The new entrants could force everyone to lower prices, squeezing margins for vendors and retailers, even as it’s a boon for consumers, said Joey Adler, chief executive officer of Diesel Canada, whose various lines are now carried in all the chains (although differentiated by style and price) as well as three standalone Diesel stores.
While pleased to have a greater number of potential customers, Ms. Adler said that suppliers “are worried about having another retailer on board and being able to serve it properly and have them be successful.”
Shoe company Stuart Weitzman, whose lines are stocked at Saks, Holts and Nordstrom, faces a similar dilemma.
“It’s really the evolution of retail,” said Nicholas Niro, director of the Stuart Weitzman Canadian operation. “As fresh brands come in, more tired brands will come out. That’s what will happen in the next five to 10 years.”
Developers are seeing opportunity, as they woo upscale new entrants. Yorkdale has been among the most successful, now generating more than $1,300 of sales per square foot.
West Edmonton Mall, the country’s largest shopping centre, is rapidly adding more luxury banners, such as jewellery specialist Tiffany & Co., with the centre’s sales now at about $745 a square foot, up from $450 five years ago and aimed at $1,000 in the next few years, mall president David Ghermezian said. La Maison Simons rolled out its first store outside of Quebec last fall at West Edmonton and its performance “has exceeded all our expectations.”
Mr. Ghermezian is pitching for Nordstrom, among others, to come to his mall and will soon speak to Mr. Baker about Saks. “Eventually, there will be a saturation point but I don’t think we’re there yet,” he said. “At some point, it will be too much.”
The retailer with perhaps the most to lose is Holt Renfrew, by virtue of its position as the dominant luxury player. “Holts, I suspect, will lose some business,” consultant Mr. Karabus said. “I think there will be some fallout.”
Owned by the Weston family, which also owns Selfridges in Britain, other prominent overseas chains, and controls grocery giant Loblaw Cos. Ltd., Holts is not standing still.
The company is using its Yorkdale store, which will relaunch by the fall, as a laboratory. Set to double in size, it will feature a beefed-up men’s section and a new men’s lounge, a grooming area to get a shave and “tech toys” to keep men in the store and in the buying mood, Alix Box, vice-president of marketing at Holts, said late last year. (The company did not provide an executive for an interview this week.) The store will spotlight designer brands including heavyweights Manolo Blahnik, Jimmy Choo, Donna Karan, all of which are stocked at Saks.
Fitting rooms will be up to three times larger than current ones – “Big enough so that a woman could bring five or six of her best friends and shop together, which is a growing habit we’ve seen among our high-value clients,” she said. With nine stores, Holts has also announced it will launch a new store in Mississauga’s Square One Shopping Centre and expand its space by 40 per cent over all.
“Holts is aggressively expanding – don’t underestimate it,” consultant Mr. Karabus said. “The Westons are extraordinary retailers.”
But if there’s an Achilles heel, it’s in online sales. Its importance can’t be underestimated: Total Internet luxury spending is expected to nearly double to $12.5-billion by 2015, says American Express. Holts has yet to launch a cyber-shop.
Harry Rosen, which has annual sales of about $300-million, saw its e-commerce sales soar 90 per cent in the first six months of 2013 (though it makes up about 2 per cent of total sales). And both Saks and Nordstrom have reported that growth in their e-commerce businesses has outpaced those in their conventional stores.
Stephen Sadove, chief executive officer at Saks, said customers who shop both online and in-store purchase about three or four times as much as those who shop in a single channel. “Getting people to shop both channels is extremely important,” he told Saks’ annual meeting in June.Report Typo/Error