U. S. shoe giant sticks to big- box
Shoe giant DSW’s Canadian expansion plans belie suggestions that big- box retailing is on the way out.
The U. S. shoe company, whose stores average 20,000 square feet and feature seemingly endless aisles of discount designer brands, will double its presence in Canada this year, executives told the Financial Post this week.
“We are kind of going out and doing the opposite ( of what the rest of the market is doing), with the larger stores,” says Bruce Dinan, CEO of Town Shoes, the Canadian chain in which DSW acquired a 44- per- cent stake last year for $ 68 million. Town Shoes operates more than 180 locations in Canada under various banners, including Shoe Company and Shoe Warehouse.
“The customer does want to see assortment, and 20,000 square feet is about delivering on that breathtaking assortment,” Dinan said. “That is really where the size of the box helps us.”
DSW, based in Columbus, Ohio, follows the TJX Cos. concept of retailing, parent of the Winners and Marshalls chains, typically leasing space in less- expensive big- box outdoor mall spaces and selling goods marked down by about 40 per cent from their original retail prices. It carries trendy brands such as Timberland, Nike, New Balance, Converse, Vince Camuto, Steve Madden and Coach. Average DSW stores carry about 22,000 pairs of shoes.
The Canadian expansion comes as chains such as HMV, Staples and Best Buy close stores and shrink their average store square footage as consumers migrate online.
But while many tech entrepreneurs are developing fitting technologies to help consumers buy footwear and apparel online, Toronto- based consultant Doug Stephens notes the bulk of those two categories are still bought in bricks and mortar retail stores.
“There are certain categories that still have a marginal advantage over ( selling goods) online,” he said.
“Best Buy has been caught squarely in the crosshairs of the Internet and the category of consumer electronics lends itself to buying very easily online. Shoes, not so much. There is a consumer comfort level to going in to a store and trying them on and making a selection.”
Dinan notes that about 90 per cent of retail industry shoe sales are still conducted in bricks and mortar stores.
Meanwhile, the woes of some other big- box retailers could work in DSW’s favour, as landlords look to fill the space when merchants downsize.
Properties left vacant in the wake of Target’s exit from Canada may also be attractive to DSW if the landlords should choose to carve up the big spaces the U. S. mass merchant left behind, Dinan says.
“We are under a real estate review right now,” Dinan said. “Certainly some of that Target space would be of interest to us.”
DSW opened its first Canadian stores last August and currently has three of its large outlets in Ontario and three in Alberta. The company plans to open six more locations this year in Alberta, British Columbia, New Brunswick and Ontario and add roughly 10 per year to the market. While Dinan said the company does not have a specific growth ceiling in mind for Canada, he notes if it reaches the same penetration in relative size to what it operates in the U. S., it could operate 40 or more locations here eventually.