Nordstrom knows it isn’t easy going international, even to Canada.
“We are certainly mindful of the competition here,” said Pete Nordstrom, president of merchandising for Nordstrom Inc., which opened its first store in Canada on Friday, in the Chinook Centre, in Calgary. It’s also Nordstrom’s first unit outside the U.S. and the $13 billion Seattle-based department store chain’s 118th full-line location.
“If we are going to compete, we’ve got to have a really good distribution” of vendors, Nordstrom told WWD. “That’s the stuff we are working on right now. Nothing is going to help us more than if we have success here in Calgary. Vendors want to go with retailers who are doing well. Harry Rosen and Holt Renfrew, they have great assortments, and Hudson’s Bay is clearly trying to improve” by elevating its offerings.
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“Maybe there are issues around distribution of the most coveted [merchandise] already in Holt Renfrew. We’ve run into that a little bit. If we have success, a lot of those barriers will go down,” he said.
Canada, a country with a population of only 35 million, is experiencing an unprecedented influx of U.S. retailers, who will be battling it out with Canadian firms for market share at a time when there are already questions as to whether the country is becoming overstored. Target opened more than 100 stores and is struggling with losses, pricing and customer acceptance. Saks Fifth Avenue, which plans seven full-line stores and makes its Canada debut in fall 2015, in Toronto, will be challenged to win over the luxury consumer from Toronto-based Holt Renfrew. Holt has the home-court advantage and is growing its square footage by 40 percent, stepping up service and bolstering designer offerings and, in a few weeks, opens its first men’s-only store on Bloor Street in Toronto.
Saks Off 5th and Nordstrom Rack outlets are also coming to Canada, and Wal-Mart, Ann Taylor, Loft, J. Crew, American Apparel, Marshalls, Tory Burch, Jimmy Choo, David Yurman and John Varvatos have already opened shop, among other U.S. retailers and brands.
Nordstrom noted that the assortment in the Calgary store, while to some degree overlapping those at Holt Renfrew and Hudson’s Bay, is “much broader.”
“We’re not looking to create some kind of Canadian Nordstrom. We want to operate the best Nordstrom we can,” he said, adding that there are “a lot of commonalities” between what Nordstrom sells in Calgary and in the U.S. “We are coming in with all guns blazing, to give them the best Nordstrom offer we can.”
“Ultimately,” Nordstrom added, “what you are competing against over time is peoples’ habits. We are asking people to change their shopping habits, to do something different. That’s not easy. You can’t take that for granted. You’ve got to slug it out and earn it. We’ve got to go into this market as humbly as we can. For us to be successful, we’ve got to earn it.”
Nordstrom has five more stores planned for Canada, in Ottawa’s Rideau Centre in March 2015, Pacific Centre, in Vancouver, in September 2015, and three units in Toronto: Eaton Centre in fall 2016, Yorkdale Centre in fall 2016 and Sherway Gardens in spring 2017. “I don’t think this is overly aggressive,” Nordstrom said about the rollout. “We are capable of this. We’re taking it one at a time. There’s no doubt we will have to evolve the stores. All of these stores are unique. This isn’t a cookie-cutter thing.
“We’re good with the six for now. We get the scale we need with six stores to do this well. Any opportunity that comes along we’re happy to consider. We’ll see how it all goes. It’s likely there will be more, but we don’t want to get ahead of ourselves.”
Nordstrom will also be operating Rack stores and e-commerce in Canada, but those launches have been delayed. “We have every intention of having Rack and having that seamless multichannel experience we have in the U.S.,” Nordstrom said. “We’ve got systems challenges.” He summarized them as involving creating the right infrastructure and logistics, handling foreign currencies, being able to transfer product from full-line stores to Racks and having one common database for the merchandise information. “We weren’t able to do everything all at the same time,” Nordstrom acknowledged, adding that Rack openings in Canada are at least a year away, if not longer.
Pricing is another challenge. “Our goal is to be competitive in pricing in Canada,” he said. “To have items priced exactly the same,” as they would be in the U.S. However, “there are practical issues around exchange rates and taxes. We are not trying to figure out how to make more money, just the same, but you have to take into consideration the costs of doing business. Most of what we sell is branded where there are differences — not huge differences — and they change by classification.”
Then there’s dealing with Canada being a big country with different climates and lifestyles. “We do business in Minnesota, and we do business in Florida,” Nordstrom said. “We understand climates. It’s not that different in Canada, but I don’t want to be presumptuous. We are going to learn. All of our merchant teams have spent quite a bit of time here [studying] the competition, talking to suppliers,” who, as Nordstrom said, don’t hold back on advising how deliveries should be timed and when and where different classifications should be emphasized. “Do we have it nailed? No, our goal is [to] make it great for the customer,” Nordstrom said.
The retailer will establish a corporate center in Canada but hasn’t determined a location yet. The Canada team has 250 individuals, including executives and support staff for such areas as store design, technology, merchandise, human resources, talent acquisition and development, supply chain and compliance, operations and privacy.
The Calgary store has 31 department managers and 500 sales and support positions, so Canadians will get a good dose of Nordstrom’s famous service. The store is in a former Sears that was gutted and rebuilt with a new interior-design concept that made its debut earlier this month in Nordstrom’s store at Woodlands Mall, Houston. There, too, Nordstrom took over a former Sears, and, in Vancouver, Nordstrom is again moving into a former Sears box.
“We tried to find ways to make departments intuitively easy to understand and navigate, and flexible,” so products and categories can be tweaked to reflect selling trends, Nordstrom said. The store is brighter than other Nordstrom stores, partly due to the glass walls extending off the glass-door entrances, which enable people outside the store to get a glimpse of the action inside. The single-surface white terrazzo tile floor throughout makes it easier for Nordstrom to size up or down brands and categories. “It looks like a Nordstrom, but it’s improved and pretty different. It reflects a big step forward,” Nordstrom said.
The Chinook Centre store has five shoe departments, expansive cosmetics and accessories areas and what Nordstrom describes as a comprehensive array of well-known brands for women, men and children. Shoe and handbag labels include Jimmy Choo, Rebecca Minkoff, Tory Burch and Vince Camuto. In women’s, there’s Burberry London, Missoni, Roberto Cavalli, Band of Outsiders, 3.1 Phillip Lim, Rag & Bone, Kate Spade New York and Vince. In beauty, there’s Burberry Beauty, Chanel, Jo Malone, La Mer, Nars, Diptyque and Creed, among other brands. For food, there’s Bazille, a bistro-style restaurant, and Ebar, for handcrafted coffee drinks and grab-and-go food.
Opening-day festivities Friday began at 7:30 a.m. with a beauty bash by the store’s mall entrance with skin-care consultations, demonstrations and makeup lessons. When the doors swung open, 500 employees cheered the incoming traffic. The night before, there was a sellout gala for the Alberta Children’s Hospital and Calgary’s United Way.
For Nordstrom, there was a sense of déjà vu. The Calgary opening brought back memories of launching stores in California and the East Coast and all the challenges those expansion chapters posed. “There’s kind of a pioneering spirit here again. The enthusiasm of our team is palpable. Our people are proud of what they are doing,” he said.