6 U.S. retailers set to invade Canada's malls
It hasn’t been such a smooth ride for Canadian retailers lately.
Montreal-based clothing chain Le Chateau has struggled to keep its head above water amid dwindling sales and higher inventory for several quarters in a row.
Toronto women’s chain Tabi has already disappeared, shuttering its 76 locations in late 2011. Montreal’s once ubiquitous Jacob has cut back significantly, closing about a third of its stores in recent months. And Vancouver-based children’s apparel chain Please Mum has closed 68 of its 90 stores this year.
Even large chains aren’t immune. Sears Canada is in the midst of a major reorganization, trying to turn around the iconic 60-year-old department-store in the face of rapidly changing consumer demands.
The causes have been slightly different, but now, even those that remain face a similar threat: big-budget U.S. retail chains eager to set up shop. Despite the pitfalls, their reasons for doing so are obvious: compared to the U.S., we have fewer places to shop, and the ones we do have make more money
A recent report by real estate consultancy Colliers International found that the U.S. has 23 square feet of retail space per person. The comparable figure in Canada is 14 square feet — although Canadian malls average annual sales of $580 for every square foot of retail space available, well above the $309 seen in the U.S. (All currencies are Canadian.)
Here are six U.S. chains that are eager to take advantage of that:
- Target The discount chic chain bought the leaseholds for 189 Zellers locations from Hudson's Bay Co. in late 2010, with plans to convert most of them to Target locations in the near future. After some legal headaches surrounding the use of their name in Canada, Target is set to open as many as 135 locations across Canada later this year.
- Marshall’s The U.S. owner of outlet chain TJ Maxx quietly set up shop in Canada recently with very little fanfare. The company currently has 12 locations across Ontario, but it plans on adding to that stable in the near future. Similar to Canadian chain Winners, Marshall’s business model is to sell excess designer clothes at drastically reduced prices.
- J Crew The upmarket clothing chain launched its first Canadian location in August 2011. After weathering complaints about higher prices in Canada compared with American stores, the chain slowly expanded its footprint. In February, three new locations were added in Vancouver, Edmonton and Toronto.
- Bloomingdale's The high-end department store chain has set its sights on the Canadian market and is working with Hudson’s Bay Co. to bring the brand across the border. The move would bring the chain into the Bay’s retail chain as a "store within a store" concept, an expansion that could begin as early as this fall.
- Nordstrom The luxury retail behemoth had been shopping for Canadian space for over a year, and the closure of a few Sears locations came as an opportunity to acquire prime real estate. Over the next few years, the upscale store is geared to set up shop in Vancouver, Toronto, Ottawa and Calgary.
- Tanger Outlets In early 2011, Tanger signed a $1 billion deal with Canada's largest REIT (and mall-owner) RioCan to bring Tanger Outlet centres to Canada. While similar to outlet malls that most Canadian suburbanites would be familiar with, Tanger outlets tend to be even larger. The first glimpse of Tanger's Canadian model is the outlet mall in Cookstown, Ont., north of Toronto.
- A previous version of this story incorrectly attributed a quote to retail analyst Jim Danahy. The quote has been removed.Aug 10, 2012 1:55 PM ET