NEW YORK — As American retail’s migration north continues — Target recently said it will open stores in former Zellers units — Canadian retailer Aritzia is heading in the opposite direction.

This story first appeared in the February 4, 2011 issue of WWD. Subscribe Today.

A temporary location on the third floor of 524 Broadway and Spring Street will debut Sunday, a precursor to Aritzia’s permanent 10,000-square-foot bi-level unit opening in May.

Aritzia, a vertically integrated multilabel retailer for women ages 18 to 35, produces eight proprietary brands with names such as Wilfred and A Moveable Feast. All are designed in-house and are far from basic. “They’re there to stand on their own as individual brands and to complement the other brands,” said Brian Hill, chief executive officer. “They’re not private label. We have full design, pattern and technical teams and sourcing capabilities. We can control the fit and there’s consistency in the style and quality.” So far, Hill has declined to sell the brands to other stores, but it hasn’t been for a lack of inquiries. There are plans to wholesale them in the future, he said.

About 25 percent of Aritzia’s merchandise mix consists of designer labels. In SoHo, outside labels will comprise 30 percent to 40 percent of the offering, since the store is larger than typical units. J Brand, James Jeans, Athe Vanessa Bruno, Cynthia Vincent and Rag & Bone are among the labels sold.

Aritzia operates 48 units, including stores in Chicago, San Francisco, Portland, Seattle and Short Hills, N.J. Hill said he waited until Aritzia was ready for prime time before entering Manhattan. “We purposely didn’t open there initially because there are a lot of unforeseen challenges with a new business,” he said. “Our strategy was to quietly open in some important markets, but not necessarily Manhattan. We had some immigration challenges initially and supply chain issues.”

Hill now feels comfortable with the idea of multiple units in Manhattan. “There’s a lot of opportunities, including six major ones I see,” he said. “Fifth Avenue may be in our cards and is a big project. Some of the other stores will be smaller projects.”

Aritzia could make things interesting for Intermix and Scoop, two multibrand retailers with outposts in SoHo. “I’m fairly comfortable with the competition — from Opening Ceremony to Intermix,” Hill said. “SoHo is predominantly single-brand stores. It’s a testament to how good the real estate is and how good the customers are.

“What gives us the confidence to [expand] in the U.S. is that our product has resonated with the American consumer. Our bestsellers in Canada are also bestsellers in the U.S. Our top colors in Canada are the top colors in the U.S.” One difference is the average spend, which is higher in the U.S. than in Canada.

Hill declined to disclose U.S. volume but said 2010 comps were up 30 percent over 2009. Total sales were $250 million last year. Aritzia is focusing on the Northeast, Northern California and the Northwest, due to the similarities with Canada’s climate. Six to eight stores are planned for 2011, including a unit at Garden State Plaza in Paramus, N.J. “We’re focusing more of our energies on the U.S.,” Hill said. “We’re running out of runway in Canada.”

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