With Hudson’s Bay on the ropes, it might seem that Canada is hostile to department stores.
In recent years, Canadians have waved goodbye to Sears Canada, Target and Nordstrom. Now Hudson’s Bay, also U.S.-owned, is awaiting court approval to begin liquidating some of all its 96 Canadian stores after filing for creditor protection on March 7.
Meanwhile, Canadian-owned Simons, a department store chain with an emphasis on apparel and home goods, is opening new stores.
Simons is making its Toronto debut with two stores opening this fall or winter in the Toronto Eaton Centre and at Yorkdale Shopping Centre.
That will expand a Simons presence in the GTA dating from 2016 when Simons opened its Square One Shopping Centre location in Mississauga.
La Maison Simons, the company’s formal name, is something of an anomaly in North American retailing. Simons has posted modest revenue growth in recent years during a slump in consumer spending that has pushed several retailers into bankruptcy.
The Canadian market, often and mistakenly described as difficult to master, has been welcoming for a Simons that has long understood Canadian consumers.
The 185-year-old retailer, founded by Scottish immigrant John Simons in 1840 in Quebec City, where the company is still headquartered, now has 17 stores from coast to coast.
Simons is Canada’s oldest family-owned business. It is a big company, with estimated revenues of more than $650 million.
But its success formula is straightforward.
Simons has resisted the overexpansion from which Nordstrom’s Canadian operations suffered.
Simons’ goods are sufficiently fashion forward to stay on top of trends without alienating more traditional customers.
About 70 per cent of Simons’ offerings are high-margin private-label goods available only at Simons. Unlike traditional department stores, Simons doesn’t carry low-margin furniture or appliances.
And while Simons’ merchandise leans to reasonably priced items, the store allows for a “wow” factor by selling luxury Gucci bags alongside $10 tees and $49 jeans.
More on that later.
First, a brief look at Hudson’s Bay, a lesson in retailing failure.
For 16 years until December, when it became a stand-alone company, Hudson’s Bay was part of a retail conglomerate controlled by U.S. real estate investor Richard Baker.
Baker’s congeries of store brands has included Hudson’s Bay, Zellers, Saks Fifth Avenue, Bergdorf Goodman, Lord & Taylor, Neiman Marcus and Germany’s Galeria Kaufhof.
Baker has bought and sold those brands, occasionally profiting from selling their real estate.
Baker didn’t create a sustainably winning strategy for Hudson’s Bay, which was already in decline when he bought control of it in 2008.
Most of what the Bay sells can be purchased elsewhere.
And Hudson’s Bay is “over-stored,” with money-losing outlets dragging down the chain.
With its wide range of goods, Hudson’s Bay has been unable to keep up with changing consumer preferences in all its product categories.
And it has failed to upgrade its stores, many of which have long been rundown.
By contrast, Simons has a proven retail strategy worthy of a business school case study.
Simons carries some brand-name goods, including Chloé, Armani and Balmain.
But Simons draws on scores of Canadian designers and artisans for its unique jackets, suits, sportswear, shoes, lingerie, kitchenware and linens.
Simons is a leading showcase of Canadian art and design. It relies for its product selection on what former CEO Peter Simon called its “huge creative ecosystem.”
That fashion sense is mirrored by the daring design of many Simons stores, which also are unique rather than look-alike emporia.
The exterior of Simons’ Halifax store evokes the sails of the famous Bluenose schooner. The façade of Simons’ Sherbrooke, Que., store is wrapped in giant copper leaves.
The interior of Simons’ Calgary store boasts a three-story mural by local artist Maya Gohill.
That makes Simons’ outlets “destination stores,” as they say in the trade. With relatively few stores, Simons can serve most Canadians because customers are willing to travel an extra distance to shop there.
Brick-and-mortar stores have proved more resilient than forecasters first believed with the advent of e-commerce.
Simons derives about one-third of its sales from its award-winning online store.
But to keep its physical stores viable in the era of Amazon and fast-fashion online retailer Shein requires that Simons outlets be interesting to visit, a longtime Simons priority.
A weakness for Simons is its lack of brand awareness outside Quebec, where it has 10 of its 17 stores. As a privately owned company, Simons has limited access to capital for expansion.
Simons’ two new Toronto stores, in high-traffic locations, will help raise Simons’ profile, and are expected to increase total sales by about 15 per cent.
As to Hudson’s Bay, among its most valuable assets are its striped wool blankets, still sold today. They are a fixture of Canadian heritage, traded for beaver pelts in the 1700s.
Hudson’s Bay might yet have a future as an in-store boutique of its striped apparel and accessories at, for instance, Holt Renfrew or Mountain Equipment Co.
Or at Simons.
