[URBAN NOTE] Two links on the opening of Saks Fifth Avenue in Toronto

[rfmcdonald]

MacLean's hosts Chris Sorensen's interview with the company's president.

Saks Fifth Avenue is preparing to open its first two Canadian stores in Toronto this month, making it the latest in a long line of big U.S. retailers to expand northward. But much has changed since Hudson’s Bay Co. purchased the U.S. luxury retailer for $2.9 billion back in 2013 and announced plans to bring the storied Saks brand to Canada—namely, the cratering of the price of oil, which has taken the Canadian economy down with it. Meanwhile, U.S rival Nordstrom is continuing its Canadian rollout while local luxury stalwart Holt Renfrew has upped its game in a bid to protect market share. So can Saks still realize its goal of opening as many as seven stores in in Canada over the next several years? Or did it arrive at the exact moment when Canadian consumers ran out of money to spend on Manolo Blahnik shoes and Valentino handbags? Senior writer Chris Sorensen caught up with Saks President Marc Metrick in the (almost-finished) flagship store in downtown Toronto to find out.

Q: Tell me a bit about your background.

A: I was born and raised in New York. Worked at Saks for 15 years. Left Saks. Worked for HBC for a few years. And they recently made me president of Saks. So I’ve spent a lot of time up here [in Canada]. I know the customer and how Canada works. I have experience with both brands, but I was really born and raised with Saks.

When HBC first announced its Saks plans in Canada, the economy looked a lot brighter than it does today. Is there still enough demand here to support a U.S. luxury retailer like Saks?

We never believed we would throw open the doors and people would just walk in. We have to take share to be successful. At the same time, our current Canadian business [cross-border and online] is among our better-performing ones. So as long as demand for luxury goods is here, which it will be, we want to be able to offer the Canadian consumer something in Canada so they don’t have travel to the U.S., where there’s going to be a foreign exchange headwind. We look at it as an opportunity to win and be successful.

So Toronto still looks like a pretty attractive launch market in 2016?

Toronto is the fourth-largest city in North America. But you don’t have a Saks here. It never made sense to me and it was talked about before the company was bought by HBC. In fact, it was one of the key tenets of the deal’s acquisition thesis. Boston is a little over 4.5 million people with eight luxury store operators, including Nordstrom, Barneys, Bloomingdale’s, Saks and Neiman Marcus. By contrast, there are just three Holt Renfrews servicing the GTA (Greater Toronto Area), with six million. So the market is totally underserved. Even with the Canadian economy facing a little bit of a headwind, there’s an opportunity to come in and claim some share.

Meanwhile, NOW Toronto's Michelle da Silva questions the need for this store at all.

Acquired by the Hudson’s Bay Company in 2013, Saks opened in New York in 1867. Nearly 150 years later, it’s moving north at a time when the Canadian dollar is nervously low and consumer debt is on the rise. According to Stats Canada, at the end of 2015, the average Canadian household had nearly $1.64 in debt for every dollar of disposable income – a record high.

Saks is also opening less than a year after another major American retailer so spectacularly failed in Canada. Target, purveyor of the cheap and cheerful, shuttered over 100 Canadian stores shy of its two-year milestone last April. Why weren’t we spending our hard-earned cash at Target like so many people down south? It was a mix of poor location planning and Canadian up-pricing, according to retail analysts. But perhaps when shopping at a store no longer requires flashing a passport at customs, it feels less special, too.

Saks, however, is obviously targeting a different customer than Target shoppers. A press release sent out ahead of this morning’s ribbon-cutting ceremony with American fashion designer Phillip Lim described the store’s offerings as “an elegant edit of the best designer names,” including Dior, Valentino, Louis Vuitton, Prada, Givenchy and Saint Laurent.

This is a store where it’s not unusual to see a four-digit price tag attached to a sundress or key chains for $500 – where a fur salon selling chinchilla capes exists and Parisian sunscreen marketed to men retails upwards of $300.