National Post (National Edition)
Simons says it’s focused on culture and people
Business model based on careful expansion
EDMONTON • Peter Simons is a dream tenant for mall landlords, but it wasn’t always this way.
He said there were several years where his chain — he is chief executive of the 177-year old Simons fashion department store — couldn’t find space. Landlords were more interested in large U.S. retailers.
“It’s another business model based on purely maximizing capital efficiency, and I get that,” he said. “I read Milton Friedman.”
Simons said customers are looking for commitment and engagement from retailers and that his company is in a place where they can deliver that and where they are making investments to ensure their long-term success.
On the cusp of opening their second Edmonton location, Simons said he doesn’t rely on economies of scale when making decisions.
“I think in our strategy it’s actually diseconomies of scale,” he said.
Simons said there are more challenges to scaling up than there are benefits, because his stores are focused on culture, people and training. The bigger they get the more difficult it is to execute these on a larger scale.
He said there have been “depressed moments,” when he has considered making cookie cutter stores, even though now would be the time to execute such a strategy.
Even with Sears Canada filing for bankruptcy protection and abandoned Target locations still up for grabs in many malls, he doesn’t plan to grow the company aggressively. Instead, he said the strategy is to keep a tight retail footprint though he did not say how many additional stores this might involve.
He said the company faces new challenges every time it reaches a new financial milestone. Because Simons is a private company, revenues are not disclosed, but they are estimated at $400 million per year.
Simons said the company is focused on renovating Quebec locations and bringing technology into their locations, via a new app that is being beta-tested this summer and will be launched this fall. It is expected to feature an e-commerce component.
“I do believe that the stores have their role, in a more controlled way, to combine with the web,” he said. “You need the two — it’s just to get the business model to meld.”
Simons 15th store is a twostorey location at Edmonton’s Londonderry Mall that opens in August. Formerly a tired, community shopping centre, Londonderry has recently undergone a $130 million dollar renovation.
Simons saw it as a great opportunity, in part because the mall was willing to let the store install environmental features, such as electric car chargers and solar panel canopies in the parking lot.
Inside, the store will feature trademark investments in local art as well as the company’s first dedicated shoe department.
Simons said the chain wanted to offer the same experience but with a smaller footprint — 90,000 square feet — than the West Edmonton Mall location that was the first to open outside of Quebec in 2012.
The firm started in 1840 as a dry good and 33imports store in Quebec City. In the nineteen sixties the company shifted to a fashion focus, creating in-house brands like le 31 and twik that are still sold today alongside national and designer brands.
When Simons first worked at the company in the summer as a university student he knew everyone by name. Now there are stores in Vancouver, Calgary, Edmonton and Ottawa in addition to locations across Quebec.
Though fast fashion has been seen as harmful to many Canadian retailers, Simons said their customers are thoughtful and gravitate towards higher quality products. This fall, for instance, Simons is launching a unisex capsule collection with Toronto designer, and 2016 LVMH Prize winner Vejas Kruszewski.
He said this shift is a glimmer of change in the retail world.
“The fast fashion thing — it’s going to be there,” he said, “It’s going to be an element, but people are thinking differently.”
The expansion of his family’s company has caused him not only to look at the business a different way, but himself. “Before I didn’t really consider myself an entrepreneur, but now I’ll take that,” he said. “Because the risk is there, I feel it. And it’s intense.”