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Simons looks to defy retail industry woes, expand across CanadaMonday, July 13, 2015 > 09:10:00
One of Canada's oldest family-owned retailers is hoping to defy industry woes by launching an expansion that could extend the Simons brand across Canada.
The 175-year-old company based in Quebec City will open its ninth Quebec store in Gatineau next month before entering the British Columbia and Ontario markets and expanding its presence in Alberta.
The fashion retailer is spending up to $200 million over the next four years to open eight stores. It says the move is intended to boost its annual sales base of more than $350 million.
An outlet will open this fall in West Vancouver, followed by openings next year in Mississauga, Ont., and Ottawa. A second Edmonton store and a new one in Calgary will be added in 2017, and two more stores are expected to open in the Toronto suburb of Scarborough in 2018 and at the Yorkdale Shopping Centre in 2019.
Atlantic Canada, the Prairies or Winnipeg could join the list as more stores are added to reach a maximum of 25 to 30 stores, says CEO Peter Simons.
But Simons says he doesn't feel any pressure to make hasty moves.
"You don't think in next-quarter increments when you're a private company of five generations," he said from Quebec City. "You think in 25-year increments."
Missing from the Simons national expansion plans is downtown Toronto, one of Canada's toughest retail markets. Simons made a pitch to enter the Eaton Centre but that didn't materialize. Meanwhile, U.S. retailer Nordstrom will open next year at the old Sears location in the Eaton Centre.
Retail analyst Randy Harris of Trendex believes Simons' gradual expansion will make it a "national powerhouse" in the Canadian apparel market.
"A lot of retailers, while they're worrying about Nordstrom and Saks, have got to be equally worried about Simons," Harris said.
He said Simons' mid-market pricing and strong private label offering will resonate with shoppers looking for something new. In addition to clothes, Simons sells some home goods and is introducing shoes and a new restaurant concept called Eve. But unlike department stores, it doesn't sell cosmetics or "hard goods" like appliances and furniture.
Simons says he and his brother are keenly aware of the risks -- particularly in trying to build upon its success in Quebec and spread it to English Canada while juggling the logistics of operating across the country.
Few family-run companies survive the third generation, let alone the fifth, he said.
"Sure, when your name's on the door and it goes badly, that sticks to you, so we're nervous."
The Canadian fashion retail industry has seen its share of casualties with brands such as Mexx, Smart Set and Jacob closing or reducing their operations.
In addition to facing an influx of foreign competitors, the sector is undergoing big change as people increasingly shop online. Simons offers online shopping.
Independent retail analyst Brynn Winegard said Simons' understanding of the Canadian consumer may give it a leg up over American retailers.
But she said Simons should have first focused on beefing up its omni-channel offering -- an industry term referring to the use of stores, its website, mobile apps and any other possible ways to shop -- then add stores close to its base in Quebec before expanding further afield.
"We've seen a lot of failures in the retail space in the last little while," she said. "The ones that have had good success really come to life in their online and non bricks-and-mortar space."
Simons said he expects the company's online sales -- which make up less than 10 per cent of its total sales -- will grow. But he adds that it won't trump the experience of receiving customer service in person.
"There's still going to be this almost primordial desire for human contact, a quality human contact," he said.
As a relatively unknown brand outside Quebec, Simons said he knows the first challenge will be marketing -- specifically, to develop a relationship with shoppers so they keep returning after the initial rush wears off.
It has selected ad agency Cossette to build brand awareness and pique people's curiosity.
"I'm not trying to win their minds or their wallets. I'd like to win their hearts."