COMING TO A HOLT
Retailer axes luxury services to refocus on incoming U.S. competition,
The barber chairs are gone, the shoe shine service is closed, the blow-out bar shut in January — Holt Renfrew at Yorkdale has scaled back on the luxury services it began offering customers in 2014 as the Canadian chain underwent a $300-million renovation and expansion to maintain market dominance in the face of a looming U.S. retail invasion.
Holt Renfrew has also scaled back on employee hours and made changes in the senior ranks as it adjusts to competition from Nordstrom and Saks Fifth Avenue, powerhouse U.S. luxury retailers that have opened slick outposts in Canada, each with two new locations in the GTA.
Earlier this year, Holt Renfrew announced that it will close its two hr2 discount stores, one at Vaughan Mills and the other in an outlet mall in Brossard, Que., near Montreal, while Nordstrom Rack and Saks Off 5th discount stores are expanding in Canada.
But in an interview with the Star, Holt Renfrew president Mario Grauso said the many changes that have been made since he took over the brand in September are not the result of a decline in fortunes.
“Holts hasn’t had competition in the Canadian market like we do now, but with a strong assortment of key brands, a great customer experience and strong marketing, we are confident that we have set ourselves up for success,” said Grauso.
Adjusting staffing is something that is done from time to time and should not be regarded as a sign the retailer is in trouble, he said. Removing the barber chairs and shoe shine services will allow the store to invest more in brand presentation.
“We are very happy with where we are in terms of sales and we . . . are confident about our future,” he said, while also pointing out that the widespread retail slowdown in North America is inspiring caution among all merchants.
“All businesses deal with cycles, whether it is due to shifting economic conditions or seasonality.”
Retail sales of Canadian luxury apparel and accessories increased by 4.5 per cent during 2016 to $2.3 billion (Canadian), according to Trendex North America’s Canadian 2017 Luxury Apparel Report.
But foreign retailers are now taking a big bite out of a pie that used to belong almost exclusively to Holt Renfrew, part of the Weston family empire that includes Loblaws, Shopper’s Drug Mart and Joe Fresh.
In 2016, the five Nordstrom stores in Canada rang up $300 million (U.S.) in sales. A sixth Nordstrom is scheduled to open at Sherway Gardens on Sept. 15.
Saks Fifth Avenue is part of the Hudson’s Bay Com- pany. It does not break out sales in Canada.
Holt Renfrew is also facing increasing competition from luxury brands, such as Chanel, opening stand-alone stores.
“It logically follows that five years from now there will be a shakeout in the Canadian luxury apparel market, and those retailers left standing will be those who are committed to continually upgrading their customer’s shopping experience,” according to Randy Harris, president of Trendex North America.
The Canadian luxury retail market has seen unprecedented growth in the last five years, according to James Smerdon, vice-president and director of retail consulting for Colliers International.
“To describe the competitive environment as fierce would be an understatement,” he said.
Smerdon pointed out that much of the competition among luxury brands happens behind the scenes, before the stores even open: they compete for the best locations, the best talent, the best brands and brand exclusives.
He said the saturation point is hard to discern, because the retail sector is in flux, with Sears Canada’s decline hollowing out the mid-price point, creating an opportunity for luxury retailers to carry some lower-priced products to attract new customers.
“They can maintain their margins on the cheaper product while potentially upselling the consumer on their meat-and-potatoes luxury goods,” said Smerdon.
Nordstrom and Saks also have discount operations that could capture sales around the edges of luxury, among shoppers who want high-end labels at affordable prices.
There are 11 Saks Off 5th stores operating in Canada, including one at Vaughan Mills, and five more opening in 2017.
Six Nordstrom Rack discount stores are scheduled to open in Ontario and Alberta in 2018.
Grauso said that since he took the helm last year, Holt Renfrew has improved its e-commerce website and magazine and has strengthened its high fashion business for men, including men’s accessories.
Grauso said the company is pleased with the performance of the Holt Renfrew Men store on Bloor St. and has added new brands, including Brioni and Sacai, to respond to the fashion-forward clientele that shops there.
“We’ve rolled out the men’s concept to other doors, including Square One and in our newly renovated and expanded Vancouver store,” said Grauso.
Holt Renfrew has also built a strong contemporary — or fashion casual — business in both men’s and women’s, including Comme des Garcons Play by Japanese fashion designer Rei Kawakubo, offering what Grauso calls easy clothing at attractive prices and for all ages.
“They have deep pockets. They have the luxury of time and money,” said Zane Aburaneh, referring to Holt Renfrew, where he worked before founding his own retail enterprise.
Luxury retail consultant Brian Winston of Winston Collective also believes Holt Renfrew do well over time.
In Toronto, Canada’s biggest marketplace, Holt Renfrew benefits from having alocation on Bloor, close to affluent shoppers in neighbourhoods like Rosedale, who find it more convenient to shop there than the Toronto Eaton Centre, where Saks and Nordstrom are located, said Winston.
In fact, Winston thinks all three retailers will likely find success in the Canadian marketplace. “I would be very hesitant to say that there would be a failure.”
Farla Efros, president, HRC Advisory, said Holt Renfrew is probably losing sales to both Saks and Nordstrom.
At Yorkdale Mall, Nordstrom has the advantage of being part of a shiny new wing that is attractive to shoppers.
Efros said her research shows that shoppers typically spend 90-120 minutes in malls and they only visit between three and five stores. So if shoppers are drawn to the Nordstrom end of the mall instead of the area where Holt Renfrew is located, that creates a problem for Holt Renfrew.
“I think it’s tough across the board. I think they are all competing for the same share of the pie,” Efros said.