American luxury brands and department stores are increasing their footprint in Canada.
After years of ignoring Canadian expansion, Nordstrom (NYSE:JWN) announced its plans to open six Canadian stores by 2017. And they aren't the only ones. Saks Fifth Avenue, acquired by Hudson's Bay Co. (NYSE:HBC) last year, plans to add seven new stores in Canada, reported Bloomberg.
These upscale stores are heading north in response to trends in changing shopping habits and the availability of foreign prime real estate. The department stores will compete in markets long dominated by Canadian staples Holt Renfrew and Harry Rosen. In anticipation of the rivalry, Harry Rosen started a $100 million expansion and launched a large-scale brick-and-mortar remodeling initiative.
"We believe there's a lack of exciting opportunities for the luxury shopper to do their spending," Hudson's Bay CEO Richard Baker told Bloomberg. "We'll not only capture a large percentage of the existing luxury market, but we're also going to capture a growth that's happening in Canada and the business that's presently leaving Canada to shop in the U.S."
Following the recession, U.S. stores have been seizing the opportunity to gain a market share of rising Canadian wealth. Sears (NASDAQ:SHLD) Canada recently closed several of its storefronts, and Nordstrom seized the available spaces as an opportunity to move in.
However, the luxury chains will proceed with caution, especially since Sears' and Target's (NYSE:TGT) rapid expansions in Canada have produced lower sales than expected. Sears Canada is seeking a buyout amid two rounds of employee layoffs earlier this year. And although Target is still opening new stores—the retailer announced three new stores just this week—the company has had to apologize to Candian shoppers for a bungled market entry.
-See this Bloomberg article
Nordstrom invests $79M in online distribution center
Nordstrom to invest a bigger spend on mobile execution in 2014
Nordstrom partners with internet jeweler for ring-shopping experiment
Nordstrom pulls plug on gift-giving service Wantful
Nordstrom illustrates why mobile may change the rules on third-parties