RETAILERS SPREADING NORTH FROM THE STATES TO CANADA

Byline: Brian Dunn

MONTREAL — For the past few years, Canadian apparel manufacturers have enjoyed tremendous success exporting to the U.S., due in part to a weak Canadian dollar, NAFTA and sophisticated European styling at a competitive price. Now, several American retailers are planning to try their luck in Canada.
The trek north is being spurred by the success of U.S. retailers who have already set up shop in Canada: the Gap, Banana Repub-lic and Wal-Mart among others.
New arrivals include the imminent return of Abercrombie & Fitch Co. which exited Canada about a decade ago. The company is looking to hit the Canadian market under a revamped format.
G&G Retail Inc., New York, which operates about 485 Rave women’s stores in the U.S., has also been scouting Canadian malls for locations because it feels the market is less saturated.
Other players looking to cross the border are J. Crew Group Inc., Pacific Sunwear of California Inc. and Old Navy. Although few would comment, Canadian mall owners said they’ve been approached by a number of U.S. retailers about leasing availability.
Old Navy said it plans to open its first Canadian stores in Toronto in summer 2001, but wouldn’t comment on its intentions for the rest of the country. However, the company expects its sales to surpass those of the Gap by year three, according to David Howell, vice president of market research company NPD Group Canada Inc., Toronto, who pegged that figure at over $102 million. He said the entire adult casual clothing market in Canada is worth about $3.2 billion.
“Five years ago, a lot of U.S. retailers wouldn’t consider coming to Canada,” he said. “But today, the U.S. market has reached maturity and their shareholders are demanding more growth, and so they’re coming to Canada.”
Howell said Old Navy is so well positioned for the Canadian market because of its lower price points than the Gap.
“I think a lot of U.S. retailers have discovered we don’t do it [retailing] very well. If American department stores decided to come here, a lot of Canadian chains would be in trouble.”
The northward movement doesn’t surprise industry watchers who feel Canada is going through a mini boom and is “under-retailed compared to the U.S.,” according to Richard Talbot of Talbot Thomas Consul-tants International, Unionville, Ontario. He said dot-com companies have forced a lot of retailers to think globally, and for U.S. companies, they think of Canada first. “But to make a go of it, they have to be in all the major Canadian cities such as Montreal, Toronto, Calgary, Edmonton and Vancou-ver,” said Talbot. “And if you look at the top 20 U.S. retailers, most of them are not here.”
Len Kubas, of Kubas Consul-tants in Toronto, said the three largest Canadian markets could sustain a new wave of U.S. retailers and he doesn’t see it as the demise of Canadian retailing. He said fashion needs new ideas and concepts to flourish and points to the success of Zara in Canada, a Spanish company operated by Reitmans (Canada) Inc. that makes all of its own apparel.