National Post (National Edition)
HARRY ROSEN LOOKS TO INSTAGRAM GENERATION.
BUT OLDER CUSTOMERS ‘DON’T STOP SHOPPING’
TORONTO • A chuckle escapes Larry Rosen’s lips as he thumbs through the most recent issue of Harry, the magazine produced by luxury menswear retailer Harry Rosen.
Featuring a male cover model in a slim-cut blue suit who sports a vague scowl and a tidy version of the long undercut hairstyle ubiquitous among Millennial men, the glossy’s style is a far cry from the staid fashion layouts of a decade ago.
But in an increasingly crowded Canadian luxury market, Harry Rosen is fending off market share threats from niche websites and rivals Saks Fifth Avenue and Nordstrom.
And appealing to a new generation of customers is critical for Rosen, chief executive of the company founded by his father Harry and uncle Lou in 1954.
“Every time we make our image younger, we get letters and emails from our older customers saying, ‘Hey, I’ve been a Harry shopper for 30 years, and this doesn’t look like Harry Rosen any more’,” Rosen explains.
“But they don’t stop shopping. They know us and trust us already. This, and all the stuff we do is about inviting in a new generation of men, our declaration as to who our customer is becoming, and it’s important to us that we are there.”
As Rosen assesses the current state of the Canadian luxury market, he is upbeat even though 2016 was a tough year.
Nordstrom and Saks opened two locations each in Toronto, home to six of Harry Rosen’s 15 locations across the country, putting pressure on a pricey merchandise sector that many retail experts predicted will be oversaturated in the next couple of years.
And the incumbents are apparently hurting: Holt Renfrew cut the hours of its full-time store employees by 20 per cent last month in a bid to cut costs, and has rejigged its management team and shuttered its off-price division.
Harry Rosen had its lowest rate of sales growth in many years, Rosen says.
“We are an organization that is used to growing 10-plus per cent a year, and last year we grew one per cent, and for us, that was a big disappointment,” Rosen said of the retailer, which has annual sales of more than $300 million. “You bring in all this new square footage of retail, it’s going to have an impact.”
Still, Harry Rosen is in a fortunate position relative to other luxury retailers, according to Randy Harris, president of apparel market research firm Trendex North America, as it operates in a virtually uncontested niche in Canada.
“The men’s luxury market has been growing faster than women’s for some time,” Harris said, “Harry Rosen are category killers when it comes to men’s luxury apparel brands. That’s a key strategic advantage, along with having one of the best websites in the business.”
He said Harry Rosen made a smart decision to reinvest in the business significantly before new market rivals arrived, spending $100 million on store and digital upgrades beginning in 2012.
With 15 stores ranging in size from 8,000 to 50,000 square feet, Harry Rosen is also larger and carries a greater breadth of assortment than the average men’s specialty luxury shop, says Harris, one of many industry experts who has serious doubts about whether Canada can sustain the added luxury square footage.
Luxury department stores such as Saks and Holt Renfrew, meanwhile, carry a far greater percentage of womenswear than menswear, relative to the overall assortment.
The luxury segment accounted for 7.2 per cent of Canadian apparel and accessory sales in 2016, about $2.25 billion, according to Trendex. The firm estimates Harry Rosen has a 40 per cent to 45 per cent market share of the men’s luxury apparel business in Canada, which accounts for 31 per cent of the overall luxury apparel and accessories business.
“There will be a shakeout (in luxury), there is no doubt,” said Harris. With new stores yet to open, “there will be too many luxury retailers chasing too few dollars.” Saks, for example, has opened two of its seven planned stores in Canada, while Nordstrom has opened four of its six locations.
Tourism plays an important but unpredictable role in the luxury market, Harris says, accounting for as much as 25 per cent to 35 per cent of luxury sales in cities such as Vancouver, and fluctuations could weigh further on luxury purveyors in the future, particularly small stores devoted to a single high-end brand.
Rosen, meanwhile is focused on promoting the retailer’s solid reputation for customer service and courting the millennial cohort exemplified by his three grown sons and their friends, highly educated professionals, he says, “and you have got to earn a piece of their screens.”
“There will be a shakeout (in luxury), there is no doubt”
HarryRosen.com, which launched in 2009 and accounts for about 4 to 5 per cent of sales, seems to help generate store traffic and incremental sales because 85 per cent of the merchandise bought online is returned to a store. “This is the new reality of retail,” Rosen says. “People are going to shop both ways.”
Forty per cent of Harry Rosen’s customers are millennials in terms of units, Rosen says, and though the figure is “far lower” in dollars, “those dollars will become bigger dollars. Our philosophy is to link to them in the earliest part of the cycle as we can, and appeal to the next generation of men, because we are going to be here for the next 63 years.”
To that end, Rosen just made his Instagram account public, in alignment with his store associates, all of whom have individual Instagram accounts to interact with clients and post shots of new merchandise. When Rosen goes on store visits around the country, which he does often, he logs an Instagram post.
The competition and the merchandise markdowns that arise when new players are selling in the space have weighed on the business, he says, but he believes in the solid service relationships Harry Rosen has forged over the years with customers.
“There are always periods of slower and quicker growth …and this has slowed our growth. But at the end of the day, we have been doing this since 1954, and this will shake out.”
THERE WILL BE TOO MANY LUXURY RETAILERS CHASING TOO FEW DOLLARS.