The fast-shifting department-store landscape is getting another jolt from a U.S. retailer.
Nordstrom Inc. of Seattle is finalizing its plan to set up shop here in four locations, including three top sites that Sears Canada Inc. is abandoning this fall. The plans come as Sears announced on Wednesday it will close yet another store, at Deerfoot Mall in Calgary.
Upscale Nordstrom plans to launch its first stores here at the Pacific Centre in Vancouver, Chinook Centre in Calgary and Ottawa’s Rideau Centre – whose leases Sears sold back to landlord Cadillac Fairview Corp. this year for $170-million – as well as Sherway Gardens mall in Toronto, industry sources said.
Nordstrom’s long-awaited entry into the Canadian market within the next few years hits the retail market at the same time that a bevy of foreign retailers are arriving here, including U.S. cheap-chic Target Corp. in 2013.
The latest addition is bound to pinch mid- to high-end fashion incumbents, including Holt Renfrew, the Bay and Harry Rosen.
“Some of the fancier stores will find that the competition has heated up,” said Hermann Kircher, a retail real estate consultant in Toronto.
“It will have a negative impact on Holt Renfrew – not devastating but something they would notice … The Bay would feel the impact of Nordstrom also.”
Spokespeople for Nordstrom and Cadillac Fairview on Wednesday said they had no news to share.
Nordstrom’s conservatively stylish offerings and attentive customer service will further shake up the market. The new addition comes as the Bay rapidly overhauls its strategy to move more upscale, while Holt’s and Harry Rosen refine their luxury appeal to gear up for a more brutal retail scene.
Amid the changes, giant discounter Wal-Mart Canada Corp. is investing in its largest expansion yet as it prepares for Target’s arrival, while Zellers is closing its underperforming stores to make way for Target after the U.S. chain bought most of Zellers’ leases from Hudson’s Bay Co. for $1.8-billion. The Bay, for its part, has talked to upscale U.S. department-store Bloomingdale’s about a partnership that could see Bloomingdale’s boutiques in Bay stores.
“There will continue to be a lot of change in the market,” said Neil Linsdell, an analyst at Industrial Alliance Securities in Montreal. “Everybody is going to have to step up their game.”
Adding to the uncertainty, mall operators and Nordstrom officials have been locked in negotiations for months as the U.S. retailer makes its painstaking decisions on store sites for Canada.
Nordstrom is known to drive a hard bargain, demanding relatively low rents in exchange for drawing big crowds to its stores and the rest of the mall.
Nordstrom is still awaiting approval from its board of directors for the four new Canadian locations as well as final documents, industry sources said.
It is believed the retailer also wants to open a store at Yorkdale Shopping Centre in Toronto, one of the country’s top malls with average sales of about $1,300 per square foot.
The centre’s owner, Oxford Properties, was prepared to put aside a 165,000-square-foot space for Nordstrom near the mall’s subway entrance, sources said.
But Oxford also wanted Nordstrom to open a store at its Square One Shopping Centre in Mississauga, Ont., which the U.S. chain is reluctant to do, they said.
Nordstrom is also believed to covet the Sears flagship store site at the Toronto Eaton Centre, but Sears chief executive officer Calvin McDonald said recently he is not looking to unload that lease, which is believed to cost Sears only about $1 per square foot in rent. Sears runs its head office on the top floors of the site.
Vincent Power, a spokesman for Sears, said on Wednesday that the retailer is not looking to sell other leases beyond the four already unveiled.
The new CEO is focused on his three-year plan to turn around Sears, including re-focusing on core departments such as appliances and mattresses and revamping existing stores.
Sears’ lease sales come as its U.S. parent plans to spin off a large part of its stake in its Canadian unit, which steps up pressure on it to bolster its performance and eliminate businesses with poor returns.
Mr. Kircher, the consultant, predicted Sears will take advantage of more store closings when leases expire or even before, as it is doing with its Deerfoot store. , whose lease runs out next year.
“I don’t think it looks all that great for Sears,” Mr. Kircher said.
“They have to make some drastic changes.”
Mr. Kircher said there’s room for a retailer such as Nordstrom, which is positioned at a price level between the Bay (except for its tony Room fashions) and Holt’s. The Bay is trying to occupy more of the higher end space but there may still be room for another player, he said.Report Typo/Error