Dow Jones Newswires
By Karen Talley
Nordstrom Inc. is looking at expanding into Canada as a way of extending its luxury department stores beyond the U.S.
The retailer is scouting a number of sites, feeling demand should be significant enough to make the endeavor successful.
"We already know we have a lot of Canadian customers," Nordstrom spokesman Colin Johnson said. The retailer, whose Seattle headquarters isn't too far from Canada's border, has Canadian customers who shop its stores when they visit the U.S., Johnson said. Also, Canadians make up the biggest share of Nordstrom's international online customers.
So far, it's been "tough to find a location where everything will come together," Johnson said. He didn't give a timeframe when Nordstrom might make a formal announcement, but did say the company would start with department stores before opening any Nordstrom Rack outlets in the country.
Johnson also said Nordstrom knows that there are challenges, including a lot of established retailers in the country and in regard to customers "we would have to work hard to earn their business."
Nordstrom would be the latest U.S. retailer to announce plans to enter Canada if it does find locations. Target Corp. plans to start operating in the country in the next couple of years through its acquisition of the leases of up to 220 Zellers stores owned by Hudson Bay Co.
Wal-Mart Stores Inc., Sears Holding Corp., Costco Wholesale Corp. and Marshall's and T.J. Maxx operator TJX Cos. have been in Canada for some time. But they are largely the exceptions. Many U.S. retailers, despite the close proximity, don't have stores in Canada.
Retail spending per capita for Canada and the U.S., expressed in U.S. dollars, are now equal, a new report by Colliers International said. As recently as 2004, Canadians' retail sales per capita was $8,000, while Americans' spending power was 50% higher, at about $12,000 per capita.
Aside from tapping a fresh group of consumers, one of the most compelling reasons for U.S. retailers to operate in Canada is the value of the Canadian dollar compared with the U.S. dollar, Colliers said. With a stronger Canadian dollar, it becomes increasingly worthwhile to establish Canadian stores rather than to sell only to Canadian customers who shop online or on cross-border trips, Colliers said. For some U.S. retailers, Canada is the largest, closest and or most similar market to the U.S., and represents a logical next move.
Canadian retailers also haven't had to resort to the kinds of mark-downs that their U.S. counterparts are engaging in. As a result, U.S. retailers could earn a greater return on their merchandise, which can serve as another incentive. U.S. companies will, however, face established Canadian retailers that have a loyal following, so they can expect to engage in plenty of marketing and executive time as they try to familiarize themselves with residents.
