Home Blog 2018 Nordstrom Rack opens their first store in Canada
Apr 18, 2018

Welcome to the neighborhood Nordstrom Rack

Subscribe to our blog

It’s been quite some time since Nordstrom announced that they were going to be opening their first Nordstrom Rack store in Canada; and since then, there has been significant buzz around when this was going to happen. Well a few weeks ago the doors to the first location at Vaughan Mills Mall finally opened and with all the anticipation and buzz, I decided to go check it out for myself.

The first question I keep getting asked is why did it take so long and why do you think there was such a delay. As we have seen with most successful retail imports, slow and steady seems to win the race. However, it was interesting to me that Nordstrom went ahead and expanded their regular banner stores before opening their off-price banner - kind of the opposite strategy that we had seen with Saks Fifth Avenue. This is made even more interesting by the fact that the off-price channel in Canada was the fastest growing channel in 2017 and continued to outperform the market growing +12 per cent from last year.

After visiting the first Nordstrom Rack store it became obvious that this was done with a very strategic approach and every detail of the opening was thought out in an effort to ensure that the Rack would be successful and the buzz would not fade. Here are a few insights I took away from my visit:

  1. There was clearly a strategic decision here to use the regular Nordstrom stores as the branding vehicle. Essentially keeping the essence of the Nordstrom brand intact while offering discounted options. Nordstrom had brought a certain “cool” factor and younger energy to the Canadian landscape that had been missing and using that voice in the off-price space would fill that void that the channel has been lacking. This would also help acquire a stronger presence with the Millennial consumer as off-price is under indexed in the only generation cohort that posted In-store growth from a year ago.
  2. The level of transparency in labeling was fascinating but also so needed in the off-price space. At Nordstrom Rack everything was clearly labeled without any hidden agendas, such as “Designer Shoes” and “From Our Nordstrom Stores”. To me this removed the disarray out of the hunt and created a guided shopping experience.
  3. A major difference between Canada and the US is that Canada is specialty focused with over 50 per cent of apparel dollar sales traced to specialty stores vs. only 25 per cent in the US. Nordstrom Rack really played into this by merchandising by commodity not department as each key commodity was labeled and merchandised so it was very easy to shop.  This really engages the way Canadians shops.

The second question I get asked is there room for another off-price player in the Canadian landscape, isn’t this space already crowded?

If we look at the US, 12 per cent of the apparel dollar sales are traced to off-price where in Canada only it’s only 7 per cent - that’s a 3pt. gap of opportunity. And to take that further in Canada 93 per cent of the off-price channel sales are traced to 2 major players where in the US 95 per cent of the off-price channel sales are traced to 7 retailers.

So whether this increases competition, thereby driving market growth, or opens the door for the channel expansion, one thing is for certain – the Canadian market does in fact have room for more off price players.

So welcome to the Great White North, Nordstrom Rack!


Stay current in your industry
SUBSCRIBE

Related Blog Posts

Tagged: Fashion Accessories , Footwear


Sneakernomics: What Does the NBA-China News Mean for Sports Brands?
Sneakernomics: What Does the NBA-China News Mean for Sports Brands?

NPD’s Matt Powell offers his analysis of the NBA-China dilemma and what the potential implications are for sports brands.

Women’s Handbags – The New Normal
Women’s Handbags – The New Normal

The women's handbag industry has seen a major shift over the past 3 years with declining sales and many marketplace and consumer changes. Will it bounce back?

The Year in Footwear, So Far
The Year in Footwear, So Far

NPD Footwear Industry Analyst Beth Goldstein looks at trends such as "Buy Now, Wear Now" and sustainability that continue to be hot topics among industry insiders.

Sneakernomics: Checking in on the Run Specialty Market
Sneakernomics: Checking in on the Run Specialty Market

According to NPD’s Matt Powell, Hoka One One and On Running are two brands within the run specialty channel that are showing strong growth and boosting results within that market. Another brand the market should keep an eye on is Oofos; they are trending nicely in run specialty, and in his opinion could be the next big comfort brand.

Newsletter

Subscribe and get key market trends and insights relevant to your industry each month.

We will not sell your information. View privacy notice.

Follow Us

© The NPD Group, Inc.