How does a Quebec fashion retailer that wears its environmental credo on its sleeve woo customers in Alberta's oil capital without losing any of its fiercely green clientele back home?
La Maison Simons, the 177-year-old Quebec City-based chain that began a cross-Canada expansion in 2012, has made the greening of the planet central to its shopping experience. Chief executive Peter Simons insists it's not just PR. He is passionate about the urgent need to combat climate change and is soon set to open a zero-net-carbon store in Quebec City to prove it.
Still, going green is expected of retailers in Quebec, where the proposed Energy East pipeline is roundly rejected. But after opening a Calgary store in March, and with a second Edmonton outlet slated to open later this summer, Simons now has a direct stake in the oil-dependent Alberta economy. And that has forced Mr. Simons to bridge Canada's two environmental solitudes.
"We are not going to transition to a zero-carbon economy immediately. I am for the pipeline," he says of Energy East, the $15.7-billion pipeline TransCanada is pitching to move Western Canadian oil to refineries and ports in Quebec and New Brunswick. While not exactly a shocker, it's a gutsy stand for a retailer that still depends on young, enviro-conscious Quebec customers to keep the lights on.
But Mr. Simons, 53, has guts to burn beneath those Tiger of Sweden suits. He would have to in order to undertake an uber-risky Western Canadian roll-out during an oil downturn and spend millions of borrowed dollars on bricks-and-mortar stores amid a rush by consumers online and the invasion of far richer high-end U.S. fashion retailers such as Nordstrom and Saks.
"If I was confident of success, I think I would be a fool. We are fighting," he offers, searching for the best description for his struggle before settling on the French expression "comme le diable dans l'eau bénite." Like the devil in holy water, a fitting metaphor for the head of a family-owned company whose headquarters have sat next to the Cathedral-Basilica of Notre Dame in Old Quebec City since 1870.
The dry-goods store that John Simons first opened in 1840 evolved into a local legend renowned for quality and value long before Peter Simons, having barely taken over the family business, made a move into the Montreal market in 1999. The downtown outlet Mr. Simons opened in the then-shuttered Simpson's building might have been his Waterloo. Instead, it became a beacon for fashionistas and retailing gurus the world over.
The secret of Simons' success has been its higher-margin private labels and the tendency of Quebec consumers to mix and match variously priced lines to create their own distinctive look. That makes Simons, with its vast array of price points, a one-stop fashion destination for a loyal clientele.
"Customers in Quebec are very confident in our exclusive brands and much more apt to mix high-end brands with mid-range ones," Mr. Simons explains. "In other markets, our customers focus on international brands and high-end brands."
That may be one obstacle to replicating Simons' success outside of Quebec. But it pales compared with the challenge posed by online shopping. It's one reason that, in hindsight, Mr. Simons wishes he had opted to open smaller stores in the rest of Canada, where his outlets typically occupy 100,000 square feet.
Simons' own online sales are set to account for about 20 per cent of its overall $500-million in revenue this year. That is as much financial information as Mr. Simons will share, for now.
He may soon be more forthcoming. The investment required for an automated e-commerce warehouse has Mr. Simons considering taking the company public. Though he is regularly approached by investment bankers, Simons' 150-year relationship with Bank of Montreal would make BMO a likely underwriter.
Tapping the stock market would also facilitate expansion in the high-rent Toronto market, where Mr. Simons is still in negotiations with landlord Oxford Properties to take up space in Yorkdale Shopping Centre and Scarborough Town Centre. Yorkdale is Canada's top mall and Simons' arrival there would put it in the thick of Canada's high-end retail wars.
No Canadian-based retailer can win this war, Mr. Simons warns, unless Amazon and foreign-owned bricks-and-mortar competitors step up to pay their fair share of domestic taxes. "You just can't sell 95 per cent of your product in one country and declare 95 per cent of your taxes in another," he insists. "You just shouldn't be able to transfer-price your way out of reality."