While off-price has been retail’s hottest sector, Holt Renfrew isn’t feeling it. The company’s off-price division, called HR2, will shut down in mid-2017, WWD has learned.
The division, which launched with two stores in 2013, was created to expand Holt Renfrew’s market reach, and provide a growth vehicle to compete against the wave of U.S. stores, which over the last few years have entered Canada, such as Saks Off 5th, as well as Nordstrom Rack, which will begin opening stores in the country in 2018.
The HR2 division, characterized by Holt Renfrew officials as “premium off-price,” has its own buying and operations teams, and offers women’s and men’s wear, accessories, footwear, leather goods and fashion jewelry.
“The decision to close the HR2 off-price model was made so that we can focus fully on our enhanced luxury business in our Holt Renfrew stores across Canada,” Mario Grauso, president of Holt Renfrew, told WWD. “This decision was a strategic one designed to benefit the business as a whole. It allows us to build our signature brands, enhancing our customer offering and providing even more extraordinary moments for our customers.”
Asked if Holt Renfrew would be developing an alternative lower-price strategy, Grauso replied, “No. This year we celebrate 180 years as Canada’s purveyors of luxury and are excited about the future.” He said the focus is on continuing to refine the assortment and customer experience and introduce new brands.
There are two HR2 locations, each approximately 25,000 square feet, in Vaughan Mills in Ontario and Brossard, Quebec. Grauso said they will close in mid-2017.
When the Toronto-based Holt Renfrew announced the launch of HR2 in October 2012, officials said the concept would “fill a void in the Canadian market” and that it expected to open HR2 stores across the country but did not specify how many. They said that while HR2 wouldn’t carry the same merchandise sold at Holt Renfrew stores, it would 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. Some key labels currently sold at HR2 include Eileen Fisher, Theory, Tahari, Vince, Rebecca Taylor, Cole Haan and Vince Camuto.
Grauso said very little of the merchandise in the HR2 units has been clearance from the Holt Renfrew luxury stores. “HR2 was not a clearance outlet for Holt Renfrew merchandise. Almost all of the products at HR2 are purchased specifically for HR2. Holt Renfrew has a completely different assortment.”
As Canada’s leading luxury retailer, Holt Renfrew has limited growth potential. It already has nine units across Canada where there is a relatively small population of about 35 million, though last year, a Holt Renfrew store opened at Square One in Mississauga, Ontario. In addition, Holt Renfrew recently unveiled an expansion and major renovations at its Vancouver flagship including an 8,500 square-foot shoe hall.
“As part of our forward-looking vision, we will continue to enhance our stores with updates to come this year. Currently, we are not planning any store openings,” Grauso said. “In 2017, we will be investing in several Holt Renfrew stores across the country in our continued effort to exceed our customers’ expectations.”
Grauso became president of Holt Renfrew last September after running Joe Fresh, succeeding Mark Derbyshire. The change in command, Grauso said, provided “an opportunity to refocus our efforts and priorities.”
Joe Fresh is one of six operating divisions within Loblaw Cos. Ltd. whose largest shareholder is George Weston Ltd., which is majority-owned by the Weston family. Holt Renfrew is part of the Selfridges Group, which is also owned by the Westons.