American Retailers Expanding to Canada

The following is an excerpt from an article in:


The New York Times
Saturday, September 15, 2012

American Retailers Expanding to Canada

By IAN AUSTEN and STEPHANIE CLIFFORD

TORONTO — Nordstrom and Target are about to open stores in Canada, J. Crew and Tory Burch just did so, and Ann Taylor and Kate Spade are scouting locations.

American retailers extending their reach northward seems like the most obvious of moves. But until recently, the Canadian market was hard to crack for many companies. The Canadian dollar was weak, costs were higher, and with limited real estate development, it was difficult to find space.

“You can’t just say that we are close in proximity or we both speak English, so it should be the same,” said Blake Nordstrom, president of the Seattle-based Nordstrom chain. “We recognize there are differences. That’s probably why we’ve probably been slow in coming to Canada.”

Now, the door to Canada is opening wider thanks to a stronger Canadian dollar, a relatively robust economy and a loosening of the commercial real estate market, in part because of the downsizing of some longtime retailers like Sears Canada. Nordstrom said this week that it would open four stores in Canada in 2014, three of them in former Sears Canada locations.

For American retailers, Canada’s allure is basic: Sales per square foot at Canadian malls were almost 50 percent higher in 2011 than sales per square foot at American malls, according to Colliers International Consulting, a real estate research firm.

“Major Canadian markets are at historic lows for vacancy rates, and have been for four to five years now,” said James Smerdon, director of retail consulting at Colliers. “We have a much more conservative development financing and development industry in Canada. There’s not as many lenders for retail and large-scale shopping center development, so finding access to capital is trickier.”

Here in Toronto, the Yorkdale mall is adding 145,000 square feet, in part to accommodate American newcomers like Kate Spade New York, Tesla Motors and Ann Taylor. The high-end mall has been a first stop for other American brands, including J. Crew, Crate & Barrel and Apple.

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