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Northern Outposts

Winnipeg, Manitoba, a city of 600,000 inhabitants, has three major dubious claims to fame: It is the coldest city in Canada — a bone-chilling -20 F on Dec. 2 — it is the home of singer Burton Cummings of the Guess Who, and it is the head...

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Winnipeg, Manitoba, a city of 600,000 inhabitants, has three major dubious claims to fame: It is the coldest city in Canada — a bone-chilling -20 F on Dec. 2 — it is the home of singer Burton Cummings of the Guess Who, and it is the head office of Nygård International, now that the Jets of the National Hockey League have since left town.

The place was buzzing during the first week of December when one of the three production and development committee meetings held each year was taking place, bringing together all key personnel throughout the company.

With some 1,600 employees at head office and two production facilities, Nygård is one of the largest private sector employers in the region. That fact is driven home and around town by the omnipresence of Peter Nygård’s black and white image on the sides of the company’s transport trucks.

The private company launched by Nygård 35 years ago has estimated annual sales approaching $500 million. An important component of that amount is generated through the company’s 210 dedicated retail outlets in all Canadian provinces except Quebec, which is about to change. It also has about 1,000 independent Canadian accounts.

“The whole issue of having to translate everything into French and going into a completely different market initially prevented us from opening stores in that province,” said Art Pemberton, president and chief executive officer of Nygård Co. “But between this spring and next fall, we plan to open 20 stores in Quebec.”

Pemberton is one of three presidents or divisional heads at Nygård International. He’s primarily responsible for the company’s Canadian retail or dedicated stores. The others are Jim Bennett, president and ceo of the higher-end Nygård Fashions, and Denis LaPointe, president and ceo of moderate-priced goods under the Tan Jay and Alia labels.

In all, Nygård is scheduled to open 50 new outlets in 2003 under the Tan Jay, Alia, Tan Jay-Alia combo or Nygård banners. The company also sells under the Jay Set clearance name and plans to launch some 15 Jay Set & Co. 20,000-square-foot superstores that will sell women’s and men’s fashion, linens and other household items. Ten of the stores will be opened within the next 18 months, with the first two slated for Toronto and Calgary.

Pemberton disagreed with one industry analyst who suggested Nygård’s dedicated stores perform so poorly he wondered how they survive.

“Our retail stores perform very well,” he said. “They rank one, two or three in the malls where we operate. We have a very loyal customer base with more than 80 percent repeat business and record sales over the last 15 months.”

Nygård plans to double its retail business within the next two years, growing to 400 outlets, the optimal level for Canada, according to Pemberton, who worked at Eaton’s and Dylex in Toronto before joining Nygård 14 years ago.

In order not to cannibalize sales, Nygård is careful not to have a dedicated store and wholesale client in close proximity, even though a lot of their clients don’t carry the full company line. But it is not uncommon to have a Nygård outlet and Tan Jay outlet beside each other since they are going after different markets with different price points.

Nygård does no advertising, except for in-store promos, for its dedicated stores out of loyalty to its wholesale accounts. Most of the stores range between 2,000 and 3,000 square feet, primarily located in suburban shopping malls where rents are lower.

The higher-end brands under the Peter Nygård Signature and Bianca Nygård labels generate sales of $385 to $510 per square foot, followed by Tan Jay and Alia at $255 to $320 and Jay Set at $190. (Sales per square foot figures have been converted from the Canadian dollar at current exchange rates.)

The company believes in spending top dollar to build the initial store interiors and not touching them again for about 10 years. Peter Nygård and Bianca outlets, for example, cost around $75 per square foot to build.

“We believe the merchandise is what draws traffic and we’re spending more money on upgrading our in-store software systems rather than on store furnishings,” Pemberton said.

The dedicated store concept started about 25 years ago when Nygård approached some of the major department stores about putting a store within a store and was rebuffed.

“But our dedicated stores demonstrate how independents should operate their own businesses in terms of setting up software accounts,” Pemberton said.

Plus, increased efficiencies translate into lower prices which are passed on to customers, said Pemberton.

Nygård stores have been totally paperless for the past nine years. At the end of each week, records of the best-selling items go to the distribution centers and replacements are picked and packed and shipped out on Mondays and Thursdays.

There is no special trick to merchandising the stores, according to the division head.

“The presentation is very simple with the newest products in the front,” he said. “We want the fashion to stand out, not the displays. We put a lot of emphasis on customer service and client building. For example, we’ll give our best clients advance notice of upcoming sales through mailings, e-mail and even by phone.”

Nygård stores are heavily into community service through fashion shows at senior-citizen homes and sponsorship for breast cancer research. Personal dedication is also not uncommon.

Pemberton cited the example of one customer who was interested in a particular item that wasn’t available in her color or size and the manager drove to another company store to find it.

“There are three things a store has to offer,” he said. “It has to be presentable to a customer, it has to offer customer service and after-sales service or follow through. Regrettably in Canada, retail is not seen as a profession and we’re trying to change that.”

To generate traffic during slow periods, Nygård outlets will hold in-store fashion shows where customers model the fashions or hold one-on-one wardrobe sessions.

“Sometimes we’ll offer coffee and cookies or open early for mall walkers or hold product-knowledge sessions,” he noted.

Despite a sluggish economy, Pemberton expects Christmas sales to be 5 to 6 percent ahead of last year. Until three months ago, the company was enjoying double-digit growth.

While Nygård is known for its suitings and coordinates, its print blouse business is being overshadowed by sweaters, which Pemberton predicts will be even stronger next year.

Nygård expects to eventually open dedicated stores in the U.S., but not until Canada has been fully tapped out and after the American wholesale business has more time to develop.

Pemberton added, “We are trying to create a balance between our dedicated stores and wholesale customer.”

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