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Shopping Centers Today -> February 2001
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QUEBEC'S APPAREL CHAINS IN EXPANSION MODE
By Susan Thorne
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Savvy Canadians know that some of the country's most exciting shopping is found in Québec. This is partly due to the Gallic flair and fashion-forward nature of Québeckers themselves, who spend more per capita on clothing and entertainment than residents in other provinces.
But La Belle Province is also interesting to shoppers because of its indigenous brands and retailers, many of which aren't found outside the French-speaking market. Regional retail is strong here, while some U.S. and Canadian national chains have stayed away because of concerns about political stability and the language.
The result is a unique, somewhat isolated market: Harley Oberfeld of Oberfeld Enterprises, a retail brokerage firm in Montréal, estimates that Québec retailers account for at least 50% of space in AAA regional malls and 75% in secondary malls.
The province's recent economic growth is shaking things up, however. Québec, which has a population of 7 million (46% of whom live in the Montréal area), didn't share in the economic rebound of the 1990s enjoyed by most of Canada until the latter part of the decade. The turning point for retail came in 1998, according to Jean Laurin, president of Devencore Ltd., a Montréal real estate property consultancy. In that year, retail property values and rents began to increase consistently, vacancy rates dropped and retailers began to expand their operations, Laurin said.
The expansion mode is taking a growing number of retail operations outside provincial borders. Québec-based retailers have always had a strong national presence, particularly in apparel. Longtime fashion leaders Le Chateau (165 stores, 40 of them in Québec and five in the States), the Laura Group (owners of the 140 Melanie and Lynn fashion apparel stores) and national apparel retailer Jacob are good examples. Suzy Shier Ltd., a Montréal specialty women's clothier formerly part of the Dylex retail empire, operates 458 stores in Canada under banners such as Suzy Shier, L.A. Express, La Senza and La Senza Girl.
The Aldo Group of Montréal, Canada's largest specialty fashion footwear retailer, has roughly 500 stores in Canada under the Aldo, Pegabo, Calderone, Transit and Feet First banners, among others.
But a number of newer Québec retailers are also turning up in other parts of Canada and even the United States.
Boutiques San Francisco, Boucherville, is a lead player with 182 boutiques under eight banners: Boutique San Francisco; San Francisco Maillots and Bikini Village (swimsuits); L'Officiel (women's wear); Moments Intimes and Victoire Delage (lingerie); Frisco (children's wear) and West Coast (men's wear). "In Québec, they are the kingpin — they have stores in all the shopping centers, and when a regional mall is developed, landlords are hungry to work with them," said Oberfeld.
Boutiques San Francisco's President and CEO Guy Charron reported that the bathing suit concepts are being extended into Ontario, Alberta and British Columbia. "As a public company, we have to grow and develop," he said. "We feel that the banners we have in Québec have the ability to do well elsewhere."
The Garage Clothing Co., which also operates under the Dynamite banner, is another large Montréal company, with 180 stores that has expanded aggressively across the country. La Vie en Rose, a lingerie retailer, has 50 stores, 40 of them outside Québec. And a new large-format concept called Lingerie & Company is being taken to the Toronto area's big-box centers.
"We expect to grow more and more outside Québec," said Fernanda Di Liello, marketing director for La Vie en Rose. Parasuco Jeans, which has five Québec stores, is reportedly branching out with upcoming stores at Square One in Mississauga, Ontario, and Toronto's Yonge Street. Five-year-old natural-ingredient cosmetics retailer Fruits & Passion has around 54 stores across Canada, two in the United States and three in Taiwan, and plans further U.S. and European expansion. The Jean Coutu Group, a Longueuil-based pharmacy company, which owns 242 Brooks stores in the United States, is expansion-oriented and recently tried to acquire Shoppers Drug Mart, Canada's leading drugstore retailer.
Aldo, which entered the States in 1993 and currently has around 100 stores there, is focusing on future growth for the Aldo brand in the United States and abroad.
And Tristan e Iseult, a Montréal fashion retailer, has 45 Québec stores and is expanding under the Tristan & America banner in the United States (five stores, including three in Manhattan), Ontario (19 stores) and Alberta (two new locations). La Senza recently announced plans to open stores in Morocco, Tunisia and Algeria.
Montréal is also a jumping-off point for some foreign retail concepts such as Dutch-based MEXX, which has 24 stores across Canada and hopes to expand to 40; and Spain's Zara, encouraged to enter Canada by The Reitman Co., a long-standing value clothing retailer based in Montréal.
Apart from the natural urge to grow a brand and the need to increase profit for shareholders, some of the vitality of Québec retail has been spurred by intensifying competition, said Gaston Lafleur, president of the Retail Council of Québec, who points to the battles shaping up in the hardware/home improvements and department store sectors. Home building retailers Reno-Depot and RONA of Boucherville have both announced big growth plans in Ontario. RONA is looking stronger at the moment with 425 stores in Québec, the Maritimes and Ontario plus the acquisition of 61 Cashway building centers in Ontario earlier this year. But with Home Depot Canada planning to more than double its stores to 120 from the current 52, the market could get very crowded.
In department store retail, there is much activity despite the closing of Eaton's and the fact that no new Sears-owned Eatons stores are planned for Québec. The Simons Co. of Québec City, which first expanded outside that city last year with a store on Montréal's Ste. Catherine St., now has four stores in the province. Les Ailes de la Mode ("the wings of fashion"), a more upscale specialty concept of Boutiques San Francisco, has three Québec stores at present, a Montréal store set for a 2002 launch in the former Eaton's building, plus a first Ontario outlet opening in August at Bayshore Shopping Centre in Ottawa.
Having invaded the wider Canadian national market (the first step is usually into Ontario), Québec retailers are generally happy with the results, Oberfeld said. "They typically find that sales in Ontario are higher [than in Québec] once they get the formula right. Once they commit, they wonder why they didn't do it earlier," he said.
San Francisco's Charron says the merchandise mix usually needs to be adapted for the non-Québec shopper, but that process is the same as for any regional trade area.
"The mix of product is different as in any market — summers are two to three degrees warmer in Ontario than in the Saguenay [northern Québec], for instance. There's a different market niche and different product even between cities like Calgary and Edmonton."
Out-of-province retailers have noticed the improvement in Québec's spending power and started entering the province in greater numbers, too. Many are big-box retailers who have contributed to the growth of power centers, a shopping format that has started to multiply rapidly in Québec in the last three years or so. Wal-Mart, which has been in Québec since 1994, is now expanding more aggressively there, for example.
Laurin feels Québec retailers have the capacity to do well elsewhere because they've had such an uphill battle at home. "They're accustomed to fighting [for retail success] while other parts of North America have had fairly easy conditions. If they're smart about their business plans when they expand, they will be well equipped to get into the trenches."
Watch for them in a mall near you.
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