Nordstrom Rack delays Canadian store openings until 2017

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Nordstrom has delayed opening Nordstrom Rack stores in Canada until 2017. Target’s struggles in Canada are partly to blame. Sources relayed this information to us in early March, and it’s now confirmed by the Globe & Mail via an interview with a Nordstrom spokesperson. 

Nordstrom Rack managed to secure several Canadian locations, and we expected its first stores to open in 2015. We delayed reporting on these locations, as some landlords were negotiating related leases. Nordstrom recently walked away from its Nordstrom Rack deals and it now expects to open its first Canadian Nordstrom Rack stores in 2017. 

Target‘s struggles in Canada are partly to blame. “We want to ensure we understand how to best serve Canadians,” said Nordstrom spokesperson, Brooke White, in an interview with the Globe & Mail. Target lost about US$941 million last year and the company continues to experience supply chain issues, as well as negative perceptions by some Canadians. Nordstrom Rack wants to ensure that its distribution and replenishing systems are optimal before its Canadian debut.  

“There are enough differences for us in our distribution and systems that virtually everything that we do in the States we have to alter somehow for Canada, and we had underestimated that,” said Ms. White to the Globe & Mail. 

Nordstrom Rack stores are very productive. Sales per square foot at Nordstrom Rack are estimated to be US$553 per square foot, while Nordstrom’s full-line department stores earn about US$372. We credit the Globe & Mail for providing these numbers. 

Nordstrom Rack stores are typically in the 30,000-50,000 square foot range. The company anticipates opening 15-20 Nordstrom Rack stores in Canada. 

Nordstrom Rack’s delay may be a gain for Off 5th by Saks Fifth Avenue. Saks plans on opening up to 25 Off 5th outlets in Canada over the next few years, some as early as next year. Saks has one advantage over Nordstrom: real estate. Sources tell us that Saks could open Off 5th stores in current Hudson’s Bay Company real estate, including rebranding some of its Home Outfitters locations as Off 5th outlets. 

Source: Globe & Mail article by Marina Strauss

[Nordstrom Rack website]

 

Craig Patterson
Craig Patterson
Located in Toronto, Craig is the Publisher & CEO of Retail Insider Media Ltd. He is also a retail analyst and consultant, Advisor at the University of Alberta School Centre for Cities and Communities in Edmonton, former lawyer and a public speaker. He has studied the Canadian retail landscape for over 25 years and he holds Bachelor of Commerce and Bachelor of Laws Degrees.

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