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 several days.
Zellers at Erin Mills Town Centre (Image: Erin Mills Town Centre)
Craig and Lee discuss the relaunch of the iconic Canadian retailer including what’s in-store, and Craig’s opinion of the success of the future of the new Zellers concept. Included is a discussion on Zellers’ new Anko line and its various categories, which has seen success at Kmart Australia where it first launched.
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Announcer 0:00 This is a Retail Insider podcast. You’re listening to “The Weekly”.
Lee Rivett 0:08 Welcome to this week’s episode of “The Weekly” by Retail Insider. I’m Lee Rivett and I’m joined with the owner and publisher of Retail Insider Media, Craig Patterson, to discuss this week’s most read articles on retail-insider.com. So thanks for joining me, Craig!
Craig Patterson 0:22 Hello, everyone.
Lee Rivett 0:25 Craig, on March 22nd, you had the opportunity to head over to Scarborough Town Centre, and look at the new Zellers location that opened. You’re quite impressed so you wanted to have a podcast on that, which is very exciting, because we’re going to be getting one in downtown Vancouver as well, but it just hasn’t opened yet. So Craig, tell me about your Zellers visit.
Craig Patterson 0:46 So I wasn’t I mean, I sort of knew what to expect when we saw the Zellers because we were told what the concept was about. So just as a bit of a recap, what the Hudson’s Bay Company has done is it’s relaunched the Zellers brand. These are shopping stores within existing Hudson’s Bay department stores in Canada. Each of these shopping stores are somewhere between about eight and 10,000 square feet. So they’re about 1/10 the size of these Zellers stores that people would have known that existed up until about a decade ago in Canada.
Lee Rivett 1:15 What do they look like?
Craig Patterson 1:16 The appearance of these new Zellers 2.0 (as we’ve coined it) definitely looks like the old Zellers stores in terms of the aesthetics – with the red and the white and the branding and the logo. So it’s very much a nostalgia play that could work at least to get people in the door initially. But I can tell you a little bit about what I experienced inside the space because I was pleasantly surprised, at least with the products and what was there.
Lee Rivett 1:42 Walk us through it like you’ve got there and what happened?
Craig Patterson 1:45 So got into the Scarborough Town Centre location, it was Tuesday evening, the stores open to the public on Thursday, and had a look around and we had an opportunity to shop the store as well. So there was a little bit of a talk about what Zellers is and the product and then they basically just sent us on our way there was a DJ music and, some food, we got to try some of the food that would be in the food trucks, which are driving around Canada to these different Zellers locations.
Lee Rivett 2:10 So Vancouver hasn’t opened yet, which locations have opened for Zellers?
Craig Patterson 2:15 On Thursday, 12 of the 25 announced Zellers stores open to the public and then – well Lee, you’re in Vancouver, so you have to wait a little bit, you’re getting one in downtown Vancouver, but the remainder of those 25 initial locations will open and I was chatting with some Zellers people there and even the president of Hudson’s Bay was there, or The Bay I should say. And there are plans for more locations, nothing was confirmed in terms of the actual locations. But if this is successful, and takes off, there could be more is what the official word is, I suspect there will be a few more at least
Lee Rivett 2:44 I was very confused. When you came back from that location and was super excited about the products that were there. For me, that was a big question mark (mystery) because what was Zellers going to do to try to make it relevant and make it interesting for people to have a reason to come in. So Craig, tell us about that as your excitement was completely a surprise for me.
Craig Patterson 3:06 I had written an article already about this and done a little bit of homework around the core brand, which Hudson’s Bay is brought with Zellers into these Zellers shop-in-stores. Now this brand is called Anko which is a brand, which originated in Australia through Kmart, Australia. It’s their private label. And this brand showed tremendous success in the Australian market to the point that the company said, “Well, let’s distribute this around the world to other retailers so that they can also have this brand within their stores”. Brilliant move on their part, the first international market outside of Australia, where Anko is now being distributed, of course, is within Zeller stores here in Canada, and we’ll see more of this in some other countries. We’re saying that I read an article in the Sydney Morning Herald from the gentleman that is involved in this in Australia. And he’s saying that there’s going to be more countries with more stores having this as well.
Lee Rivett 4:01 What what did the Anko brand products look like?
Craig Patterson 4:06 So I got to actually see this Anko line in action or guy got to see the products within the Zellers stores. And I have to say, I was quite impressed actually, with what’s on offer in terms of what the goods look like. Well, I could see in terms of I think, quality, I’m not the greatest person to judge that. But the pricing was absolutely tremendous. I don’t know if the “Lowest Price is The Law”, but it certainly was not that expensive overall. And I spent money there on that evening as well.
Lee Rivett 4:33 Wow. And that’s quite a testament since you actually bought some of the product as well. But what makes it such a darling product in your thoughts?
Craig Patterson 4:39 I think the Anko line is interesting, because it’s actually, in my opinion, quite a bit better than what Zellers used to have before. In terms of I remember the old Zellers of about 10 years ago, and it had a private label line called “Truly” which was introduced in 1999. And it had other products and other categories as well and some of the quality was good I mean they had other brands that were there that you know people would would definitely want to buy. But the “Truly” line itself I don’t think was was overly innovative or even that attractive. It wasn’t something I think people aspired to get but this new Anko line from Kmart Australia, I found it to be quite urban, it’s quite modern, it’s something would actually really work in a place like downtown Toronto I think because a lot of these products – say the furniture line and whatnot – could really work for say a small apartment that person might have. The home goods are again quite modern looking. Something that would work say in an urban environment.
Lee Rivett 5:36 That’s cool and so where did the name ‘Anko’ come from?
Craig Patterson 5:39 The Anko name itself is quite interesting. So up until about 2018, Kmart Australia had a few different brands under this private label umbrella for its fashion line it had “Clothing and Co.”. So this was clothing & co. And then for home goods it had “Home and Co.”. For children’s wear and whatnot it had “Kids and Co.” and “Active and Co.” was the athletic wear by the way, the gym stuff is great. And I would say I own quite a bit of it again, what I purchased last week, but what Kmart Australia did in 2018 Was it renamed everything to simplify things to “Anko” so instead of “Clothing & Co.”, now the name is “AN” and then the “K” for Kmart (referencing the retailer which you know founded everything) then “O”. So that is where “Anko” came from. So it’s completely a derivative from Kmart Australia.
Lee Rivett 6:40 For myself I’m very impressed with what you’ve been describing. For me Zellers has products that are coming from an international success story from Kmart, as well as having a little bit of that nostalgia to pick up on. So how successful do you think this is going to end up being?
Craig Patterson 6:56 Now, I think that this sellers concept could be successful if people come back into the stores. Chatting with people from Zellers last week, they were saying that more products are coming in, I spoke to someone that does some of the buying. So this Zellers concept keeps bringing in new Anko stuff. And if Canadians want to buy it, and it’s something that’s receptive, which probably it will be, I think, I mean, I think the line is great, I’ll buy more. And I think, you know, this could be something which would really take off. I don’t know how much this is going to drive in terms of huge profits for the Hudson’s Bay Company just given that these are smaller stores, but the buzz that’s being seen here with this new Zellers concept, people are coming into the Hudson’s Bay stores…
Lee Rivett 7:36 I just want to pause on that for a moment. You were saying that one of the strategies for having the Zellers pop up within the larger Hudson Bay store was to try to draw foot traffic into the larger Hudson Bay store – to drive sales, right? So are you thinking that maybe people are going to be just coming in for the Zellers pop up and bypassing the broader Hudson Bay store (because that would be not necessarily a successful strategy then for Hudson Bay overall)?
Craig Patterson 8:03 Now, I was told I mean, I’ve had a lot of people giving me feedback already that they weren’t necessarily seeing people shopping in other parts of the Hudson’s Bay store, even though these Zellers around opening day (and a bit after) we’re very, very busy. But in theory, this could actually be something which would drive extra sales per square foot within Hudson’s Bay stores. So I really do hope this is successful. I wasn’t as optimistic before I actually saw it in terms of I thought, “Oh, Jeez. This is an effort which could potentially fail but but I’m cheerleading this one right now, because we haven’t seen a lot of brands being revived and succeeding. But in this case here, I think sort of the kitchiness of the original Zellers concept, coupled with the fact that this is actually some pretty darn good stuff. There’s some other brands in there as well, I should say, I saw some Disney Toys and some Mattel and Crayola crayons and, you know, in the kids section and whatnot. So there are a few little other brands in there, but I’m sure at least 80% of the stuff there is from this one, individual Anko line. So, you know, again, I’m cheerleading this, I hope that the Zellers concept really does take off. I’ve got some ideas on how they could revamp this and I think I want to speak to someone about it, but I won’t give away that information just yet. Because who knows, they may use it and then we’ll see.
Zellers at Hudson’s Bay in Sunridge Mall, Calgary, AB (Image: Mario Toneguzzi)
Lee Rivett 9:12 When besides the Anko brand, is there any reason why you think shoppers may be coming into the Zellers pop up besides the nostalgia factor?
Craig Patterson 9:21 That’s a good question. Actually. I mean, I think it’s going to come down to people discovering new products because the Zellers shop-in-stores themselves don’t have the restaurant and this is something that people were definitely requesting, sadly, maybe more so than even the store itself. They almost should have started maybe with a restaurant concept and had some merch or something, but maybe that’s not the best strategy either. But nevertheless, I’m being honest about that, I think new products are going to have to come in and new locations. For this Zellers to I know for myself living in downtown Toronto, it’s quite hard for me to get to either the Scarborough Town Center, which would be the easiest in theory for me to get to on the subway, it’s kind of a soap and then an LRT trip, or something like Erin Mills Town Centre, which is really not that accessible to me without driving a car. So I think you know that downtown stores would work. So I think more locations are going to be important. This food truck situation, “Will that drive traffic to these other stores?”, in theory, probably, I mean, if people want to have that full experience, they may get some food from these trucks when they’re in the Zellers locations (outside the stores, that is, you’re not driving them through a store inside) but this may create a bit of an event atmosphere, I don’t know how often by the way food trucks are coming in, but this event atmosphere that’s going to be created when the food trucks are there could in theory, again, just bring people in for the Zeller stores. So maybe they’re going to need to have those trucks zipping around the country continuously, I don’t know. And at the prices they’re charging, which are pretty low for the food, you know that I don’t know what margins are there, it might be a loss leader, ultimately, just given the cost of goods and services, transport and labor.
Craig Patterson 11:01 But again, I think it’s going to come down to the Anko product. Are people going to be receptive? Someone like me, do I need new bedsheets? Am I going to look at the Anko line? Well, actually, probably I will. But also, I think that the online channel is going to be really important for Zellers because I know for myself, I do like the underwear line, not to give too much information. I guess it’s not really but I the next I actually want to buy more, but I’m going to do it online because the stores for me being this downtown person, they’re not as accessible. But I know what that how they look and how they fit and I’ve seen the furniture and I’ve seen the blankets and everything. So if I want more stuff from from Zellers and I definitely am considering this as a brand, the Anko brand specifically for a few different things furnishing my home here and there as I upgrade little things. We all seem to do that. Yeah, this is definitely a consideration that’ll have your I like the stuff because the prices are, I think lower than IKEA. And in on a lot on a lot of stuff. And I mean, things like essential oils, I bought this as a gift for someone, but they were $5 each and apparently they smell really nice. He was telling me so quite interesting there that that’s low, low prices for stuff that also looks nice. I mean, this is not bad looking stuff in terms of the packaging.
Craig Patterson 12:11 It’s almost a lot better than the old Zellers I would say. There’s a gentleman I forget his name. He’s a comedian, and he’s a singer. And he did a song about Zellers being better than I remember. And I kind of thought, oh, geez, because this is before I got to go visit. I’m like, Oh, come on. Really, this is a marketing play. This is just so silly, whatever. But I got into the actual Zellers. And I thought, Well, ya know, he’s right. I mean, well, the old Zellers couldn’t have been much worse. That’s the problem, I think, at least in my opinion, because the old stores have 10 years ago, they didn’t look that nice, they kind of smelled funny. You know, the product wasn’t amazing. I mean, it wasn’t a place that most people would really aspire to shop at. I hate to say that and I don’t want to sound snobbish saying that, but that is my opinion of what Zellers was. I would shop at these new stores if they were near me, or I’ll shop online for the product. So in theory, yeah, no, this is better than the old Zellers. At least for someone like myself, that’s a bit more of a modern urban dweller looking for certain products, and the great prices are always going to be a benefit as well. So this could be a slam dunk if things are executed properly and if people come back and and keep shopping.
Lee Rivett 13:15 Didn’t Anko open independent stores in western the United States? It’s great that they’re going to the wholesale kind of relationship with Zellers right now, but this is not the first time that this Australian Kmart brand has come to North America, right?
Craig Patterson 13:31 In about 2018 Kmart Australia started opening these little Anko stores in the United States. It was part of a planned rollout to bring the brand in with retail stores. So they opened up a little pop up stores and then they built a flagship store in the suburb of Lynnwood (right by the I think it’s the Alderwood Town Center shopping mall) was about 18,000 square feet. But in 2020 with the pandemic Anko closed these stores because the pandemic disrupted everything from the supply chain to people shopping, even people going out of their home. So unfortunately, this shutdown so this new newly released Anko is now a wholesale situation. So instead of taking that risk of opening all these new stores that are standalone for Ankle. Kmart Australia is wholesaling this brand to the retailer so they’re taking this risk and they’re distributing things so Anko doesn’t have to pay this rent for these stores.
Craig Patterson 14:31 I have a peek on the boxes as well. I also now have some product at home because I was able to buy it but it does say important for the Hudson’s Bay Company so these are items that are actually have been brought in. If you actually look on that was a few days ago anyways on the Zeller’s website, I was zooming in on a few of the products and it said you can see on the box there’s something about for Kmart, Australia and New Zealand and an even had something about Lynnwood, Washington. I think these are some old products and some old photos they were just putting them on and I’d have to go I can check honestly to see if they’re still there, but it doesn’t matter. It’s if that’s not what you’re seeing in the stores anyways.
Lee Rivett 15:05 Do you think there’s going to be any retailers in Canada that would be worried about how successful this Anko brand is going to be in the pop up if it takes off?
Craig Patterson 15:16 There are a few competitors out there that could be at least a little bit impacted by this new Zellers 2.0 and it’s Anko line. I’m just thinking the kitchen goods at this new seller seemed really good. There was lots of knives and forks and plates and, and all kinds of other stuff of kitchen appliances. This could certainly impact retailers like say in Ontario, I don’t think it’s something outside of Ontario. “Kitchen Stuff Plus”, kind of a discounter of kitchen goods. I don’t even shop there anymore, unfortunately, because we just have a store on Young Street and Yorkville and they shut it down. And for some reason I seem to be a bit of a physical shopper. Even though I can buy all the stuff online for some reason I still like going into the stores and even if I can buy it online, I still like to see it sometimes it which is silly. But anyways, I haven’t bought anything from “Kitchen Stuff Plus” since they closed that store, not even online or anything. But other brands – I was in a Winners store yesterday and I thought “Oh geez, there’s lots of categories and Winners”. I should say more HomeSense perhaps because this is connected to this particular Winners. It’s kind of a dual store. Lots of categories, but some of the prices at Winners were higher than the Zellers. So I thought that was kind of interesting. I mean, and with Winners. It’s kind of a crapshoot in terms of what you’re getting, right. Sometimes certain things are in stock and others aren’t. So you know, they’re bringing things in, it’s really is far more reliable than say Nordstrom Rack to get certain things but Zellers with its ankle line this is this is purpose driven in terms of a brand and categories as long as they can keep it in stock, which hopefully they can sign if they can’t because people are buying it all and at Zellers. As long as they can keep that in stock, you know, it’ll be a reliable source for people to buy things and even retailers like IKEA. You know, like he has a gigantic store and these Zellers locations are teeny-weeny tiny in comparison, but certainly there is some a bit of market share that could be taken from Ikea, a little bit, the furniture area, a bit in the kitchen area. Any retailers that say sell pet goods could be impacted by this, because there’s lots of pet stuff and it’s really cute stuff. With this, this Anko stuff is Zellers really kitschy. So you never know. I mean, again, there’s lots of pet retailers out there and the pet industry is growing quite quickly. So there’s probably room for everyone but you know, not everyone’s going to need a ton of stuff over the years for pets. So if they move to a different brand don’t shop at a certain store that is going to have an impact. And then even I’m just thinking I mean at $5 for essential oils, I mean I’m not an expert and you know, the ultimate quality, retailer like sage, natural wellness, well, they’re not selling them at that price. So and I haven’t tried the bath bombs yet from Zellers, but you know, they’ve got these bath fizzies or whatever, I think they are bath bombs, nine for $9. Well, you know, it’s nine to $12 for one at Lush Cosmetics. They’re a little bigger at lush, but, you know, the price point at Zellers was was a fraction like 15% or less of what you’d be paying at the other store. So again, I think this is a bit of a concern. If a value shoppers are going to step away from other retailers to shop at Zeller specifically. That could be an interesting situation.
Lee Rivett 18:12 Any other final thoughts before we wrap up the podcast?
Craig Patterson 18:17 So since Zellers has opened its first 12 stores on Thursday, I’ve had all kinds of people messaging me on social media and texting and people checking it out. I would say that overall, there wasn’t a lot of negative feedback. I mean, maybe there’s some analysts saying this may not go on forever, you know, they’re gonna need X Y, Z, but even some of those analysts who might be a little bit contrarian or may not, you know, always say positive things in the press. Are giving me pretty positive feedback, at least on the product itself. People seem seem to like it. And I thought that was kind of neat. So one of the things that made the Anko line through Kmart Australia popular was people posting their purchases on things like Instagram and Tik Tok. And apparently, that social media presence really bolstered the brand in that country. And we’re seeing all kinds of social media now here in Canada about Zellers and people liking the product. It’s not tied nearly in the same degree to the word Anko. itself, but it certainly is, in terms of what’s available at sellers. So again, if this excitement continues, from people that are shopping in the store, if they continue to like the product and if Zellers and the team behind it, that’s doing the marketing continues to push the messaging out and try to get people excited about this. There could be legs here in terms of this concept being successful, at least for an extended period of time. So hopefully, that time extends indefinitely, because it’s kind of neat to have something back from the past, in terms of nostalgia, and finally, I mean, I think that we’ve come out of this pandemic and I think that you know, people have lost family members. We’ve got a situation where you know, The world just seems to have changed a whole bunch. And some people are kind of looking for a few things, memories of the past and even though this new Zellers isn’t what the old one was, maybe better I wouldn’t I don’t wanna say for worse, but maybe for better. I like this one better, but it just brings back a little bit of that nostalgia and remembering that things were a little bit different a decade ago. And sometimes I’d like to remember that as well. So at the same time, we always have to look to the future.
Lee Rivett 20:28 Well, thanks for going through this article with me. Well, it’s your trip that you went all the way to Zellers for and as well as writing about it. Other than that, I’ll chat with you next week. Craig.
Craig Patterson 20:38 Thank you so much, everyone for listening. Take care and bye for now.
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A new report says 2022 was the year that Canadian apparel retailing shook off the effects of the pandemic and by the second half of the year returned to normal.
“Not unsurprisingly, retail apparel sales increased 43.4 per cent in the first half of 2022, followed by a 9.9 per cent increase in the second half. During all of 2022, total Canadian retail sales increased 8.2 per cent, while just retail apparel sales increased 21.2 per cent after increasing by 16.3 per cent, during 2021. Last year retail apparel sales totalled C$33.6 billion, which was 7.7 per cent greater than sales in 2019, the year just prior to the outbreak of the pandemic,” said the report by Trendex North America, a marketing research and consulting firm.
“Driving the growth of apparel sales in 2022 was first and foremost the fact that apparel retailing was totally open in the first half of the year compared to a year earlier during which apparel retailing was in a lockdown mode. An estimated increase of 3.5 per cent in Canada’s GDP and a slowdown in housing sales resulted in Canadians having more discretionary income. One factor that can only partially be discounted was inflation. When it came to apparel inflation itself, was not an issue as apparel prices increased a miniscule 0.2 per cent. However. inflation’s overall rate of 6.8 per cent could have had a negative on discretionary apparel purchasing.”
Randy Harris, president and owner of Trendex North America, said the industry has returned to normal.
Randy Harris
“All of the negative effects of COVID on the market have now passed. They’re in the rear-view mirror if you will and now we’re returning to the degree of normalcy in the apparel market with very few threats that I can see to apparel sales for the coming year,” he said.
“There is no indication that inflation is having an effect on apparel prices at retail and inflation hasn’t gotten so bad yet that consumers are cutting back on their discretionary purchases of apparel.
“So for the first time in three or four years, it’s full speed ahead for the industry.”
The report found that men’s apparel sales (+27.8 per cent) increased at a faster rate than women’s apparel sales (+20.7 per cent) during 2022. The 8.1 per cent growth rate for children’s apparel was held down by heavy discounting in the segment.
“Not surprisingly as men transitioned back to an office environment, men’s suits/sport coats (+83.0 per cent) recorded the largest merchandise category sales increase. Tops/ bottoms, the largest mens merchandise category registered a 24.4 per cent sales increase, while both outerwear (+34.2 per cent) and accessories (+31.5 per cent) posted significant sales increases,” said the report.
“In the women’s market dresses/suites (+37.9 per cent), not surprisingly, in- creased as women returned to the office. Other women’s categories reporting strong increases included pants/tops (+24.2 per cent) the largest women’s category, followed by accessories (+19.5 per cent) and lingerie (+11.8 per cent). Of note, was that no adult merchandise category registered a decline in sales last year.
“Sales in apparel specialty stores, the largest channel of distribution for apparel, in- creased 23.4 per cent in 2022 and was up 6.9 per cent over 2019 sales. The largest provincial increases during 2022 in specialty store sales occurred in Ontario (+37.8 per cent) and Quebec (+18.9 per cent), while the smallest sales increase occurred in Saskatchewan (+6.6 per cent).”
Value Village Boutique on Queen Street (Image: Dustin Fuhs)
Trendex’s forecasting model indicates that apparel sales will increase by 4.5 per cent this year.
Harris said men stopped buying dress apparel two years ago. They weren’t buying suits and sportcoats. They had no reason to go out and purchase apparel.
“I think what you’re seeing is that for men you’re seeing delayed purchasing, meaning they postponed purchasing during COVID and now they’ve come back into the market,” said Harris.
“The bottom line. It’s back to normal. Everything’s good for the industry. No threats at all. I have not been this optimistic about the industry for at least the past three years.”
Store Closing Signage at Nordstrom Rack at 1 Bloor (Image: Dustin Fuhs)
The report said Nordstrom made a number of mistakes in the Canadian market:
Overestimating the potential of the Toronto metro market. Nowhere in the U.S. are these three full line Nordstrom’s stores physically so near to each other. As Nordstrom is in most cases a destination retailer putting three stores so close to each other did not add to sales. Rather it made it quicker/easier for the Nordstrom customer to shop, as evidenced by Nordstrom’s Vancouver store, which was its most successful. If Nordstrom had opened only two stores or even one in the GTA, it would have resulted in slightly less sales but far less costs;
Underestimating the competitive framework for the niche it would compete, this failure had three components: Loyalty – Canada’s two largest luxury apparel retailers, Harry Rosen and Holt Renfrew, both have passionate customer loyalty. Nordstrom underestimated the challenge it would have in developing a relationship with potential new customers; Store upgrades – After announcing its entry into Canada, both Harry Rosen and Holt Renfrew announced multi-million dollar store upgrade programs. As part of its upgrade program, Holt Renfrew rolled out its “World Of” concession program, while Harry Rosen expanded its luxury casualwear selection, and began to provide a first-class omni-channel experience; New competition – Again post Nordstrom’s Canadian entry Saks Fifth Avenue entered the market along with its Off 5th stores. Additionally, new foreign apparel retailers have continued to enter Canada;
Other factors – “While it is debatable whether Nordstrom could have foreseen the previously described events, it is this publication’s contention that the retailer could not have foreseen: COVID related shopping restrictions, which resulted in a 23.6 per cent decrease in total apparel sales during 2020 and according to Trendex, a 14 per cent decline in luxury apparel/accessories sales during the same year. The 47 per cent decline in annual foreign tourism during the period 2020-2022.
Harris said the demise of Nordstrom will benefit its competitors. Holt Renfrew, Harry Rosen, Saks Fifth Avenue and to a lesser degree Simons, The Bay, Marshalls, Aritzia and Canada’s better women’s apparel specialty stores will benefit from Nordstrom’s closure.
“Bottom line Nordstrom’s demise will mean that there will be a jump ball for its C$310 million apparel sales during 2022. However it should be noted that this amount, for comparison purposes, is only 40 per cent of Reitmans (Canada) C$777 million sales in the 12 month period ending October 2022. Additionally for Canadian apparel suppliers Nordstrom’s demise will have a minimal impact on their sales,” said the report.
After twenty years of being absent in the Quebec market, Tip Top, a Toronto-based menswear suit and casual fashion retailer, will be expanding into Quebec this year and is looking to renovate existing store locations in Canada.
“Right now, we are well down the road in our planning and are in the execution stage of our return in Quebec. So we are finalizing some lease agreements, and in the second half of this year, we will be opening a few stores in Montreal and Quebec City using our new small footprint store formats such as our new stores in Vaughan Mills and Markville,” says Lance Itkoff, the President and CEO of Grafton Apparel which owns Tip Top.
Lance Itkoff
Although the new locations are not confirmed yet, Itkoff said consumers should expect to see between two to four stores opening in Quebec in the second half of this year and is excited as he believes they will succeed this time as they are offering something that is different from other retailers in Quebec.
“We believe we have a competitive advantage over anyone else in Canada and we have something that is unique and different and something that is not currently being offered in Quebec, so we believe that it will resonate extremely well. We will open two to four stores to make sure we do it right, and to ensure it resonates with the customers in Quebec as the long term opportunity for us is to have around twenty stores in Quebec. I am confident that what we are doing now – nobody else is doing in Quebec.”
Tip Top at CF Markville (Image: Tip Top)Tip Top at CF Markville (Image: Tip Top)
With the new language law in Quebec, Bill 96, Itkoff says they want to serve the customers in Quebec the way they want it and are happy to be entering into the province as the brand can start off fresh and meet all the new regulations from the start.
In addition to expanding into the Quebec market, Itkoff says he is always looking for opportunities to expand more into Canada and fill in the markets where they are not currently and other areas such as the Greater Toronto Areas and Vancouver. As Itkoff does not have any stores opening right now or has set a goal to open an amount of stores this year – he rather will take opportunities as they come.
“We are not going to open stores unless it is absolutely the right location. We don’t put a number on the board with a set amount of stores, we are going to open up as many stores as we get the right opportunities in the right malls, the right space, and the right location in the mall. And as we are being shown those opportunities, we are in a great position to capitalise on it.”
As Tip Top looks for expansion opportunities, Itkoff says since the small format stores are working for the brand, they will keep moving forward with the new formats of around 2,200 square feet instead of 3,500 square feet as they look for future stores. Any new locations will be announced once they are finalized.
New Renovations Coming Soon
Tip Top Bramalea (Rendering: Tip Top)
Tip Top will be renovating twelve of its current locations this upcoming Spring. Going back to 2019, Tip Top opened its new prototype store with a redesigned experience for consumers and will focus on the new format as they renovate the twelve stores. The new formats will be designed to be event solution focused where men can find a variety of shirt colours, ties, and suits for any moment in their lives such as graduations or weddings – the “perfect solutions for events where people can find hundreds of different solutions that they could do to individualize their look.”
In the older formats, Itkoff says customers would have seen dark walls, dark ceilings, and dark fixtures.
“So in a lot of our stores in the older format you will see grey flooring, grey tables, grey slated walks and in our windows, you would have seen grey wall colours. And then on top of that, we put grey charcoal, black, and navy type suits – leading to a somber experience. In the new promotype, it is all about this light, bright, airy, accessible, and happy store experience.”
Itkoff says for the new formats, all the fixtures will not be the “heavy, clunky, chunky fixtures” they have had before, it will be brighter and more welcoming to consumers. The new concept was in conjunction with Shikatani Lacroix, a design firm in Toronto and started rolling out in 2019 and is planning on renovating twelve more this Spring with more on the way.
Tip Top (Image: Shikatani Lacroix Design)
In addition to renovating new store locations, Itkoff said they have also revamped its ecommerce platforms, its IT infrastructure with a new ERP and POS systems, and have a new Shopify platform where they can manage the inventory better for consumers where it allows access to all its inventory within the 125 stores across the country.
“At the end of the pandemic, we took a good hard look at what we felt the future was going to be for the brand and what assortments the brand will have. And we turned it on its head and we said we are all about outfitting that guy for his special day, that special moment, or that special event in his life – perfect moments and perfectly dressed. We changed everything about the merchandise and anchored the event shop and it worked phenomenally.”
The Tenor, 10 Dundas St. E. in Toronto. Image: BentallGreenOak
A prime retail space at the busiest pedestrian corner in Canada is coming available for lease. The adidas store at The Tenor, located at 10 Dundas East in Toronto will be vacating its premises, presenting an incredible opportunity for a new tenant to occupy the prominent location at the northeast corner of Yonge and Dundas Streets in downtown Toronto.
The retail space itself spans approximately 6,741 square feet on the ground floor, allowing for a flagship retail opportunity with extensive frontage and street front exposure along Yonge Street as well as Dundas Street. Signage opportunities are available on both streets, that allows for ample branding. Included as well are large access doors for the retail space facing onto the busy intersection.
An additional 2,731 square feet of mezzanine can be utilized for storage or other uses, making for a versatile space appropriate for a variety of tenants.
Soaring ceiling heights on the main floor reach 18’10”, creating a sense of volume that makes the retail space feel even larger. The new tenant in this space has an opportunity to create something that is both dramatic and experiential in terms of interior design.
Foot traffic in the area is unparalleled in Canada. An estimated 50 million people visit the Yonge-Dundas area annually, making it one of the busiest places in North America. Vehicle traffic is estimated to be about 5.5 million annually. More than 45,000 students attend the Toronto Metropolitan University (TMU) next door, and there are about 700,000 residents (and growing) within 5 km of the building. The busy Dundas TTC subway station sees about 26.6 million riders annually, many getting off right in front of the 10 Dundas Street East retail space in a building that was recently rebranded as The Tenor.
The Tenor complex, managed by one of Canada’s largest 3rd party property managers, BentallGreenOak, sees about 28.5 million annual visitors, and spans 13 levels with 340,000 square foot retail, office and entertainment space. The tenant mix includes a diverse variety of national brand retailers, restaurants, entertainment, and tourist attractions.
Signage opportunities on the exterior of the iconic building allow for ample branding, including potential exclusive naming rights via zoning-approved first-party rooftop displays which represent an incredible opportunity to create messaging that can be seen from a distance.
Unparalleled access to The Tenor includes direct access to the Dundas Subway and PATH network, as well as Green P parking available nearby.
Nearby, busy Toronto destinations include CF Toronto Eaton Centre across the street, Toronto’s Financial District, Yorkville neighborhood, several research hospitals, Toronto City Hall and Toronto Metropolitan University, among other draws.
The area is growing quickly with approximately 40 residential developments either proposed or under construction within a 1 km radius, which are estimated to add more than 17,000 residential units to the area in the coming years.
Securing this coveted corner retail space is a once in a lifetime opportunity. For more information, contact Jennifer Crispel, Senior Director, Leasing Retail Services at BentallGreenOak at:
The new state-of-the-art Stylephotos Studios has launched in Mississauga. The facility is a game changer for film and commercial production and other content creation needs.
The studio was created in close collaboration with the leaders in film production industry, including Arri, Mo-Sys, Movie-Tech, Absen, Leitz, and others. Located minutes from Pearson International Airport, the space spans over 12,000 square feet with dedicated areas for e-commerce content creation, a 75 foot by 16 foot curved flawless cyclorama and the most advanced 46 foot by 15 foot LED volume for the most immersive film and commercial shooting experience.
The e-commerce section of the studio is comprised of seven dedicated automated stations, catered to various product types to be depicted in the most efficient and appealing way. With a proprietary software developed by Stylephotos Studios, every client has a streamlined way to order content, monitor the order status, and consistently receive high quality results. With client retention rate of over 90%, Stylephotos Studios’ e-commerce division has proven to be a great success and a great assistance to online retailers, looking to create high volume of high quality content in an efficient and cost effective manner.
The overall studio space looks like something from a futuristic movie. As part of the cyclorama/ LED volume package, clients have an ability to rent and use the latest robotic arm that was sourced from one of the most renowned manufacturers located in the United Kingdom – Mark Roberts Motion Control. The studio currently has BOLT X available to clients, with Bolt Junior on order to be utilized with the LED volume. The robotic arms create outstanding video content for any type of application.
The LED volume itself utilizes the latest technology from Absen, Mo-Sys tracking, and Brompton processing. With this expansive LED volume clients are able to transform the shooting process from on-location to one centralized space. The screen is comprised of 252 LED panels from Absen, with 1.9mm pixel pitch resolution – something that allows for unprecedented quality of the video environment to be created for the scenes. The content is created through Unreal Engine, and is supported by the Brompton processors that create the magical scenes on the LED volume. Coupled with an array of Arri SkyPanels and orbiters above the cyclorama are and LED volume, the process of creating content has never been easier and more realistic.
One of the most important success factors is the abundance of the most advanced lenses (from brands like Leitz, Cooke, Angenieux, Orion, Sigma, and Arri) as well as state of the art camera lineup (Alexa 35, V Raptor XL, Phantom Flex4K, Sony Venice, and others). The studio itself has the most recent technological advancements in production hardware, from tripods to Movie-Tech Magnum dollies brought to Canada from Germany.
Bolt X Robot In front of The Cyclorama StageCamera attached to Bolt X Robot
The Stylephotos Studios has a dedicated area for food content creation, with a full set dedicated to cooking shows and food product commercials. Having the right tools and appliances readily available makes this studio ideal for shooting food related content, and with the assistance of Arri lights every shot will be simply perfect. Another bonus is that users do not have to rent the whole space at once – every section is modular and can be used at the same time individually by different clients. The studio also provides an area for models to change and get makeup done, a lunch room for staff and clients to have a break, a dedicated client area, and a shower (which could be used for shooting or for a conventional shower purpose).
Fully equipped, the studio is ready to open its doors to new clients and companies looking to create professional content while utilizing the best equipment, technology, space, and location.
*****
Retail Insider partnered with Stylephotos for this article.
The Combine at 225 WELLINGTON ST W in Toronto (Image: Dustin Fuhs)
The Combine describes itself as an experiment in progress.
It’s an ongoing experiment in transforming a conventional office into a community-driven space that blends making, shopping, learning, and living.
The concept, at 225 Wellington St. W. in downtown Toronto, inside the CBC building, is home to four creative agencies, a new cafe (bevy), event space and retail pop-up.
Sarah Spence
Sarah Spence, CEO of Tadiem, which is the parent company of the four agencies (Bensimon Byrne, OneMethod, Narrative and Folk), said The Combine is a physical and philosophical retake on the nature of work and workspaces.
“It’s about prioritizing things like collaboration, connection and it’s that understanding that as much as hybrid working is good, bringing people together is critically important and it makes our work better,” said Spence.
“So we have come up with this concept of The Combine which is all about transforming a conventional space to make it very community driven which is inspiring for our people and exposes them to more and it creates this very collaborative environment where great things can happen.”
The Combine at 225 WELLINGTON ST W in Toronto (Image: Dustin Fuhs)The Combine at 225 WELLINGTON ST W in Toronto (Image: Dustin Fuhs)
Amin Todai, Founder and Chief Creative Officer of OneMethod, said the idea is to really drive into the community aspect.
“Before our office space was obviously just for our staff and that was kind of the primary purpose and generally what the nature was for everybody. So what we’ve done is take our space, re-imagined it so that we can bring people outside of our company into our home and offer some points of education, collaboration and just creativity match-ups that normally wouldn’t happen,” said Todai.
Amin Todai
“We have membership that goes beyond just our staff to our clients who can now use our space openly like our staff. They’ve been coming quite a bit. We’ve started recruiting members from the creative community locally that will come use our space like a music producer, a photographer or some other kind of artistic folks that would just come into our office and use some of the tools, some of the space and sometimes they come just to get inspired.
“We also have this retail component. We’ve taken our reception area which would normally have a couple of receptionists and just be a greeting space to farm people through the office, we’ve taken that concept and made it a retail pop-up store. It’s on the ground floor at a very popular corner of the CBC building. So our former kind of front-facing reception area has now become a retail pop-up space that switches out concepts on a regular basis, weekly, monthly, depending on who our artist collaborations are with at that moment.”
The Combine at 225 WELLINGTON ST W in Toronto (Image: Dustin Fuhs)The Combine at 225 WELLINGTON ST W in Toronto (Image: Dustin Fuhs)
The concept of The Combine began in 2018. The current design was established in the past year.
Spence said The Combine is focused on growing its Toronto membership and making people aware of the concept.
“But we are absolutely open to growing. For example, we acquired Folk in Montreal and it would be lovely in the future to do a Combine in Montreal. So I think there’s opportunities for growth in the future but right now we’re focused on Toronto,” she said.
Added Todai: “Our Phase 2 plan is we want to create offshoots. We’re actually creating a bit of a pitch deck that we can go to other agencies or creative style spaces around the world where they’re kind of like us where they’re not getting 100 per cent capacity with their spaces so what else could they do with the space because a lot of people are locked into long-term leases. So it’s kind of like how can you reimagine space?”
The Combine at 225 WELLINGTON ST W in Toronto (Image: Dustin Fuhs)The Combine at 225 WELLINGTON ST W in Toronto (Image: Dustin Fuhs)The Combine at 225 WELLINGTON ST W in Toronto (Image: Dustin Fuhs)
In a blog, The Combine said the concept is an ongoing effort to apply forward thinking to everything it does.
“In a more specific sense, it’s an attempt to transform a conventional office into a community-driven space that blends making, shopping, learning, and living. So we’ve redesigned our physical space for retail and events and hanging out. But we’ve also redesigned who uses our space, from the employees of our 4 agencies to our clients/partners to an ever-growing-yet-select group of creative, like-minded people,” it said.
“It’s a workspace for so much more than work being used by so much more than just our employees. And yeah, it has a store, a café, a bar, a magazine, a podcast, an ongoing Ted-talk-type speaker series, and so on.
“The Combine actually launched back in 2018 and ran until Covid did what Covid does. The pandemic forced us to press pause on the whole thing but also reinforced the need for such a concept and helped shape this next iteration of it. However, the idea for it all truly developed organically in our offices in the decade leading up to the launch. For years our office spaces would see employees and non-employees collaborating in different ways, using the space for different things, adding a whole different energy to where we work and what we make. Clients, ex-employees, and friends-of-friends would hang out. NBA All-Stars (Baron Davis) and Grammy Award Winning producers (Boi1da) would drop by. Chris Bosh even set up a desk in our space one year.”
So the perspective that U.S. retailers are somehow more prone to failure than Canadian retail chains is unconvincing. However, something is going on that makes retailing in Canada more challenging than ever.
Online shift isn’t the reason
One of the key explanations given by pundits for why retail is so challenging in Canada is the switch to online buying. For many, the advantages of online shopping are multifaceted, including convenience, 24/7 availability and a wider selection of products compared to traditional retailers.
According to Statistics Canada, the proportion of retail e-commerce sales rose to 6.2 per cent in 2022 from 3.9 per cent in 2019.
There are four factors that make the Canadian retailing environment difficult for newcomers to break into.
1. Economies of scale.Canada has a population of 39 million spread across a very large geographic area. Compared to other G-7 countries, retailers don’t benefit from economies of scale in Canada unless they operate across the entire country. A regional operator in the northeast U.S., for example, has a potential market of more than 125 million, while a regional operator in Canada is lucky to have a potential market of 15 million.
When it comes to ordering sufficient quantities of products from overseas manufacturers, Canadian retailers are at a massive disadvantage. With online retailers like Amazon that operate across borders, this disadvantage is amplified. The economies of scale also hamper Canadian firms due to smaller sales volumes. Smaller volumes mean that fixed business costs, like salaries and marketing, are higher on a per product basis.
2. Supply chain challenges. Because Canada is not a densely populated country, the distances that products need to travel to make it to consumers are high, compared to other countries. Regional distribution centres can overcome this challenge, but they could increase the cost and complexity of already-strained supply chains.
3. Tough regulatory environment. Compared to the U.S., Canada has a more regulated environment for retailers. Whether it is employment laws, building permits, environmental regulations or health and safety rules, Canada is more demanding. This creates added cost for retailers in terms of startup, operations and compliance. Canadian compliance laws are tough for good reason — corporations play a key role in the standard of living and are therefore held to a high standard.
4. Canadian identity. While Canadians buy and consume products imported from everywhere, there is a segment of the population that is concerned about Canadian identity. For this group, Canadianess is important. They see Canada as a small country living in the shadow of the U.S., trying to make its mark in the world.
The segment is small, but it still reduces the potential market for foreign retailers that need to compete against an existing retailer with a strong Canadian identity. Because Canada is the smallest of the G-7 countries, this issue is more important in Canada. There are Canadians who don’t want to see more dollars than necessary going south of the border.
Strategies for success
So how can new retailers maximize their chances of success? There are three strategies that, if followed carefully, increase the likelihood of newcomers’ success in Canada.
1. Go big or go home. Because the Canadian marketplace is substantially smaller in size, a newcomer needs to commit to succeed. The perceived advantage of opening a small number of stores is that it reduces risk, but this strategy poses a problem: the economies needed for a company to succeed never materialize.
Going big means more than just having a bricks and mortar footprint across the country. It also means building a strong online presence that allows synergy between online ordering and in-person browsing to flourish. Many consumers who order from the Walmart or Canadian Tire online stores inspect the goods at the physical stores beforehand.
PHOTO: TARGET CANADA
2. Be true to yourself. If a retailer has enjoyed success in another market, it needs to figure out how to replicate that in Canada. This is especially true for big U.S. retailers. Ninety per cent of the Canadian population lives within 160 km of the U.S. border and many Canadians cross the border to go shopping.
Long before Target entered Canada, Canadians knew it to be a more stylish alternative to Walmart with competitive, if not slightly higher, prices. This is what Canadians expected when they went to Target in Canada for the first time. But it was not what they found. Instead, they found empty shelves and prices that were inconsistent with those at U.S. Targets and non-competitive with Canadian Walmarts.
3. Understand the market. The biggest challenge for a new Canadian retailer is recognizing regional differences despite the smaller population. One-size-fits-all is something retailers need to leave behind. Beyond the obvious challenge of developing a specific Québecois retail strategy, the differences across Canada in terms of climate, leisure activities and culture are significant. There are cities in Canada where Chinese New Year and Diwali are as important as Thanksgiving and Christmas, for example.
In Canada, most retailing initiatives that fail can be attributed to a lack of recognition of the importance of critical mass to compete effectively. By incorporating these three strategies into both launch and operating plans, newcomers may find Canada to be more welcoming than recent history suggests.
By David Soberman, Professor of Marketing, University of Toronto
For the past 40 years, master chocolatier Bernard Callebaut has been famously associated with the chocolate industry in Calgary.
It’s been his passion but it hasn’t always been a sweet journey. Now Callebaut is poised for growth again.
Callebaut lost his company, Chocolaterie Bernard Callebaut, in 2010 after it hit financial trouble and went into receivership. It had 30 stores at the time. He opened a new company location, Papa Chocolat, in late 2011 but that too eventually ceased operations. And in 2015 he declared personal bankruptcy.
But today the master chocolatier is growing his business with the Master Chocolat brand.
Image: Bernard Callebaut
“Forty years is a big milestone,” said Callebaut.
He opened his first store March 25, 1983 along 17th Avenue S.W. in Calgary.
Callebaut is originally from Belgium and said his family were originally brewers. His great grandfather saw the chocolate craze coming up and sent two of his sons to Paris to learn the craft. And in 1911 the chocolate company was started.
Callebaut’s father had the business from 1945 to 1972. His mother continued with the business when his father died and then sold the business in 1980 to a Swiss business and today that’s the largest chocolate factory in the world.
“When my mother sold, I said I didn’t want to continue in the chocolate business,” he said. Callebaut got an electromechanical degree in engineering in Belgium and took a business management course in Switzerland.
But the passion for chocolate would not go away. He came back to the business his family was so well known for, did an internship in Europe and then emigrated to Canada and started his chocolate shop in Calgary.
Image: Bernard Callebaut
Master Chocolat at Calgary Farmers’ Market
Master Chocolat at Calgary Farmers’ Market
Today, he has a new 7,000-square-foot factory and retail store on 69th Avenue SW. There’s a second retail store in the trendy Marda Loop southwest neighbourhood. It is also present at both Calgary Farmers’ Markets – West and South.
The new factory opened in November 2020. The store in Marda Loop opened in 2019. Callebaut launched a presence in the South farmers’ market about 10 years ago and opened in the new West farmers’ market this past year.
“Retail wise we will probably add more locations in the longer term,” he said. “Retail is a portion of our business but a big chunk of our business, the majority, is wholesale, and private label. We do a lot of custom-made products like for example one of our biggest clients is Chapters/Indigo. So we make several customized products for them that they retail in their book stores across Canada. That’s a big, big part of our business.
“And because we are 95 per cent organic these people come to us because they want to sell products that are of that calibre and so we do a lot of business. And I see more growth in that portion of the business than in the retail. But ultimately they feed off each other.”
Image: Bernard Callebaut
Callebaut said more and more people today are drawn to chocolate.
“If you think about it, when I started 40 years ago, chocolate was considered candy. It’s a candy bar. You pick it up at the grocery store when you pay your bill, you pay 50 cents or 75 cents, etcetera. Chocolate has evolved a lot like coffee has evolved. Forty years ago coffee was 50 cents at the Husky gas station and now people pay six bucks for a coffee,” he said.
“Chocolate has become more sophisticated too because you cannot just stay where you are. It’s more sophisticated. People travel more. The food channel has done a lot to that in my opinion. People get more educated in different ways and I think there’s much more growth potential.
“In the whole chocolate industry in North America, the specialized portion, like what I do, is the fastest growing section in the chocolate industry.”
The key, he said, is the price point. The chocolate has to be priced at a very good quality but still making it an affordable luxury.
“I think that’s the key thing – to sell the chocolate at an affordable luxury.”
Buggy, Canada’s leading rapid retail logistics company, has launched an equity crowdfunding round on Frontfundr.
“With an experienced team, strong strategic partnerships and focus on the path to profitability in this space, we’re excited to offer the opportunity for individuals to invest in our growth through our equity crowdfunding round on Frontfundr,” said Nicole Verkindt, CEO of Buggy.
Nicole Verkindt
“In most cities across Europe and the US, people don’t think twice when they need something immediately. They open an app – click three times and what they need shows up in 15 minutes or less. This market has exploded around the world – but not yet, in Canada. Canadians, particularly young, urban consumers are looking for instant gratification. They don’t want to have to plan a day ahead, purchase large minimum basket sizes, suffer receiving substitutions, or pay 25-30 per cent over retail prices.”
Founded in 2014, then ‘Inabuggy’ the company became a leading grocery shopping and delivery business for Canadians from coast to coast, University students to seniors, particularly during the height of the COVID pandemic. In the summer of 2022, Buggy started opening its own dark stores (ie. “The Buggy Stores”). The company currently has three locations in Toronto and London, Ontario, and plans to expand across Canada, focused on urban and University/College school locations.
In this video interview, Verkindt discusses the unique aspects of the company, consumer trends, the future of retail and her background as an entrepreneur and experience previously on Dragons’ Den: Next Gen Den.
Image: Buggy
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