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Holt Renfrew Sets New Concept

The department store chain will next year launch "hr2," a lower-priced alternative to its luxury stores.

A rendering of an HR2 store.

Holt Renfrew will next year launch hr2, a lower-priced alternative to its luxury stores.

The Toronto-based retailer said the concept will “fill a void in the Canadian market” and will debut in March with a 30,000-square-foot store in Montreal’s Quartier DIX30 shopping center. Another location is planned for Ontario early next year. The company expects to open hr2 stores across the country but did not specify how many.

Officials said hr2 will not carry any of the same merchandise sold at Holt Renfrew stores, though the new retail division will be stocked with lower-priced or secondary labels from many of the same designers and brands that supply Holt Renfrew with their top-priced lines.

The executives were firm in stating that Holt Renfrew is in no way retreating from its luxury status and reiterated previously announced plans to expand Holt Renfrew’s square footage by 40 percent by the end of 2015 by enlarging, renovating or relocating existing stores.

However, considering Canada’s relatively small population of about 34 million, the Holt Renfrew chain, with 10 stores operating, including one outlet, would be hard-pressed to grow its store count and would instead require new growth vehicles, particularly in light of the current influx of U.S. retailers. Among the American retailers set to move into Canada beginning next year are Target Corp. and Nordstrom Inc., while J. Crew, Ann Inc. and others have recently set foot in the country and will be adding stores. Hudson’s Bay Co. is also spending big on modernizing, and designer boutiques are slowly filtering into urban areas.

Holt Renfrew’s new strategy mirrors those of other luxury chains such as Barneys New York, which more than a decade ago started the Co-Op chain, and Neiman Marcus, which six years ago launched its Cusp contemporary division.

“Today’s news is an excellent testament to our record performance, and further fuels our strong growth trend,” said Holt Renfrew president Mark Derbyshire. “In addition to expanding the Holt Renfrew luxury retail space by 40 percent, we’re [pleased] to leverage our 175 years of expertise in Canadian retail, and our deep relationships with the world’s leading brands, to enhance our market reach with hr2, a unique and compelling new retail concept that just does not exist here today.”

Derbyshire said the merchandise assortment and shopping experience at hr2 will be “like no other in the market today” and will include unique product lines sourced especially for hr2 and not available elsewhere in Canada. The division will have its own buying and operations teams, and will offer women’s and men’s wear, accessories, footwear, leather goods and fashion jewelry. Stores will have their own merchandisers.

Derbyshire said the hr2 stores will be airy and easy to navigate, and will have space for seasonal themes, brand highlights and daily shipments. The stores are being designed by the Janson Goldstein architectural and design firm, which has worked with Holt Renfrew in the past.

Heather Arts has been named vice president of hr2 to lead the division. She joined Holt Renfrew in May as vice president of special projects. Previously, she was a merchandising director at Lowe’s Canada, and earlier a senior vice president and general merchandise manager at Winners.

“We can deliver this new concept because of the strong and enduring relationships we have with the world’s leading brands,” Arts said, adding that “the depth and breadth of our brand portfolios is impressive. Not all of it fits within the Holt Renfrew luxury model, and they see this as an ideal opportunity to further extend the market reach of their brands in Canada.

“Canadians can look forward to a strong national presence of our hr2 stores across the country before the end of 2015.”

According to sources, the 175-year-old Holt Renfrew is fast approaching $800 million in revenues and has budgeted more than $300 million for the Holt Renfrew expansion. No budget was given for hr2.

Holt Renfrew began as a cap and hat shop in 1837 in Quebec City. In 1986, W. Galen Weston and his family acquired the company and triggered a wave of renovations, store openings, new designer and brand shops, though the current expansion is more aggressive in its shorter time frame.

Weston is chairman of the Selfridges Group Ltd., the holding company for Holt, Selfridges in the U.K. and Brown Thomas in Ireland. Selfridges is also expanding with a big budget for capital improvements; systematically revamping its Oxford Street flagship, which recently unveiled a new men’s designer area, and will soon open larger halls for men’s shoes and beauty.