Canada is an international retail ‘hot spot’, according to the world’s foremost fashion-industry trade publication. Many international retailers are contemplating Canadian expansions, following Nordstrom and Saks Fifth Avenue’s lead. Home-grown retailers will need to innovate to compete, or risk facing demise, like bankrupt retailer Boutique Jacob.

Women’s Wear Daily referred to it as the ‘department store effect’: following Nordstrom and Saks Fifth Avenue’s announcements that they would open in Canada, other international retailers followed. Mary Mowbray, Senior Vice President of the retail group at Colliers International in Toronto, said the following:

“The Canadian consumer weathered the downturn better. They have more money to spend and are more comfortable spending it. Traditionally there have been fewer players in the mid- and higher tiers in Canada, and that’s left an opening for more brands to enter here.”
Rents on desirable streets in Toronto, Montreal and Vancouver are all rising. On Vancouver’s Alberni Street, rents jumped 43 percent between 2012 and 2013, averaging $147 per square foot. Alberni Street recently saw Tory Burch and De Beers store openings, and several of the world’s top luxury brands are currently examining Alberni Street retail space.

Laura Pomerantz, principal of her own real estate firm, said that growing tourism and a burgeoning Asian population in British Columbia triggered much of the expansion. Specifically, she said:

“You have a savvy and sophisticated customer in Canada who recognizes brands and is brand conscious. You have a lot of tourism between Canada and America, and that makes a built-in customer base.”
Not all is rosy for new retail entrants: Target lost almost $1 billion last year from its floundering Canadian operations, battling poor customer perception as well as empty shelves. Nordstrom Rack recognized Target’s struggles, delaying its Canadian debut until 2017.

Some Canadian retailers will struggle with the new competition, a fate most recently exemplified by Boutique Jacob’s bankruptcy. According to retail consultant David Ian Gray, other Canadian bankruptcies could follow, if retailers fail to innovate in the face of new competition.


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