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Each day TFO Canada publishes a sample of trade news on the Canadian import market along with any new, updated or changed regulations and legislations regarding international trade; countries in which TFO Canada offers services and on the export sectors which it promotes.

 

Ottawa retailers focus on 'aspirational luxury' as middle class diminishes

Monday, August 17, 2015 > 09:37:48
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(CBC)

'Mid-quality, mid-price or traditional type of stores have been losing market share,' retail analyst says

Ottawa may not be home to enough wealthy people to attract stores such as Louis Vuitton or Prada, but Tiffany's, Nordstrom and the brand new Simons are arriving to suit the region's "aspirational luxury" tastes, according to retail experts.

The number of residents in the upper middle class has been growing in recent years, but they had to open their wallets in other cities due to unmet retail desires locally, according to independent retail analyst Barry Nabatian of Shore-Tanner & Associates.


"In our estimation, the National Capital Region residents spend at least $2 billion for luxury items outside of this area," Nabatian said.

In part to meet those needs, the Rideau Centre has undertaken a $360-million renovation and attracted stores such as Kate Spade, Nordstrom, Tiffany & Co. and Michael Kors. Those brands are now nestled together on the top floor of the mall.

The general manager of the Rideau Centre, which is owned by Cadillac-Fairview, said the company decides which stores to bring in based on a lot of demographic and other data.

"Ottawa is a very affluent community and there is a significant income here," said Cindy VanBuskirk, though she notes the region doesn't have a critical mass of very wealthy people to sustain the world's top luxury stores.

Low cost


At the other end of the retail spectrum, so-called "discount" retailers are also taking off, which is why stores such as H&M and Forever 21 have opened shops in the capital in the recent years.

"The middle class in Ottawa is shrinking," said Nabatian.

"It's losing purchasing power," he added, citing the recent closures of stores such as Jacob, Mexx, Sears, Zellers and Target.

"The mid-quality, mid-price or traditional type of stores have been losing market share," said Nabatian. "And more and more of them will be closing."

There is also a trend for consumers to shop at both ends of the spectrum, putting together an outfit that pairs an expensive handbag with a cheap T-shirt, VanBuskirk said, adding that the Rideau Centre's strategy is to offer the best retailers at both ends of the spectrum.

"It's called high-low or consumer fragmentation," said VanBuskirk. "I think there is definitely an audience and frankly our sales results bear that out."

It appears the arrival of Simons, which carries affordable clothing in addition to some high-end labels, will be another name to keep shoppers from leaving the national capital region.

At the opening of the area's first Simons store at Les Promenades Gatineau this week, shoppers related how they had been driving to Montreal in order to visit the Quebec retailer's stores. Another Simons will land at the Rideau centre in August 2016.


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