The last five years saw a very mixed performance for department stores in Canada. Sears Canada performed poorly in the lead-up to its bankruptcy and the subsequent closure of all its stores.
Between stable sales growth for the Hudson’s Bay banner and the introduction into Canada of Saks Fifth Avenue and Saks Off 5th, Hudson’s Bay Company saw healthy growth over the last five years. The profitability of its retail operations, however, has become a key concern for the company.
Canadians are increasingly shopping online, especially for apparel and homewares, which are key categories for department stores. Investments in e-commerce vary significantly by department store in Canada.
The biggest story in department stores in Canada in 2018 was the closure of all the remaining Sears stores. For the most part, Sears competed against non-department store mid-priced retailers, including apparel, homewares and home furnishings specialists, rather than against other players in department stores.
The closure of Sears will benefit other mid-priced retailers in the short-term, but it is generally expected that mid-priced retailers will continue to face many of the same trends that led to the demise of Sears. The most important of these trends is the overall polarisation of retailing in Canada, which favours economy retailers such as Dollarama and Giant Tiger, as well as high-end players offering luxury products, including higher-end department stores.
Over the last five years, two off-price department store banners were launched in Canada: Saks Off 5th, which opened its first store in Canada in 2016, and Nordstrom Rack, which opened its first store in Canada in 2018. Previously, off-price retailing in Canada had been largely confined to apparel and footwear specialist retailers such as Marshalls and TJ Maxx, internet retailing, and homewares and home furnishings stores.
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