Attention Canadian Shoppers: The U.S. Retail Invasion is Here!

Rumblings abound in the Canadian media last year about high-profile American Department stores invading this country's shores in a play for soft international expansion.

"They look at us as being a safe, very consistent-with-what-they-know market, so therefore they can play in the international market without getting a bloody nose," Brent Barr, international retailing instructor at Ryerson University told The Toronto Star, adding that U.S. retailers have confidence in Canada's stability in the retail and financial sectors. He also told them that many stores weren't large enough to start international expansion 20 years ago, and are beginning to do so now because there is no more room to grow in the U.S.

With the arrival of Marshalls in Ontario in March 2011, this American expansion into the Canadian market has already begun and Canadian shoppers are already starting to see if the U.S. chains they heard about for years are worth their hype and reputations. Marshalls though, is only the beginning.

With more U.S.-based chain stores on the way, we thought it would be worth it to rundown their current status and what Canadian shoppers have in store for them when they finally set foot in these American retail giants.
Marshalls

Marshalls was the first of the American retailers out of the gate in Canada and has had a year to establish itself since opening last March, so the reviews are already in. For the uninitiated, Marshall's is known for being a cleaner version of Winners (Both stores have the same corporate parent -- TJX Companies) with wider selection and cheaper prices. However, according to shoppers posting comments at Smartcanucks.ca, people have been a little disappointed:

"The prices are no dif­fer­ent than Winner's - yes, there's more shoes but over­all com­pared to the USA stores, what a disappointment," writes Sheri. Her complaint about the prices being the same as Winners, instead of cheaper than the outlet, were shared by the majority of commenters. A few of them even say the price was higher than Winners.

However, a smaller number praised their wide selection of designer brands that aren't available at Winners, especially when it came to the shoes. Prada, Gucci, Coach, Puma, Jes­sica Simp­son and Nine West are all reportedly being offered. The stores are also apparently cleaner than Winners, which is saying something, given that construction expanded in Ontario from six stores to 12.

The expansion of Marshalls across Canada will continue, thanks to a store opening in South Vancouver in the fall of 2012.

Target

When it comes to Target's plans to move north of the border a year from now in the spring of 2013, it'll probably play out like Invasion of the Body Snatchers, (signing a nearly $2 million deal with HBC to take over Zellers locations) while it may be more like Invaision of the Booty Snatchers for those who can't wait to grab the one of a kind designer merchandise they offer.

There is definite skepticism out there, as Canadian shoppers wonder whether they will be able to benefit from Target's well-known designer partnerships at the same reasonable prices that American shoppers enjoy. So far, Target reps have assured us that will be the case.

"Our Canadian customers can expect the same exclusive products, the same designer partnerships and the same environmental and community outreach that their American neighbours enjoy," Target spokesperson Amy Reilly told Walletpop in an earlier article.

When Target launched a pop-up store on Toronto's Queen St. West on February 23, 2012, they had an excellent opportunity to demonstrate that commitment. The store was there to celebrate the launch of their Jason Wu for Target collection and in addition to most designs in the collection being around $20.00, Target staff walked around the line of 1,500 shoppers with coffee and Jason Wu himself, most famous for Michelle Obama's inauguration dress, was in attendance signing autographs and posing for pictures.

According to Canadian Business, the Target pop-up store had other retailers running scared:

"In early February, Wal-Mart Canada announced plans to invest $750 million over the next year in expansions, renovations and 14,000 new jobs. Sears Canada also said recently it would slash prices on more than 5,000 items."

So, even if Target doesn't quite turn out to be everything it is in the U.S., it seems to be influencing the country's retail landscape in a positive direction and all indications to this point seem to be that Canadian customers who enter a Target in 2013 are in for a transformative experience.

Next year, Target will launch 13 stores in Vancouver, Alberta and Quebec, three in Manitoba and Saskatchewan, one in Nova Scotia and 37 in Ontario.

Bloomingdales

Bloomingdales is the newest U.S. retailer to plant a stake in the Canadian market, but not as an outright stand-alone chain of stores.

Instead, Hudson's Bay Co. is in talks with Bloomingdales parent Macy's Inc. to bring the brand to Canada as a "store within a store," according to The Globe and Mail. Not wanting to be left behind in the impending influx of American retailers, this is their move to carve out a place in the coming retail landscape.

"It's the Bay's way to fight fire with fire," said Jeffrey Berkowitz to the paper. He's president of Aurora Realty Consultants, which advises retailers on picking real estate space. "It's part defensive, and it's part offensive. Nobody wants to be the one left behind."

Despite its high-end price tag and designer labels, Bloomingdales has apparently outperformed Macy's, even in the midst of a down economy. The brand has already launched an e-commerce site catering to Canadian customers because, frankly, they are wealthier than their American counterparts.

"Canadians are wealthier and healthier now on a per-capita basis than Americans," said Ian Thomas of retail specialist Thomas Consultants. "Canadians have a greater appetite now for luxury goods."

The statistics back him up on that point. Canadian shopping malls outperform their U.S. counterparts by almost 50 per cent in sales per square foot, Colliers International reported. While the average mall performance in the U.S. in 2011 was just above $400US per square foot, Canadian malls generated an average of almost $600, it found.

Unnamed sources told The Globe that The Bay wants to put a Bloomingdales in Toronto in its high-end Bloor St. West location, as well as one store each in Vancouver and Calgary. These Bloomingdales express-style shops could be appearing as early as this fall.

Dollar Tree

Dollar Tree took over the 85 stores of the smaller Canadian brand Dollar Giant for a $52 million price tag last November.

Walletpop Canada's resident dollar store diva Marlene Alexander has already checked out what the Brand has to offer and she found it had both pluses and minuses when compared to its more established competitor Dollarama.

"Dollar Tree has a store flyer and sells a reusable tote with their logo on it. Dollarama doesn't publish a store flyer and, while they have a wide variety of reusable totes, none sport the Dollarama logo," she said.

But what really counts is the price and that's where her most interesting analysis comes in:

"Dollar Tree sells everything for $1.25 or less. All of their food items, including bread, cost a buck. Much of it is brands we know like ItalPasta and Burns canned meats. Dollarama's highest price point of $2 allows them to offer shoppers a more varied shopping experience including more and better products. They're still the best place to satisfy a sweet tooth, selling regular-sized chocolate bars for just 69 cents each. Dollar Tree's price is 75 cents. However, a mesh back supports that Dollarama sells for two bucks, sells for just $1.25 at Dollar Tree, so it's worth comparing prices between the two stores."

Dollar Tree continues to expand with more stores launching in Ontario, B.C., Manitoba and Saskatchewan through June and July 2012.

J. Crew

J Crew had quite the following in Canada, thanks to their online presence, before they ever opened their first brick and mortar location in Toronto's Yorkdale Shopping Center last year. Many of these shoppers couldn't wait to get a look at their trendy and celebrity endorsed fashions and accessories at reasonable prices.

Unfourtnately, they were sadly disappointed. With many of their customers taking to consumer forums to vehemetly complain about the price disparity that existed between the website and the store, some even took their purchases back.

Suzanne Dugard was among them. This former fan calculated that four items she purchased online from J. Crew last summer for $260US would cost $385.57 today – almost 50% more. The latest rate includes taxes and duties of $93.12 as well as the chain's new $9.95 shipping rate (which is lower than the previous shipping and handling fee of $34.50).

Plus, The Globe and Mail discovered that as good as their online prices are in Canada, they are much higher than the same site in the U.S. They write that For example, the retailer's No. 2 leopard pencil skirt costs $144 at the store in Toronto and online, but just $118US on its U.S. website (about $117 Canadian) –- a 23% increase.

Thanks to the firestorm of complaints, J. Crew adjusted their pricing in Canada by taking duty off of the prices online and in store."We have to deal with what we didn't do right," Mickey Drexler, chief executive officer of J. Crew, said in an interview with The Globe and Mail. "We're fixing that now ... If we didn't do anything about it – guaranteed, we would see a deterioration in business."

Still, even without duty, Canadians pay 15% more than Americans, which Drexler chalks up to the cost of doing business north of the border. "We are looking at what others do ... The fact is, prices are higher in Canada than they are in America."

In addition to the Toronto location, J. Crew has big plans for 2012 -- launching stores on Robson Street in Vancouver, inside West Edmonton Mall and another Toronto flagship in the Eaton Centre.

Nordstrom

The upscale department store Nordstrom has been looking at expanding into Canada for over a year, but their roadblock so far has been finding suitable real estate for their first stores in this country.

That may change now that Sears has closed stores in Vancouver, Calgary and Ottawa and according to sources, the landlord at those locations, Cadillac Fairveiw Corp. offered them to Nordstrom around March of this year. Another rumour has Nordstrom moving into HMV's old flagship spot on Robson and Burrard Streets in Vancouver, a location that's relatively close to Nordstrom's head office in Seattle and follows overtures that they want their first Canadian store in Vancity.

If that happens anytime soon, shoppers can expect something a little bit more upscale that The Bay and a little less stuffy and hoity-toity than Holt Renfrew. In fact, Nordstrom has a few advantages when compared with Holt, including a better points card and online shopping options.

According to fashion blog Roccapuccia, you can "earn 1.4 points for every dollar spent at Holts itself and one point per dollar for everywhere else. In short, you'd have to spend $3,571 at Holt Renfrew before you would be eligible for a $50 gift card. Nordstrom's card is called Fashion Rewards. With this card, you get $20 in gift cards on the very first day you spend $100 on your new card. Then you get two points/dollar for every dollar spent at Nordstrom and can redeem 2,000 points for $20 notes. This means to get $50 in free money, you'd have to spend about $5,000 at Nordstrom. But the real allure of this is that you get free tailoring. There are membership levels which get you different amount of points earned and perks and free online shipping,"

There online store still has higher prices than the U.S. and charges duty, but apparently, "when there's a sale on and the dollar's doing well, you can still find some amazing deals."

Stay tuned for Part Two of "Attention Shoppers" when we review plans by Kohls and J.C. Penney to move up north and see what American-based outlets Wal-Mart and Lowe's are doing to keep up.