Quebec retail magnate Peter Simons is a fan of U.S. discount giant Target Corp. - he checks out its stores frequently and has even used its affordable fashion concept as inspiration for lines at his La Maison Simons department stores.
Now that Mr. Simons is set to launch his first Simons mega-store outside Quebec - in 2012, several months before Target's planned arrival - he's sending his staff south to study his impending rival more carefully.
The Simons store opening next year in West Edmonton Mall will be the first of about a dozen he envisions for the rest of Canada, adding to seven in Quebec (an eighth is slated for 2013) - bringing his total to roughly 20 in the next decade or so.
But Simons is stepping up its game at a time when competition is intensifying as new entrants invade the Canadian market. An array of U.S. retailers, including clothier J. Crew, are set to cash in on this country's relatively buoyant economy by rolling out new outlets over the next few years. Others, such as department-store chains Nordstrom and J.C. Penney, are studying a foray into Canada. The jockeying is also highlighting a dearth of retail space.
Simons, a fashion destination for Quebeckers, is betting that its mix of cheap-chic styles and pricey designer lines will resonate outside of Quebec, including in the United States. By later this year, Simons will expand its e-commerce, currently available across Canada, to U.S. customers.
"We've looked at Target's merchandise and will continue to do it," said Mr. Simons, 46, who at 6 foot 5 inches stands out in the crowd in a three-piece pin-striped suit. "You have to be very conscious of your competition, below you and above you [in price] I've visited a lot of Target stores. Now that they're coming, yes, we'll look at them again, much more closely."
The family-owned business, founded in 1840 by Mr. Simons' great-great-grandfather, faces other hurdles in branching out in Canada, such as the Bay, which is bolstering its performance under new leadership (and U.S. ownership). As well, Simons remains an unfamiliar banner in English Canada - putting added pressure on Mr. Simons to get it all right.
"It can be a very tight market," said Harley Oberfeld, chief executive officer of Oberfeld Snowcap in Montreal, one of Canada's top retail-real estate advisors. "But Simons is extremely good at what they do and there's no doubt in my mind that they're going to be successful wherever they open in Canada,"
When Simons expanded from its base in Quebec City into Montreal in 1999, it was unfamiliar to many people in that city but quickly took off, Mr. Oberfeld said. "You walk into a Simons store and it's busy - there's action."
The action seems to translate into business. With sales of more than $300-million, privately held Simons generates $600-plus of sales per square foot - more than three times those at the Bay, Mr. Simons said. It does it by selling $10 store-brand Twik T-shirts, similar to ones available at cheap-chic Swedish rival H&M, along with $5,000 Balmain dresses. Each store is designed differently in a bid to keep customers longer: the downtown Montreal store, for instance, features a specially commissioned $300,000 suspended glass sculpture by late Montreal artist Guido Molinari.
Mr. Simons estimated that he invests almost seven times more in his stores than the Bay, which is in the midst of a major overhaul. "I think it will pay off in the long run."
The chain's relatively high productivity allows it to place four to five times more staff on the floor, compared with the average North American department store, he said. New items arrive daily, compared with closer to twice a year even five years ago.
Mr. Simons borrows a page from the Target playbook by gambling on talented designers, providing them with a retail platform as well as help to produce their work.
Mr. Simons is counting on his formula to work outside Quebec, but with some twists. His Edmonton store will respond to local tastes by carrying more casual wear - including jeans - and less high-end dressy clothing, he said. It will stock larger sizes - people in that city are on average two sizes bigger than Quebeckers, his research found.
He's also learned from his mistakes. He doubled the size of one of his Quebec City stores last fall but sales didn't meet his targets. The layout is more open and "free-flowing" than the ones in his other outlets, making it a little more confusing for customers to figure out different departments.
Today one of his big challenges is finding the right space for his stores, which at up to 100,000 square feet each are more than 10 times larger than many clothing outlets. Landlords are often locked into long-term leases with anchor tenants or restrictive rules with other retailers, which ban newcomers such as Simons from setting up shop in the same retail category.
Mr. Oberfeld predicted that with creative thinking and re-working spaces, landlords will find room for Simons. Mr. Simons, who has been on the hunt for ideal locations for the past five years, is looking for stores in Vancouver, Toronto, Ottawa, Calgary and Winnipeg.
"I'm gambling that there are places in the country where people are ready for a more unique, less cookie-cutter experience," Mr. Simons said.
BY THE NUMBERS
John Simons opens his first store in Quebec City, selling dry goods from England and Scotland.
Number of Simons stores in Quebec - Montreal area, Quebec City area and Sherbrooke.
Number of stores Simons plans to open in English Canada, starting with the West Edmonton Mall in 2012.