The shift in consumer behaviours is creating an exciting environment for retailers to rethink how people interact with brands and the store.  Mr. Medline believes in the Canadian tech scene and sees Canada as an innovation force to be recognized globally. With that, he put out a challenge to all Canadian retailers to bring their A-game because Canadian Tire will be making bold moves in the near future to be the “most innovative retailer on the planet.”

Manny Alamwala has retail in his blood with 10+ years of experience from the sales floor to the corporate office.  He is the founder of thetieshop.ca, which provides stylish men’s accessories at affordable prices for Canadians.  Manny is on a path to be a change leader in the retail industry by embracing, implementing and utilizing technology.

 

Many Canadian Retailers Not Achieving Optimal Balance of Capital Allocated to Growth: Study

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A new research study finds that only 20% of retailers are investing optimally in their future growth. This is concerning, considering unprecedented competition from pure play e-tailers, new international entrants, and expanding discount chains. We interviewed the retail expert who interviewed top executives at 20 chain retailers for this study, to gain insight into what retailers in Canada and the United States are doing to effectively allocate capital to the right combination of growth strategy initiatives, as well as what can be improved.  

The study, which was conducted by leading retail consultancy HRC Advisory, found that 80% of retailers surveyed lacked the right combination of growth strategies including new stores, e-commerce, m-commerce, omni-channel, and remodelling existing stores. The study found that only 10% of retailers prioritized remodelling and refreshing existing locations, while the majority focused on opening new stores. The study also found that the same 80% of retailers lacked clarity on the return-on-investment surrounding e-commerce and omni-channel investment initiatives, and that only about 20% of retailers surveyed planned to expand internationally.  

In the survey, the 20% of retailers that are ‘getting it right’ are effectively balancing capital spending across channels, not to mention sharply increasing their total capital spending in 2015/2016 to fund their growth and operating strategies. As a result, this group is able to most effectively connect their brick-and-mortar stores, e-commerce and fulfillment centres as well as adding new stores and remodelling their flagships and other key store locations. The same study found that the remaining 80% of retailers are spending approximately the same amount of capital as in prior years, primarily using internally-generated cash flow as the source of capital. 

According to HRC Advisory CEO Antony Karabus “2015/2016 is the high-water mark in total capital spending for the 20% of retailers that are getting the balance of capital spending right,” and that “Disciplined capital allocation is one of the most important ways in which a CEO and CFO can influence a retail chain’s profitable growth. Striking the right balance between the key strategies to optimize the growth trajectories of a retailer’s online and brick and mortar assets is crucial”. Mr. Karabus then went on to describe that his findings included “evidence that only the 20% of surveyed retailers with strong balance sheets and access to capital are comprehensively investing in all of the key e-commerce and omni-channel capabilities, adding new stores and remodelling the top stores in their existing store fleets – all of which are necessary to transform retailers to reflect today’s increasingly digital shopping environment. As a result, these retailers are positioned for an even stronger future as they are investing to provide the consumer with a more consistent, upgraded experience across all interactions in all channels.”  

Mr Karabus interviewed the CEOs and CFOs of 20 chain retailers for this HRC Study in the specialty sector (70%, including apparel, accessories, home and footwear), department store sector (15%) and discount sectors (15%). The study was conducted in the spring/summer of 2015, adding to previous retail research studies conducted by Mr. Karabus between 2008 and 2011. About 60% of the participating retailers were private and 40% public. 

To gain clarity and to find Canadian examples, we interviewed Antony Karabus about HRC Advisory’s study. Mr. Karabus described how a number of retailers doing business in Canada are optimally investing in their brick-and-mortar operations, as well as online and omni-channel initiatives. Mr. Karabus discussed Canadian Tire’s new South Edmonton Common prototype store, which features technology innovations such as a driving simulator to test tires, and a virtual deck to plan patios. Under the same corporate umbrella, Sport Chek’s West Edmonton Mall flagship prototype, also technology-heavy, was reported by Retail Insider to have experienced tremendous sales increases relative to its previous mall location. Mr. Karabus also discussed remodelling of Canadian luxury retail stores, providing examples of Holt Renfrew’s upgraded Yorkdale Shopping Centre location, and how its bright interiors and personal shopping suites keep consumers engaged. Further, Mr. Karabus noted that Harry Rosen’s stunning store remodels are a very good examples of effective capital cost allotment, particularly as shoppers continue to shop in physical stores and to provide effective differentiation strategies relative to the e-commerce retailers selling better mens wear. 

Indigo has done an exceptional job in the transformation of its business, according to Mr. Karabus, from a bookstore to what it describes as a “cultural department store”. The general merchandise categories are an well curated assortment of both proprietary and branded product that complements its dominant book business well. The remodelling of its Yorkdale (and other selected locations) store to add the dedicated Lego and American Girl shop-in-stores are exceptional and can be argued to have “changed the game” relative to other traditional bookstores,” he said. 

Although many Canadian retailers were late to the e-commerce game, Mr. Karabus noted that it’s not necessarily a bad thing. Although some retailers may have to play ‘catch up’ in an attempt to gain market share online, these same retailers didn’t need to incur costs and time investment required by early-adopters, many who learned through inefficient trial and error. 
 
For more on this study, please see the following links via the HRC Advisory website: 

Study: Omnichannel Key to Success [Women’s Wear Daily]

HRC Advisory Study Finds 80 % of Retailers Have No International Expansion Plans [Sourcing Journal]

Study: Retail Industry a Bit Stumped on Growth Strategies [Retail Dive]

HRC Advisory: Retailers Must Reconsider Digital Age Investments [HomeWorld Business]

Q&A with HRC Advisory CEO Antony Karabus: Many Retailers Underestimate Importance of Remodels [Chain Store Age]

HRC Advisory Study: Retail Industry Divided on Growth Strategies, Capital Spend [Chain Store Age]

Mackage Opens First Freestanding Canadian Location [Photos]

Mackage CF Carrefour
Mackage CF Carrefour

Upscale Montreal-based fashion brand Mackage has opened its first freestanding Canadian location at CF Carrefour Laval in suburban Montreal. The 2,133 square foot store features Burdefilek-designed interiors “reminiscent of a ski chalet with wood beamed ceilings and wood floors. The mix of materials used for fixtures includes bronzed black metal, cerused oak paneling and black honed marble,” according to Mackage co-founder Elisa Dahan.  

Next week we’ll be interviewing Mackage’s co-founders to gain insight into plans to open more freestanding Canadian locations. Below are photos of the Laval store, provided by Mackage. 

Founded in Montreal in 1999 by Eran Elfassy and Elisa Dahan, Mackage is known for its detailed, tailored outerwear in leather, down and wool for men and women. It also boasts a successful accessories business, including a line of handbags featuring a signature arrow embellishment.

The company is part of fashion conglomerate APP Group, which also includes upscale clothing brand SOIA & KYO. The company’s only other freestanding store is in New York City’s Soho area.

In Canada, Mackage sells its products in a number of retailers including Holt Renfrew, Harry Rosen, Aritzia, La Maison Simons and Mendocino, among others. It is also available in the United States at upscale retailers including Bloomingdale’s, Saks Fifth Avenue and Neiman Marcus.

Simons Brings American-Style Luxury Designer Departments to Canada’s Suburbs

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Popular Quebec City-based large-format multi-brand retailer La Maison Simons is bringing luxury designers to Canada’s suburbs, including markets which have traditionally seen such brands locate exclusively within downtown department stores. This Thursday, October 15, Simons will open at West Vancouver’s Park Royal, featuring a roster of pricey women’s and men’s ready-to-wear designers that have been previously unavailable in any suburban Lower Mainland shopping Centre. Several of Simons’ other suburban stores also carry pricey designer brands and in the case of Edmonton, Simons’ West Edmonton Mall store carries a more comprehensive women’s ready-to-wear designer selection than any downtown store. 

The West Vancouver Simons, spanning in excess of 100,000 square feet, will feature a variety of pricey ready-to-wear brands. If the West Edmonton Mall store is any indication, Simons’ Park Royal location could carry women’s clothing brands such as Balmain, Barbara Bui, Chloé, Dries Van Noten, Moschino, DSquared2, Hervé Leger, Mary Katrantzou, Missoni, Versace, Vivienne Westwood and others. Similarly, Simons’ men’s collections feature a stellar selection, including brands such as Christopher Kane, Kenzo, Jil Sander, Marc Jacobs, Moncler, Raf Simons, and others. Toronto-based menswear retailer Harry Rosen has operated a number of suburban locations for years, featuring a wide assortment of designer goods from some of the world’s top designers. We’ll therefore focus on women’s luxury ready-to-wear designers which until recently, have been carried primarily in downtown department store locations. 

In the Vancouver area, larger-format ready-to-wear designer floors can be found at Holt Renfrew, Nordstrom, and ‘The Room‘ at Hudson’s Bay. All three of these stores are downtown, either within or connected to CF Pacific Centre. In some respects, Vancouver is behind cities such as Toronto, Montreal and even Calgary, Edmonton and Quebec City, as each of these cities feature large suburban stores with top-priced women’s designer fashion floors. 

Simons’ suburban Quebec City Place Ste-Foy flagship features a roster of luxury brands, similar to West Edmonton Mall designers listed above. The same can be said for the company’s suburban Montreal location at CF Carrefour Laval, which features an assortment of brands rivalling Simons’ multi-level downtown Montreal unit. In many respects, Simons pioneered the suburban Canadian women’s designer floor in Quebec, with the concept expanding into Alberta in October of 2012 with the opening of Simons’ 126,000 square foot West Edmonton Mall location. 

Prior to opening at West Edmonton Mall, Edmonton’s only luxury women’s designer floor, if it can be called that, was at the relatively small Holt Renfrew in the downtown Manulife Place. Holt’s Edmonton carries almost no luxury women’s clothing designers, save for a Burberry concession on the store’s second floor. What remains is a collection of contemporary-priced designers, paling in comparison to the roster of luxury clothing brands featured at Simons’ Edmonton store. It should be noted that in Edmonton, Holt Renfrew carries a variety of top handbag and shoe designers (such as Valentino and Gucci), not to mention a Louis Vuitton concession. Simons, in comparison, carries a very limited selection of leathergoods and footwear for men and women, and Simons lacks the shops-in-stores and concessions characteristic of Holt Renferw. 

Toronto’s top suburban women’s designer floor is at Holt Renfrew’s Yorkdale Shopping Centre location. Although it carried a variety of luxury brands prior to its substantial expansion, it wasn’t until last year that the store added womenswear brands such as Giorgio Armani and Chanel to its mix, creating a designer selection rivalling any suburban North American department store. Holt’s 122,000 square foot Mississauga Square One location will also feature luxury women’s designers when it opens next spring, as will Saks Fifth Avenue Sherway Gardens when it opens on February 25, 2016. 

Seattle-based Nordstrom introduced its upscale women’s Collectors department to its suburban Calgary CF Chinook Centre store when it opened in September of 2014. The Calgary Collectors department currently carries brands such as Missoni, Escada, Roberto Cavalli, Akris Punto and St. John Knits, all previously unavailable in suburban Calgary. Nordstrom will also feature an expansive Collectors department in its Yorkdale store when it opens in the fall of 2016, as well as a smaller Collectors department at its CF Sherway Gardens location, set to open mid-2017. As well, sources say that Nordstrom is looking to open at least one suburban Vancouver-area store, which could also feature a Collectors department. 

As Saks Fifth Avenue continues its Canadian expansion, sources say that it could open suburban stores in Vancouver, Calgary and Montreal. Each of these would carry a variety of top women’s clothing brands, with sources at Saks confirming that it has secured womenswear labels such as Lanvin, Oscar de la Renta, Givenchy, Carolina Herrara, Valentino, and others for its Canadian stores. 

 

AllSaints to Open 3rd Canadian Location

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British fashion brand AllSaints will open its third Canadian location at CF Toronto Eaton Centre, this fall. AllSaints will occupy space C28 in the mall, replacing fashion retailer Mendocino on level three. Mendocino’s former retail space measures just under 2,000 square feet, and it sits adjacent to a vacant 1,842 square foot retail space which will become an UGG store. 

AllSaints’ first Canadian location opened in April of 2013 at Toronto’s Yorkdale Shopping Centre. The 6,600 square foot store is located in the mall’s southwest wing which opened in the fall of 2012. A second Canadian store, measuring 2,237 square feet, opened in June at Vancouver’s CF Pacific Centre, below the mall’s new flagship Nordstrom

AllSaints was founded in 1994 in Spitalfields, U.K., and the brand has grown to over 70 free-standing retail locations worldwide. It has 16 free-standing U.S. locations in major cities including New York City, Boston, Los Angeles, Las Vegas, San Francisco, Miami, Washington, D.C., Santa Monica and Seattle, as well as four outlets. It also operates concessions within many American Bloomingdale’s locations. The brand retails menswear, womenswear, footwear, and accessories. The brand is known for being ‘edgy and directional’ with a muted palette dominated by blacks, browns, whites, and grays. The company’s retail stores feature interiors of exposed brick, weathered wood and metal. Store exteriors usually feature windows with antique sewing machines framing each store’s entrance.

Please Take a Moment to Vote Retail

In only a few moments, you can send a pre-drafted email to your local federal election candidates telling them about the importance of retail to Canada’s economy. Retail employs over 2.2 million Canadians, making it our largest private sector employer. With annual sales in excess of $350 billion (excluding vehicle and gasoline sales), retail also drives Canadian growth and jobs. 

You can send a pre-drafted letter by clicking this link —-> VOTERETAIL.CA

Retail Council of Canada has developed four policies to help retailers of all sizes in the industry to remain competitive in light of global competition, as well as to provide meaningful and stable jobs. These policies include: 

  • Lowering merchant credit card fees (which are among the highest in the world),
  • Eliminating import taxes on consumer goods that drive retail prices higher,
  • Maintaining the $20 maximum duty exemption for goods purchased online from abroad, and
  • Recognizing the importance of retail by supporting Canada’s merchants by developing an industry strategy that supports small, mid-size and large retailers.

The initiative’s goal is to ensure local candidates understand the impact of retail on their community and how, if elected, they can support Canada’s retail sector. At the moment, federal parties receive a ‘D’ grade based on their retail policy and strategy submissions to the Retail Council of Canada. These responses are on the Voteretail.ca website

“We are disappointed and troubled by what we’ve heard from the parties so far,” said Diane J. Brisebois, President and CEO of Retail Council of Canada. “While there is some support for selected issues, as a whole the parties just don’t get it. Canada’s retail industry is a key economic driver, responsible for 2.2 million jobs in malls and main streets in every community across the country. But it is also an industry that is going through a period of unprecedented change with the rise of e-commerce, mobile shopping and regulatory policies that continue to challenge our competitiveness.”

David Wilkes, Senior Vice-President of Government Relations for Retail Council of Canada adds: “Whoever forms the next government must have a comprehensive agenda in place to foster a strong and buoyant retail industry.” Wilkes went on to say that “As always a key focus for Retail Council of Canada is ensuring that government policies do not have the effect of driving Canadian prices higher. Higher prices often result in fewer products being available to consumers and ultimately drive consumers to retail options that do not benefit the Canadian economy”.

Steve Madden Launches New Concept Store in Canada

PHOTO: CF TORONTO EATON CENTRE

American footwear brand Steve Madden has launched a new multi-brand shoe concept in Canada, and it plans to open multiple locations across the country. Called SHOO by Steve Madden, its first Canadian store recently launched at CF Toronto Eaton Centre

As it expands, ‘SHOO’ locations will feature Madden-owned brands such as Steve Madden, Freebird, Betsey Johnson, Dolce Vita, Brian Atwood, Blondo and others. Shoes, handbags, accessories, and footcare products will be included. Brian Atwood is a particularly remarkable brand, given its high prices and limited availability at The Room at Hudson’s Bay in Toronto and Vancouver. 

A Steve Madden company representative noted that the CF Toronto Eaton Centre SHOO location is in its ‘infancy’, and that it will carry more of the company’s brands next spring. In 2016, as well, Steve Madden will look to expand its shoe concept into other Canadian markets, utilizing brokerage Oberfeld Snowcap. The broker’s website says that Steve Madden seeks retail space in the 2,200 to 2,600 square foot range for SHOO, ideally in enclosed malls. 

SHOO’s first Canadian location is located in the recent Level 2 expansion at CF Toronto Eaton Centre, formerly occupied by Sears. The 71,000 square foot expansion opened last month, featuring about 25 retailers. In September of 2016, Nordstrom will open a 213,000 square foot three-level flagship directly above the expansion. 

Antony Karabus, CEO of leading retail consultancy HRC Advisory, commented: “Madden’s new multi-brand concept will benefit the company by providing additional brand exposure and typically more substantial vertical margins from selling its own brands, not to mention being able to expand their distribution within a controlled retail environment. Consumers will also benefit by gaining access to a variety of popular footwear brands in the new SHOO stores, including the popular Steve Madden namesake brand”.

Mr. Karabus further described how “competition in the Canadian retail footwear category is increasing meaningfully as consumers gain the benefit of additional choices from new chains and well-curated assortments to buy footwear. DSW Canada has opened very strongly with 13 stores already and 4 additional stores announced, resulting in parent Town Shoes Limited increasing market share. Relatively new online retailers such as Shoes.com also continue to gain market share in Canada”.

Swatch Continues Canadian Expansion with New Locations

PHOTO: SWATCH

Popular Swiss timepiece brand Swatch continues to open freestanding Canadian locations. Last week, the brand opened a corporately-owned location at West Edmonton Mall. Early next year, Swatch will open a new Montreal location, as well as a replacement store at Burnaby’s Metropolis at Metrotown

The new Edmonton store measures 825 square feet, and is located on the mall’s second level near the World Waterpark. It neighbours the mall’s UGG store and is up the hall from popular brands Tiffany & Co., Coach and Michael Kors. Swatch’s interiors feature fabric walls that allow for easy interior modification, and will be customized on a seasonal basis. ‘Touch and feel’ tester panels contribute to an interactive customer experience. The store features about 600 waches, including Swatch’s new kids brand, Flik Flak

Swatch currently operates seven Canadian stores, including locations in Burlington ON (Mapleview Shopping Centre), Burnaby BC (Metropolis at Metrotown), Calgary (CF Chinook Centre), Mississauga (Square One), Montreal (two locations – downtown and CF Carrefour Laval) and West Edmonton Mall. The brand is also featured in shops-in-stores across Canada, as well as kiosks at CF Toronto Eaton Centre and Yorkdale Shopping Centre. Swatch says it could eventually operate as many as 15 to 20 freestanding Canadian stores, depending on real estate opportunities. 

Links of London to Open 1st Free-Standing Canadian Store

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U.K. luxury jewellery brand Links of London will open its first free-standing Canadian location at Toronto’s CF Sherway Gardens in March of 2016. The brand currently operates six Canadian concessions, all within Holt Renfrew. Sherway will be the brand’s sixth freestanding North American store. 

Links of London was founded in 1990 and has grown to become a global luxury brand. In July of 2006, the company was sold to Greek conglomerate Folli Follie SA. The name ‘Links’ signifies the brand’s famous men’s cufflinks, though collections include accessories, jewellery, timepieces and gifts for both genders.  

Holt Renfrew features six Links of London concessions at all locations except for Holt’s Montreal store. A source at the company says that Links will also open a concession at Holt Renfrew’s Square One Mississauga location when it opens in March of 2016.

Links of London currently operates five freestanding U.S. locations, with stores in New York City (two locations), Las Vegas, Boston and Short Hills, NJ.