New York -- Nordstrom is going to be a big success in Canada, according to Antony Karabus, president, Hilco Retail Consulting. (Nordstrom has plans for six stores in Canada, with the possibility of adding a few more over time.)
“Every one of the six stores they (Nordstrom) picked in Canada is a home run in terms of the location. It’s the perfect time, perfect sector and the perfect time in the sector,” Karabus said during a recent presentation on “The State of the Canadian Retail Market.”
As more and more U.S.-based retailers look north to expand, they should consider that some parts of the Canadian retail market are not as ripe for expansion as others.
“It comes down to a matter of sectors,” Karabus said. “Where there is a weak sector, there is opportunity. Childrenswear, for example, is a weak sector in Canada so it’s really wide open. Justice has done very, very well. There is also room in the ladies wear space, particularly in the higher end.”
A lack of choices in the luxury apparel market has resulted in many Canadians traveling outside the country particularly to the United States, to shop. Indeed, the country has an appetite for aspirational shopping, Karabus said, one that Nordstrom and Saks, which will enter Canada in fall 2015, will feed into.
“When Nordstrom and Saks come to Saks, a lot of the wealth spent outside the Canada will stay there,” Karbus said.
Discounters, however, should think twice before entering Canada.
“I don’t think there is room for any new entrants in the discount sector,” Karbus said, “and that includes the dollar chains. “
Similarly, Karbus does not see any room for U.S. expansion in the supermarket and drug store sectors.
As for Target’s missteps in Canada, Karabus pointed out several blunders made by the chain, which he said included opening too many stores in a year or less and the less-than-great real estate it took on from Zeller’s. The chain also underestimated the competition.
“Everyone in Canada knew they were coming and had over a year to get better themselves,” explained Karabus, who added that Walmart has done a very good job in Canada.
Supply chain issues resulted in empty shelves, which turned off shoppers. So did the prices, which were slightly higher than those in Target’s U.S. stores. Some of the brands were different also.
“We know Target will fix the operational issues,” Karabus said. “The question is whether shoppers will come back. Target has to give them a really compelling reason to return.”
Ultimately, success in Canada is based on the same foundation as success anywhere.
“You need a defining proposition to be in business,” Karabus said, “and there has to be space.”