NORTHERN EXPOSURE
Saks Fifth Avenue president prepares to open the chain’s first Canadian stores,
Recent reports of a downturn in the luxury goods market hasn’t spooked Saks Fifth Avenue president Marc Metrick as he prepares to open the first Saks stores in Canada, at Toronto Eaton Centre and Sherway Gardens, both in February.
“It’s a point in time,” said Metrick, referring to reports that demand for luxury goods has softened due to slowed economic growth in China, which has been a key market for luxury retailers operating there and in cities popular with prosperous Asian travellers.
“We’re in this for the long haul and this is the right thing to do. We’re very excited about planting our flag in this market — I mean the Saks flag — and creating a leadership position.”
Metrick was in Toronto Tuesday to meet with staff at the Toronto Eaton Centre (TEC) store, who are being trained in advance of the grand opening on Feb. 18. He said there is plenty of room for another luxury retailer in Canada, despite a recent increase in competition.
Holt Renfrew, which has dominated the luxury market, has been expanding and renovating its network. Seattle-based retailer Nordstrom is scheduled to open stores at Yorkdale and TEC in the fall of 2016. Maison Simon’s, which also offers some competition at the luxury level, is scheduled to open at Square One in March.
“If you look at this market versus other major markets in the U.S. where we have successful stores and competition, I think there’s room,” said Metrick.
He has had his eye on a Saks in Canada since joining the senior executive team at Hudson’s Bay Co. in 2011, after 15 years at Saks.
“I used to say: ‘There’s got to be a Saks here.’ I felt it was time for Saks,” said Metrick, 42.
Hudson’s Bay bought Saks in a deal that closed in 2013.
The Sherway Gardens store will open Feb. 25. Both properties are owned by Cadillac Fairview.
Metrick is in charge of the 38 Saks stores in the U.S. and the Canadian stores, which mark the retailer’s first international foray, as well as e-commerce for Saks. The brand operates with partners under license in other countries.
A third Saks location in Canada, to open in 2017, is close to a deal, he added. A Saks OFF Fifth will open spring of 2016 at Vaughan Mills.
“I get a lot of questions, candidly . . . about what kind of Saks is this going to be. Is this going to be a Canadian version of Saks, is this going to be different than the U.S.? The answer is: ‘There is only one Saks,’ ” said Metrick.
“You can’t really compare Canadian consumers to American consumers. Because we have the New York City consumers, we have the Troy, Mich., consumer and we have a South Florida consumer. We have all different types of consumers. So I wouldn’t say the consumer in Canada is necessarily different from the American consumer. I think it’s a matter of understanding the local clientele.”
The two new Saks stores — 150,000 square feet at Sherway and 165,000 square feet downtown, will represent the brand in different ways, said Metrick.
“The Eaton Centre store is Coca-Cola. The Sherway Gardens store is Cherry Coke; it’s not Diet Coke or Coke Light. It’s a complementary version of what we deliver; the service, the fashion content and the experience is going to be consistent.”
The global market for overall luxury goods, including cars and fine arts, grew by 5 per cent in 2015, according to a recent report by the management con- sulting firm Bain & Company.
But once current exchange rates are factored out, real growth in the personal luxury goods market — including leather accessories, fashion, fragrance and cosmetics — is significantly slowing to 1 to 2 per cent.
“For the last several years, we’ve referenced ‘luxury’s new normal’ with a deceleration of the personal luxury goods market. Now, we are starting to feel the impact of that slowdown,” Claudia D’Arpizio, a Bain partner in Milan and lead author of the study, said in a release.
“The challenge for luxury brands in this environment is how to successfully navigate through hard-to-predict volatility.”
The luxury market remains a good place to be at a time when people are buying high and low, leaving the middle market to struggle, said Andrea Baldwin, a partner and management consultant at KPMG.
“The middle guys are having a hard time. People are trading up and buying luxury or trading down and buying discount. In Canada, it’s very competitive now.”