Excellent Analysis of the Montreal Fashion Retail Environment

19 May

Starting with the visible signs–vacant storefronts in seemingly prime  Ste-Catherine street real estate that stay vacant for extended periods (even years)–Eva Friede provides an excellent analysis of the Montreal retail scene.

Some of Friede’s observations from the article, along with additional thoughts:

  • Although Ste-Catherine has some high-profile vacancies, vacancies could be a more serious problem on St-Denis, St-Laurent, and Laurier West.

My follow-up observations: (1) the arrival of some national and international retailers–like Urban Outfitters and MEC–on St-Denis and a stagnant economy could have caused the independents on St-Denis to leave. (2) Lingering effects of repairs to St-Laurent  problems that the Keystone Cops could have managed better than the city drove away shoppers to St-Laurent.  The a increasingly restrictive driving patterns and prohibitive parking rates are keeping them away.  (3) Dix30, Carrefour Laval, and even Galeries d’Anjou, where shoppers can find  are an increasing selection of top-of-the-line merchandise, are  threats to Laurier West.  Gordon Ramsey’s high profile restaurant that fizzled faster than a microwave can make tea–and that is boarded up and slightly graffitied now–doesn’t help matters.

  • Noting the increasing role of online commerce in retail, Friede reports that over 50 percent of the members of the Quebec retail federation lack websites.  A point of clarification would probably be helpful: Do that they lack websites entirely or merely e-commerce sites? The two differ.
  • Talking about  Jacob, the Canadian retailer that recently filed for bankruptcy, Friede reports two possible contributors. One is that the retailer failed to distinguish itself, a problem that has also caused a slump at Mexx (and, I might add, at Sears and, previously at The Bay).  Like many successful retailers (and organizations in general), the company tended to coast on its laurels rather than respond to an ever-volatile environment.

The other possible contributor is the arrival of other retailers.  They not only provided competition, but their deep pockets also resulted in mall managers moving Jacob to less desirable locations, on the belief that the new retailers would generate higher sales.  Although understandable on an economic level, the situation has a certain David and Goliath feel to it.  It also suggests the possibility that mall landlords have limited loyalty to their long-time tenants.

  • Speaking of economics and retailers, Friede suggests an interesting link between present conditions and recent economic history.

First, one of the key reasons that retailers have such interest in Canada is that Canadian retail weathered the economic crisis better than most other countries.  Friede provides some of the numbers.  Between 2008 and 2010 at the height of the crisis, retailers like Le Chateau and Reitmans performed had strong years.

In contrast, retailers like H&M and the Gap had particularly weak years.  I remember reading one article in Business Week at the time that questioned the solvency of H&M, which was building stores to gain market share even though it wasn’t generating much profit.  Similarly, the Gap was floundering, capping a string of unsuccessful seasons and musical chairs in its executive offices.  Flash forward to 2014.  H&M and Gap stocks have rebounded, while Le Chateau and Reitman’s are tanking.

Second, Canadian malls are more productive  than their overbuilt American cousins.  The typical mall in Canada generates 40 percent more sales per square foot; even the typical Quebec mall generates nearly 22 percent higher sales.

With some, like the New York Times, reporting that the Canadian middle class now has the same spending power as Americans, no wonder retailers find Canada attractive.

To see Friede’s complete article, click here.

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