Yorkville has Tiffany's, Louis Vuitton and Chanel. But it won't have Saks Fifth Avenue.
On Monday, Hudson's Bay Co., the owner of Saks, announced that the luxury retailer will be launching its first store in Canada at the Hudson's Bay building at Queen Street West and Yonge Street – and not on Bloor Street, as the company had initially planned. The news came just two weeks after Nordstrom announced it, too, will be setting up shop in the Eaton Centre.
"It certainly positions that whole downtown as a more upmarket destination," said retail consultant John Williams of the J.C. Williams Group.
Together, the announcements signal a southward shift for luxury retail in Toronto. And this is only the beginning: Now that the Nordstrom and Saks plans are in place, Cadillac Fairview wants to woo more upscale retailers to the Eaton Centre, chief executive officer John Sullivan said.
"Now that that's public, we can really go after some of those key retailers we've been thinking about these last few months," Mr. Sullivan said in an interview this week. His vision is to make the Eaton Centre "the place to go for luxury shopping."
Yorkville has long been the home of high-end shopping in the city. The so-called Mink Mile, which stretches from Avenue Road to Yonge Street, boasts Holt Renfrew, Tiffany & Co., Louis Vuitton, Michael Kors, Prada and Burberry, among many other retailers who cater to the moneyed residents of Rosedale and Forest Hill. But Toronto's wealth is now diffuse and retailers – foreign ones in particular – are following the money.
Fashion purveyors Ted Baker, Kate Spade and All Saints put their first Canadian stores in Yorkdale Shopping Centre, not Bloor Street. This is a significant change from the past, said John Crombie, national retail director for real-estate services firm Cushman & Wakefield Inc.
Now, he said, the same thing could happen at the Eaton Centre.
Richard Baker, CEO of HBC, which bought Saks for $2.4-billion (U.S.) in November, was initially convinced by HBC vice-chair Bonnie Brooks that Saks should be at Bloor & Yonge, near all the other luxury brands such as Holts and Tiffany & Co.
But when Cadillac Fairview, which owns and operates the Eaton Centre, decided to replace Sears with Nordstrom at the mall, that was a game changer.
Mr. Baker said he could then envision Eaton Centre becoming an "alternative luxury location" with Saks as the south anchor.
At the Eaton Centre the Saks brand will have more visibility, while on Bloor it could get lost in the sea of luxury banners, he said.
Cadillac Fairview has a deal to buy the Hudson's Bay building at Queen and Yonge streets and the connecting Simpson's Tower at Queen and Bay Street for $650-million. Under the agreement, HBC will operate a 150,000 square-foot Saks store in the Hudson's Bay store, which is set to open in the fall of 2015. (A second Saks store will open in Cadillac Fairview's Sherway Gardens in the city's west end).
Mr. Baker compared Bloor and the Eaton Centre to Fifth Avenue and Soho in New York City. Both now have many of the same high-end retailers, creating two luxury shopping districts. But in Toronto, "Bloor Street will lose a little lustre, but not a lot," he said.
Larry Rosen, CEO of high-end men's clothier Harry Rosen, which operates stores on Bloor and in the Eaton Centre, doesn't think the Saks and Nordstrom announcements will hurt retail on Bloor.
"I don't take the improvement of the Eaton Centre as necessarily being a negative for Bloor," he said. "The city has grown so much over the last number of years, it can support a number of important shopping districts."
Opening a store on Bloor Street poses a number of challenges for retailers. For one, it's difficult to get the right size space. Many are too big or too small, rather than the 2,500- to 3,000 square-feet that is ideal, Mr. Crombie said. As well, according to Mr. Crombie's data, the asking rent at the heart of Bloor is an average of $320 per square foot, much higher than the Eaton Centre, where the net asking rent is approximately $150 to $175 per square-foot on average (although net rent doesn't include taxes and maintenance operating costs, which can be twice as much in malls).
But Mr. Rosen said he sells suits with a price tag of more than $5,000 on Bloor Street and he can't sell them at the Eaton Centre. "There are different levels of luxury," he said.
Store owners in Yorkville are likely glad that Saks will be moving in to the Eaton Centre in the fall of 2015, said Mark Satov, founder of the management consulting firm Satov Consultants Inc.
"If you look retailers around there, everybody's actually threatened by Saks," he said. High-end consumers who shop in Yorkville may venture down to Saks on occasion, but they will likely still prefer the less crowded, pedestrian-friendly experience of Bloor Street, he says.
"It does not have a great reputation as a place where you are going to get a high-end shopping experience," Mr. Satov said of the Eaton Centre.
"People get shot there," he said, referring to an incident that left two dead in 2012.
But in terms of volume, the Eaton Centre and surrounding area has a clear advantage over Yorkville.
Last year, 50 million people passed through Yonge and Dundas, said Mark Garner, executive director of the Downtown Yonge BIA.
And as Mr. Satov pointed out, "There's much more tourist traffic at Yonge and Dundas." Having Saks and Nordstrom at the Eaton Centre will be a further draw, especially for American visitors, he said.
The Bloor-Yorkville BIA, which commissioned a revitalization project completed in 2011 at a cost of $25-million, declined to comment on the decision to put Saks on Queen Street. Mark Derbyshire, president of Holt Renfrew, which has a large expansion planned for its flagship store on Bloor, was not available to comment this week.
Christina Burgess, owner of Augustina, a retail boutique that has operated in Yorkville for 13 years, said she was "disappointed" by the decision to put Saks at Queen and not in the HBC building at Bloor and Yonge.
"I feel like the area is in a massive shift right now and it isn't the neighbourhood it was 10 years ago," she said. "It's going to have to reinvent itself. It feels very dated to me."
A Saks at Bloor and Yonge might have triggered a much-needed rejuvenation of Bloor east of Yonge Street, helping extend the length, and lustre, of the Mink Mile, Mr. Crombie said.
"Bloor Street East needs a little bit of a lift to it and rejuvenation," Mr. Crombie said. "And Hudson's Bay has just not performed as well at that spot. When we heard news it [Saks] was coming, we thought it would absolutely electrify Bloor Street East. Now without that happening, you're down to, 'So now what?'"