Saks Fifth Avenue arrival vaults Calgary into high-end retail’s big leagues

The interior of the new Saks Fifth Avenue store at Chinook Centre in Calgary. The store opened February 22, 2018

Calgary’s retail landscape takes a significant step upwards this week, with the long-awaited opening on Thursday of storied retailer Saks Fifth Avenue, in Chinook Centre.

It’s a bit ironic that the extensively renovated space it will occupy was once home to a Canadian retailer that dominated the lower end of the retail market in Canada — Zellers — and most recently, Target.

It is the third Saks store to open in Canada; the other two are in Toronto.

And, yes, just like Nordstrom, Saks is opening a store in Calgary before Vancouver.

For Chinook, the store’s arrival signals the mall is the dominant, high-end retail powerhouse in this city, if not the entire province, because no other shopping centre in the province boasts Saks, Nordstrom and Hudson’s Bay in one location.

“Does Chinook have the potential be a very powerful luxury centre? Yes,” said Marc Metrick, president of Saks Fifth Avenue.

Lydia Seifert, General Manager for new Saks Fifth Avenue at Chinook Centre in Calgary

The Calgary mall already racks up sales per square feet of CAD 1075 versus CAD 760 at West Edmonton Mall — and there are no plans to open a Saks store in Edmonton.

It’s all a bit counterintuitive — a luxury retailer opening its doors in a city whose economy has taken a beating since the bottom fell out of the oil market in late 2014. One would think Vancouver — with its already significant presence of luxury retail — would be more of a draw.

But according to the latest Retail Council of Canada report, the average household income in Calgary is much higher than Vancouver and the Lower Mainland — CAD 137761 versus CAD102242 — which, in addition to a more affordable standard of living means a higher disposable income.

In addition — as Metrick said during an interview — Calgary has a very young demographic, which is attractive to the retailer.

Nor is it seen to be over-retailed — especially on the luxury front.

Real estate expert Jason Jogria points out there is room for more global retail brands in Calgary. “What it (Saks coming to Calgary) tells me is that large multinational corporations have big hopes for this market and the fundamentals of this market that drive demand for retail sales,” said Jogria. “Saks cements Chinook’s position as a higher end retail centre in Western Canada,” he added.

This follows on Metrick’s take on Chinook.

“I like Calgary, I like Chinook. I saw that it was a better place for Saks to put its foot into the Calgary market — into Western Canada,” said Metrick, who was previously with Hudson’s Bay and knows the Chinook space.

Saks Fifth Avenue president Marc Metrick at the chain’s Toronto store

The other part of this move, of course, is opportunistic from a real estate perspective, which is also what Hudson’s Bay — the parent company of Saks — is increasingly being known for.

To be able to lease 115000 square feet in a mall like Chinook — whose owners were undoubtedly looking to find a strong tenant after Target closed shop in 2015 — isn’t something that happens every day, and Saks seized it.

“It’s a very opportunistic approach to our real estate strategy. We know we want to be in Calgary. We know we want to be in Vancouver. But it is a matter of what opportunities can present itself the best, and first. We didn’t necessarily have to go in order,” said Metrick.

But it still comes down to the question of what retail niche Saks will fill, in a city of 1.3 million people when the entire metropolitan area is included.

The interior of the new Saks Fifth Avenue store at Chinook Centre in Calgary

It’s about the Saks brand, the experience and, of course, the breadth of product it offers through the online site, which complements the brick-and-mortar store.

“We can sell you anything from any of our Canadian stores and then, of course, we ship in from Saks.com in the U.S. We are not offering you a store in Calgary, we are offering you endless aisles of Saks Fifth Avenue products,” said Metrick. But it can’t just be about the products; as Metrick points out, they are ubiquitous. It’s about selling the experience. “My strategy is to win with the store experience, the relationship with the stylist, the ‘edit’ (the assortment of brands and styles to choose from) and the services that we offer in the store. . . . I can’t just buy a bunch a stuff and assume people are going to come to buy it there because they can get it in 50 other places on Fifth Avenue (in New York). So I have to win in different ways,” said Metrick.

On the surface, that means it will have both a restaurant and salon — neither of which are at Holts; Nordstrom has a restaurant and a coffee bar, both of which fill a niche in Chinook’s food offering, not to mention keeping customers in the store.

The interior of the new Saks Fifth Avenue store at Chinook Centre in Calgary

The rest has to come from the team it has put in place to bring people into the store; Metrick declined to say how many new Saks employees had been poached from other retail establishments.

The store’s opening on Thursday is being preceded by an exclusive event Wednesday night, which will see the proceeds of the sales going to three not-for-profit organizations in the city: the Calgary Public Library Foundation, Theatre Calgary and Women in Need.

When Nordstrom opened its doors in September 2014, the proceeds from its charity event were directed to the United Way of Calgary.

What can customers expect?

“We are going to be a little bit more playful and have a little bit of a twist with our women’s apparel because that’s where we need to differentiate. We need to have a stronger edit than Nordstrom or Holts because you can’t have too much of the same designer product in a market that has 1.5 million people,” said Metrick.

Saks — with its 600000-square-foot store on New York’s Fifth Avenue — has plenty of experience differentiating itself from other retailers.

But there is another side to this. The opening of Saks also has the potential to present a big challenge to downtown retailers — which will have to fight harder to lure the consumer into the core. Ask anyone from Edmonton what happened to that city’s downtown when West Edmonton Mall opened in 1981.

Even with the foot traffic of 17 million in 2017, according to the Retail Council report, the sales per square foot at The CORE clocked in at CAD 656 last year.

Free parking on evenings and weekends would be a great start, but the retail mix will have to change, too.

Metrick says Saks is excited about what the retailer will be able to offer Calgarians and he sees great opportunity to offer the established consumer a wider array of brands while also bringing millennials into the store, to grow into Saks and what it offers — both in a store setting and online.

It’s what Holt Renfrew did very well many years ago when it was the only high-end retailer in Western Canada. But with the advent of online options, including Amazon, that world has changed dramatically and Holt’s is arguably running to catch up.

Metrick can’t say enough — even as he is warned of the cold temperatures — about how excited he is about Saks becoming a presence in Calgary.

“It is a market that we absolutely should be in. I hope Saks is worthy to the Calgarian and that we do exactly what we are supposed to do to make the customer enjoy everything that we are about,” he said.

In a world where timing is everything, Saks might just have hit it right: setting up shop in an economy that is recovering along with a sense of optimism about what is possible.

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www.saksfifthavenue.com

 

1 The interior of the new Saks Fifth Avenue store at Chinook Centre in Calgary. The store opened February 22, 2018

2 Lydia Seifert, General Manager for new Saks Fifth Avenue at Chinook Centre in Calgary

3 Saks Fifth Avenue president Marc Metrick at the chain’s Toronto store

4 The interior of the new Saks Fifth Avenue store at Chinook Centre in Calgary

5 The interior of the new Saks Fifth Avenue store at Chinook Centre in Calgary