Saks Fifth Avenue Flagship (Queen & Yonge)

[pw20]

I gotta agree....seems that with all of these new luxury entrants, plus Holt's/Simons/Sporting Life recent expansions and new stores that have opened and announced - that the only thing I can think of that they are all banking on is that the luxury retail pie is going to get bigger. If things remain the same, then I believe there's going to be a lot of rolling heads.

Well its not even just that... The Saks/HBC execution smells overly messy to me. I'm not convinced Richard Baker is that brilliant when it comes to retail. I think he's a brilliant real estate mind... but the execution of this Saks roll out seems totally crazy/messy and $$$. Its nice that Saks has made a deal with Pusateri's, but are they going to tear up the work they've done with Foodworks in the basement to make way for a Saks food hall (something that Saks isn't really known for?)? Are they going to move the Room, which opened only a few years ago into a new area? The whole thing seems like its a muddled mess. Even once its open - can I use my Bay card at Saks? Will there be a wall separating stores - because otherwise a consumer is likely to walk over some imaginary line and try and pay for a Saks item of clothes at the Bay? (Oh what do you mean I don't get HBC points here?)

I know these are detailed questions and I'm sure there are analysts somewhere in brampton figuring this out and crunching numbers... I just think splitting a store into two stores that are owned by the same company but still have distinct system is going to be a total shit show from a consumer perspective.

 

[Filip]

Well its not even just that... The Saks/HBC execution smells overly messy to me. I'm not convinced Richard Baker is that brilliant when it comes to retail. I think he's a brilliant real estate mind... but the execution of this Saks roll out seems totally crazy/messy and $$$. Its nice that Saks has made a deal with Pusateri's, but are they going to tear up the work they've done with Foodworks in the basement to make way for a Saks food hall (something that Saks isn't really known for?)? Are they going to move the Room, which opened only a few years ago into a new area? The whole thing seems like its a muddled mess. Even once its open - can I use my Bay card at Saks? Will there be a wall separating stores - because otherwise a consumer is likely to walk over some imaginary line and try and pay for a Saks item of clothes at the Bay? (Oh what do you mean I don't get HBC points here?)

I know these are detailed questions and I'm sure there are analysts somewhere in brampton figuring this out and crunching numbers... I just think splitting a store into two stores that are owned by the same company but still have distinct system is going to be a total shit show from a consumer perspective.

Like! Or at least I wish I could like... A silent cyber-nod to you!

I completely agree. Been mulling the same since reading this article and I am upset to think what could have been (Bloor/Yonge).

 

[modernizt]

Count me in as another person mourning the potential Yonge/Bloor Saks and finding the idea of one at Yonge and Queen to be very convoluted.

 

[officedweller]

...
I just think splitting a store into two stores that are owned by the same company but still have distinct system is going to be a total shit show from a consumer perspective.

I agree that it'll only work if there are solid walls between stores on the upper floors and the lower floors are reconfigured to be like adjacent stores across a mall common area, so there is visual and brand separation between the 2 stores. i.e. do a major reno with an atrium sliced down the middle of the building.

I never really understood the "shop-in-shop" concept if you are taking 2 department stores rather than just a focussed concession.
(i.e. The Bay rolled in Simpsons, and Sears rolled in Eatons - Is it worth maintaining 2 brands?)

Also agreed that the luxury market in Canada is rapidly being overbuilt - and I would expect fallout.
There's a huge segment of the market in the "aspirational shopper" category
- and they are price sensitive - so price (i.e. via US stores or outlets) will trump better service at higher prices (in Canada).

 

[mustangjay]

American deja-vu???

In terms of their Canadian strategy, Saks seems to be repeating the same mistakes that got them into trouble in the States; opening too many stores, many in markets that were either over-saturated or couldn't support luxury retail. Toronto certainly is a wealthy city but more so than Chicago or LA? I doubt it. Initially, their idea of opening a major flagship on Bloor made sense but then they threw all that out the window and opted for this half-baked idea of a hybrid store within The Bay at the Eaton Centre (a mall hardly known for its upscale clientele!) What's more, their second GTA store at Sherway Gardens is questionable given that mall's stagnant traffic patterns in recent years as the luxury customer has increasingly shown preference for Yorkdale (where Saks currently has no plans to open!) Holt Renfrew must be feeling somewhat relieved at seeing these moves that will predictably result in an utter shit show within a very short period of time for HBC. On the other hand, Nordstrom seems to be taking a much more optimal and thorough approach to their Canadian operations. Look forward to seeing their first Toronto area store in 2016!

 

[Skeezix]

I question the viability of Saks in Canada, and certainly of two stores in Toronto. And I agree that Bloor Street was a missed opportunity (opening downtown had more to do with the real estate deal with Cadillac than anything else). Having said all that, I am not nearly as fussed as others over having two stores in the old Simpsons store. I don't think it will be confusing - assuming they do it right, it would be fairly easily to delineate between the two stores (and if they are smart, one will be able to buy a blouse from Hudson's Bay and a pair of shoes from Saks at the same register). As it is, the second and third floors of the store are effectively divided between higher-end sections and more middle of the road departments, and shoppers seem well aware of when they cross over between sections. It will simply become a bit more obvious presumably. Anyway, of all the things to criticize, I think that's the least of their problems.

To the extent they do screw up the introduction of Saks to that store, I suspect that it will be due to the mad rush to have it open before Nordstrom down the street, rather than to any fundamental problem with the concept itself.

 

[gabe]

Also agreed that the luxury market in Canada is rapidly being overbuilt - and I would expect fallout.
There's a huge segment of the market in the "aspirational shopper" category
- and they are price sensitive - so price (i.e. via US stores or outlets) will trump better service at higher prices (in Canada).

I wonder if the Canadian Saks stores will be like almost every other US chain that moves to Canada. Higher prices with less selection.

 

[Bruno Republic]

I wonder if the Canadian Saks stores will be like almost every other US chain that moves to Canada. Higher prices with less selection.

That's pretty much guaranteed, isn't it?

 

[pw20]

I don't think it will be confusing - assuming they do it right, it would be fairly easily to delineate between the two stores (and if they are smart, one will be able to buy a blouse from Hudson's Bay and a pair of shoes from Saks at the same register).

I think this is where I disagree with you. Companies that have multiple brands usually keep them pretty distinct (I'm thinking of the Gap for example, which owns multiple brands at different price points: Banana Republic, the Gap and Old Navy all of which have different price points, all of which can be found at the same malls, but are NOT under one roof). The reason is that their shopper targets are different, they run different promotions and provide different levels of customer service. If as you suggest a consumer should be able to buy a pair of shoes from the Bay and a blouse from Saks - then what's the point of bringing in Saks? Why not just add higher end brands to the Bay (which the Bay is already doing). Again if the point is to attract a different clientele shoppers who like Saks like Saks because of: their brand assortment, prestige and customer service. If I'm a saks shopper - am I going to be happy standing in line dealing with sub-par Bay customer service staff (with the plebs), trying to pay for my Saks purchase? Furthermore - imagine the logistics of working in your Bay Card, your bay loyalty points, with Saks, (I have a 15% off coupon for the Bay - can I use that here? No? I want to talk to a manager..." at the best of times trying to find customer service at the Bay is a shitshow)

Again - think of the Gap Ltd - who carefully keeps the Banana Republic separate from the Gap.

It is this thinking which in my mind assumes that the only real way to be successful is to split the store physically - but again, you're still running two department stores right next to each other, ripping up work done in the Bay (the ROOM renovation) simply to rebuild it as some lite version of a Saks in the Canadian market with typically smaller consumer spending with a somewhat unknown brand.

Lastly - I believe we'll see a Saks in Yorkdale...which would be 3 stores for Toronto, which is unheard of.

As an armchair observer (and that's all I am) this whole thing... seems like a TOTAL mess.

 

[Skeezix]

... seems like a TOTAL mess.

I think you're jumping to a lot of assumptions, and paying way too much attention to Banana Republic and the Gap. Who said that they were ripping out the Room? (where has been announced that they are "rebuilding" it?) Who said Saks shoppers would be forced to stand in line "with the plebs" at Hudson's Bay? (why would they unless they also wanted to shop there?) All I said was that a shopper who did cross the line should, if HBC is smart, be able to pay for all their purchases at one register if they are buying from both. Unclear how that is going to blur the line to such an extent that it will be a "TOTAL MESS". You have no indication that they won't be distinct, and nothing that has been revealed to date suggests that they cannot operate distinctly while at the same time both benefit from the synergies of being side by side. The model already partially exists - they're selling Chaps and Jones New York on one side of the building, yet people still seem to be happily shelling out wads of cash in The Room. The women carrying The Room shopping bags in my office building don't seem confused or unhappy. Hudson's Bay already doesn't honour their coupons/discounts in their higher end departments - yet somehow I don't see shoppers in the Room, the West End Shop and the white space all yelling to see the manager. Why does this 15% coupon suddenly become an issue that is going to sink the whole project? Why do I need to "imagine the logistics" of using a rewards card from one in the other? Wouldn't that be technically fairly straightforward, assuming strategically that's how they want to go? The building in question is, what, 900,000 square feet or so? Given the size of the average department store, that's more than enough room to accommodate two distinct retailers if they do it right. We don't know how it will be set up, how it will function, etc. Like I said above, they could easily screw it up (most likely, IMHO, due to haste), but there is nothing inherent about the concept or the building that means it will necessarily be a disaster. Maybe I am a glass half full kind of guy, but I find it hard to believe all these apocalyptic predictions. I don't know how anyone can be so conclusive about how it is not going to work based on the vague details known to date. I wouldn't bet money on it succeeding, but I wouldn't bet money against it either.

 

[pw20]

Its like when you go into Future Shop and return something from Best Buy right?

(There is plenty of room% - I just think the decision to create two stores is troublesome and terribly messy for a payoff I'm not sure about - especially when the Bay carries high-end brands and is going higher-end. On top of that the Room is in the East End of the store - it will have to be moved for Saks).

 

[Skeezix]

If Future Shop and Best Buy were next to each other in the same building, then yes.

Why would The Room need to be moved? I think most people are assuming it would end up as part of Saks.

I think one thing we would agree on is that the payoff would have been greater on Bloor Street. (I say that, mind you, without any idea of the $ that would have been required to bring that space up to snuff.)

 

[officedweller]

The obvious examples of combined stores that come to mind are:

Winners/Homesense stores - although I've never tried to return a Winners item at a Homesense, you could do so from a Winners/Homesense to either a Winners or a Homesense.

SportChek/Atmosphere

But I tend to agree that combining stores would likely lead to degradation of brand distinctiveness.

 

[freshcutgrass]

The Saks/HBC execution smells overly messy to me. I'm not convinced Richard Baker is that brilliant when it comes to retail. I think he's a brilliant real estate mind... but the execution of this Saks roll out seems totally crazy/messy and $$$.

$650 million buys a lot of rationalizing.

 

[androiduk]

Application: Building Additions/Alterations Status: Not Started

Location: 176 YONGE ST
TORONTO ON M5C 2L7

Ward 28: Toronto Centre-Rosedale

Application#: 15 123105 BLD 00 BA Accepted Date: Mar 3, 2015

Project: Retail Store Interior Alterations

Description: Proposal for interior alterations to the basement, ground, 2nd, and 3rd floors for new retail store - "Saks Fifth Ave"