Nordstrom opens first store in Canada
The Seattle retailer’s international debut in Calgary is its first step into a country whose consumers have shown they like Nordstrom, but also bring high expectations that have badly stung some U.S. merchants.
Lorraine Hjalte / Calgary Herald
Seattle Times business reporter
Canada is an important energy producer and sailed through the recession better than most developed countries. Calgary, its oil capital, is especially wealthy.
Population: 35 million
Median family income: $68,000
Population: 1.2 million
Median family income: $90,000
Source: Statistics Canada
CALGARY, Alberta — A crowd of more than 2,000 shoppers took Nordstrom’s first Canadian store by storm Friday on its opening in this oil-rich city, an auspicious start for the Seattle retailer’s international debut.
Hundreds milled about at a preopening “Beauty Bash,” where shoppers were handed bags with samples while they waited for the store to open.
“We are very excited. I woke up my baby to come here this morning,” said Carolyn Cheetham, pointing to her 4-month-old daughter in a stroller.
Cheetham, who like many in this city works in the oil and gas industry, said she has visited Nordstrom in Seattle and Chicago, and hopes that Nordstrom brings here the “same products they have in the States.”
Many Canadian shoppers were disappointed with recent forays into their country by U.S. retailer Target, which did not match the pricing or the variety of its U.S. stores.
For Nordstorm, which began expanding outside of its Pacific Northwest home in the 1970s, the Calgary opening represents a major move — and an opportunity to keep growing its full-line stores even as many consumers in the U.S. flock online.
The debut in Canada means “the company has matured to the point where it can undertake the complexities of international operations,” said Erik Nordstrom, a fourth-generation member of the founding family who now heads online operations and has been deeply involved in the Canadian launch.
Going international, for a “company that started as a shoe store in Seattle, it’s a big milestone,” he said in an interview.
Almost all members of the Nordstrom clan — from President Blake Nordstrom to patriarch Bruce Nordstrom — were present at the store Friday.
“This is the highest priority for our company right now,” Erik Nordstrom said.
The company is entering a battle royale for the Canadian luxury market. Hudson’s Bay Company, a retailer with roots to Canada’s beginnings, recently bought Saks Fifth Avenue and plans to bring that upscale U.S. brand here.
Holt Renfrew, a 177-year-old high-end retailer that was once a purveyor to Queen Victoria, this month announced the expansion of its luxurious Calgary store, among others.
Nordstrom seeks to position itself midway between Hudson’s Bay and Holt by offering an array of both high-end and midpriced items, executives say.
The two-story, 140,000-square-foot store is at the Chinook Centre, a huge mall south of Calgary that combines mid- and low-priced options such as Target and Eddie Bauer with fancier venues such as Tiffany & Co. On Friday, hundreds also queued at the mall’s Apple store for the latest iPhones.
The expansion allows Nordstrom to stretch new muscles as it figures out how to operate outside of its home country.
But it currently has no plans to expand beyond Canada, Erik Nordstrom said. For now the company’s “whole attention is placed on this store” as it figures out Canadian customers, he said.
Canada has many allures: A strong economy buoyed by rich energy resources, it is relatively underserved by luxury retailers but offers a wealth of shoppers familiar with Nordstrom and other U.S. brands. Canada is the top destination for Nordstrom.com international shipments, the company says.
Nordstrom plans to open five additional Canadian stores over the next two years, including one in Vancouver, B.C.
The company says it could someday have as many as 10 full-line stores and up to 20 Nordstrom Racks in Canada, although it hasn’t yet determined when the Rack will migrate north. Eventually the company will also open up a separate e-commerce website for Canada.
It’s a good opportunity to grow, said Dan Geiman, an analyst with McAdams Wright Ragen. He likened the move to other investments by the company, such as the launch of Nordstrom Rack website and the recent acquisition of The Trunk Club, that seek to compensate for limited U.S. expansion opportunities for full-line stores.
But the great northern neighbor has also proved challenging for other U.S. retailers such as Sears, which is vacating some store spaces. Target, which launched its Canadian operations last year with big fanfare, lost nearly $1 billion before taxes on the project in 2013 alone.
Calgary, which became Nordstrom’s first location because it was the first former Sears space that became available, has its own opportunities and challenges.
It’s the nation’s energy capital, with a sizzling economy and one of the lowest levels of unemployment in the country. Another Seattle-area based retailer has met success there: Calgary boasts Costco Wholesale’s third-busiest warehouse.
This prairie city is relatively small, with a population of 1.2 million. But the median family income in 2012 was about $90,000 (in U.S. dollars), the highest among Canadian metropolitan areas, versus about $65,000 in Vancouver, according to government data.
Personal disposable income exceeded $41,000 a year in Calgary — nearly 70 percent above Canada’s average, according to a presentation by the city of Calgary.
Moreover, there are relatively few places to spend all these petrodollars, because the luxury market is relatively underdeveloped in Canada, said David Finch, a professor of marketing at the Mount Royal University in Calgary.
But that also means that there’s not a deep retail talent pool to draw from. In Canada, retail has been considered a “transient” job and not a career profession, so “it’s going to be difficult for them to find experienced, professional, luxury-oriented staff,” he said.
The fact that Calgary’s oil-fueled job market is sizzling hot doesn’t help Nordstrom either: Average wages for hourly employees in Alberta are $25.60 U.S. an hour, 15 percent higher than in British Columbia.
People switch jobs easily and many are drawn to oil-related activities with higher pay, Finch said, adding that a restaurant near his Calgary home no longer opens up for dinner “because they can’t find any staff.”
Scott Crockatt, director of marketing and communications at the Calgary Chamber of Commerce, agreed.
“The No. 1 problem that companies in and around Calgary have is finding and keeping quality staff. I anticipate that Nordstrom, along with many others, is going to be challenged to recruit the hundreds of staff they’re expected to,” he said.
Nordstrom executives say they heard all the warnings but were able to fill their 531 spots. “We were very encouraged by the number of applicants and the quality,” said Karen McKibbin, president of Nordstrom Canada.
The Calgary store manager is from the U.S., and so are a few other department managers, but most managers are Nordstrom first-timers hired locally — a first for Nordstrom. Canadian department managers were flown in to the Seattle area for nine weeks, where they mainly worked as assistant managers at the Bellevue store to complete their indoctrination in Nordstrom’s ways.
The company is committed to providing as much quality, variety and customer service in Canada as it does in the U.S., Erik Nordstrom said.
“We don’t want to bring Nordstrom Lite,” he said.
The company is accommodating the local flavor. In Calgary, the heart of a big cattle province, “we have more cowboy boots than we have in Seattle,” he said.
Alberta’s shoppers will be a discerning bunch, judging by Lori Edmunds and her daughter, who drove 1½ hours from Red Deer, north of Calgary, to see the new store. She said she found some good deals, but “it’s very expensive too.”
Her 19-year-old daughter, Kristen, said she was pleasantly surprised with the wide selection of high-end cowboy boots that she usually finds only in Western wear stores.
“I’m a cowboy-boot lover,” she said.