Nordstrom, the largest U.S. luxury department-store chain, plans to open six Canadian stores this year through 2017. Saks Fifth Avenue, still run from New York even after its takeover by Canada's Hudson's Bay Co. last year, plans to add as many as seven stores, with two set to open in Toronto in 2015.
These top U.S. purveyors of pricey clothing and accessories are noticing wealthy Canadians are increasingly emulating their more profligate American counterparts. The changing consumer habits and sudden availability of prime retail real estate are spurring Nordstrom and Saks to bring their attentive customer service and gourmet dining halls into a market long dominated by two major homegrown chains: Holt Renfrew and Harry Rosen.
The American chains sensed an opportunity to gain a foothold in the years after the recession as soaring housing prices and an improving stock market boosted Canadians' wealth. Store closings at Sears Canada Inc. more recently made prime retail space available. Five of Nordstrom's six planned Canadian stores will be in vacated Sears Canada spaces, said Brooke White, a Nordstrom spokeswoman.
The country's luxury shoppers also have changed. Before the recession, wealthy Canadians were seen as more reserved than their U.S. counterparts, said Antony Karabus, CEO and president of Hilco Retail Consulting. Now, years of stock market gains and rising home values are helping them realize they're richer than they thought — and they're willing to spend on premium brands, he said.
Canadians spent $6.5 billion on luxury and mid-range luxury goods in 2013, up 14 percent from 2008, said Svetlana Uduslivaia, a senior Canadian research analyst for Euromonitor in Chicago.
Moving into Canada won't be easy.
For one, their rivals aren't taking the incursion lying down. Harry Rosen started a $100 million expansion and began remodeling almost every store when it found out Nordstrom and Saks were coming to Canada, Chairman and CEO Larry Rosen said.
Nordstrom's White said the retailer is preparing for higher costs because of international duties and taxes.
Nordstrom is banking on its renowned customer service — think no time-limit on returns and salespeople who'll spend hours helping customers pick out the perfect wardrobe — to draw shoppers.
While the company usually hires department managers from within for new stores, that wasn't an option in Calgary, the first Canadian store, so Calgarian store managers participated in a nine-week training immersion program in Seattle, White said.
“They worked side-by-side with a mentor, co-worker, manager in one of our local stores,” White said in an interview from Seattle, where the company is based.
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