Luxury retailers in Canada to battle it out as sector faces challenging years

MONTREAL - Industry watchers say Canada's retail clothing sector is expected to slow in the coming few years even though the battle for luxury shoppers is revving up.

See Full Article

After two years of growth approaching four per cent, sales are forecast to slow and bottom out to a mere one per cent increase in 2018, says Trendex North America, a marketing research firm specializing in the clothing industry.

This year's sales are expected to grow by 2.4 per cent this year versus 3.8 per cent last year, slipping to 1.7 per cent growth in 2017 before inching back up to 2.1 per cent growth in 2020, Trendex said in a 2016 retail apparel market forecast.

But that could prove optimistic because the organization's outlook for economic growth is much stronger than the Bank of Canada's revised forecast of 1.4 per cent.

"I don't think this is going to be a banner year," retail consultant Wendy Evans said in an interview.

The low Canadian dollar is going to put pressure on retailers' margins and force them to offset higher costs by hiking prices, perhaps by three to five per cent.

But the luxury segment, Evans said, should help ease the sluggishness in the low- to mid-priced sector as Saks Fifth Avenue makes its Canadian entry this month with the opening of two Toronto stores, and U.S. retailer Nordstrom expands its presence with three new locations in Toronto this year and next.

The openings will give wealthier Canadians a reason to shop at home instead of travelling to global fashion centres like New York, while also attracting Americans looking to take advantage of the low loonie, she said.

Jim Danahy, CEO of retail advisory firm Customer Lab in Toronto, said the Quebec City-based Simons will increasingly be part of the competitive mix as the 175-year-old retailer continues to expand across Canada.

"They do a heck of a good job at assortment and service and are going to compete adequately against Nordstrom, Saks and Holts," he said.

Increased competition will erode Holt Renfrew's dominance in the luxury segment at least initially as customers visit the new retail options, said Jean Rickli, a retail consultant for the J.C. Williams Group.

"If Nordstrom is true to their word on customer experience, it's going to be tough going for Holt Renfrew," he said in an interview.

But he added that the Canadian chain has made some headway by making plans to expand its Vancouver store later this year, and opening two hr2 outlet stores on the outskirts of Montreal and Toronto that appeal to millennial shoppers.

Luxury menswear retailer Harry Rosen has also prepared for beefed-up competition by enlarging four of its stores and adding three locations last year.

While retail sales will be under pressure, analysts expect e-commerce will continue to flourish. Although a small part of their businesses, HBC, Le Chateau, Lululemon and Reitmans saw online sales increase between 16 and 72 per cent in the third quarter.

Industry observers say they expect Sears Canada will continue "drifting," and predict as many as four Canadian-based apparel retailers will either go out of business or be acquired this year.

Danier Leather is apparently the first. It entered insolvency protection last week as it seeks a buyer after years of financial problems.



Advertisements

Latest Economic News

  • Asian stocks drop after big sell-off

    Economic CTV News
    HONG KONG - Asian stock markets were mostly lower Friday with investors finding little guidance with Wall Street closed for the Thanksgiving holiday and Chinese markets in focus after a big sell-off the previous day. Source
  • Stores hope deals, excitement draw shoppers for Black Friday

    Economic CTV News
    NEW YORK - Stores are hoping deals and excitement bring shoppers to stores and to their sites for Black Friday, one of the biggest shopping days of the year. But Black Friday has morphed from a single day when people got up early to score doorbusters into a whole season of deals, so shoppers may feel less need to be out. Source
  • TransCanada: Over 24K gallons of oil recovered from spill

    Economic CTV News
    AMHERST, S.D. -- TransCanada Corp. says it has recovered more than 24,000 gallons of oil from the site of a pipeline leak discovered last week in South Dakota. The company said 24,450 gallons of oil had been recovered as of Wednesday. Source
  • Aurora Cannabis buying greenhouse designer Larssen to push pot partnership plans

    Economic CBC News
    Aurora Cannabis Inc. says it intends to use its ownership of greenhouse design firm Larssen Ltd. to pressure other cannabis producers to enter partnerships that will further its aggressive growth plans. In a news release, the Alberta-based cannabis producer said Larssen is involved with more than 15 cannabis industry clients globally, including five Canadian licensed producers, but the Canadian deals will be reassessed once the buyout announced Thursday is completed. Source
  • Canadian house prices 50% overvalued compared to rents: OECD

    Economic CBC News
    Canada leads the world in terms of household debt levels, and it's a major risk to the country's economy, the OECD says in a new report. In a chapter of a report set to come out next month that has been released in advance, the Organization for Economic Co-operation and Development says that while virtually all countries saw their debt loads increase in the years leading up to the credit crisis of 2007, most have seen their indebtedness decrease over time. Source
  • Uber hack latest example of why vigilance required to keep your wallet safe

    Economic CBC News
    When Doug Hoyes had his credit card information stolen, fraudsters used it to pay for three taxi rides in Toronto. He wasn't in that city, but discovered the charges while routinely checking his card transactions online and notified his bank, which cancelled the card. Source
  • Security alert: How vigilance can keep contents of your wallet safe

    Economic CTV News
    OTTAWA -- When Doug Hoyes had his credit card information stolen, fraudsters used it to pay for three taxi rides in Toronto. He wasn't in that city, but discovered the charges while routinely checking his card transactions online and notified his bank, which cancelled the card. Source
  • Canadian drug-maker accused of abusing market dominance

    Economic CTV News
    OAKVILLE, Ont. -- Britain's competition regulator is accusing Canadian specialty drug company Concordia International Corp. of overcharging for a thyroid drug after raising the price by nearly 6,000 per cent between 2007 and 2017. In a statement of objections, the Competition and Markets Authority is alleging Concordia abused its market dominance in the supply of liothyronine tablets. Source
  • Regulator investigating Sears Canada liquidation sale prices: monitor

    Economic CTV News
    TORONTO -- The Competition Bureau is investigating allegations that prices on some merchandise were marked up ahead of the liquidation sales at Sears Canada that began last month, the court-appointed monitor overseeing the retailer says. Source
  • Sears Canada liquidation sale pricing under investigation

    Economic CTV News
    TORONTO -- The Competition Bureau is investigating allegations that prices on some merchandise were marked up ahead of the liquidation sales at Sears Canada that began last month, the court-appointed monitor overseeing the retailer says. Source