Holt Renfrew Closes Three Stores: Set to Battle American Competitors
The Canadian luxury-retailer, Holt Renfrew, has taken the plunge to terminate operations in their Ottawa, Quebec City, and Winnipeg locations. With the future emergence of major American competitors, including the likes of up to seven Saks Fifth Avenue locations and ten Nordstrom's stores, Holt Renfrew is preparing for battle by allocating its focus on its large flagship locations in five Canadian cities in the form of a $300 million expansion. The retailer chose to close the aforementioned locations primarily on the basis that they were smaller stores, and in order to successfully compete in a soon to be more saturated market, focusing on stores with more square footage is the most desirable, strategic option.
Holt Renfrew's Ottawa location measures at 36,000 sq. ft., while the Quebec City and Winnipeg locations measure at 33,000 sq. ft. and 2,990 sq. ft., respectively. These stores have experienced less than optimal revenue generation partly due to the fact that with a lack of size, they are unable to carry desirable luxury brands that can be purchased in their larger locations such as Toronto, Vancouver, Calgary, etc.
This big move from Holt Renfrew is most likely to help solidify its position in the Canadian market. The $300 million expansion sets to increase square footage in its already large stores from 800,000 sq. ft. to 1.2 million sq. ft. in total. The largest expansion will be seen in Montreal in 2017 when the 84,000 sq. ft. Holt Renfrew store will merge with Ogilvy's in a massive 220,000 sq. ft. location. By providing consumers with larger locations, Holt Renfrew will hopefully see higher traffic and an increase in revenue generation based on providing an enhanced shopping experience with an unparalleled luxury brand selection in Canada.
It's no surprise that Holt Renfrew had to do something to attract new customers and to keep their existing customers. The retailer’s multi-million dollar expansion is not exclusively focusing on bringing in more luxury brands to increase their selection but is aiming to enhance the shopping experience in terms of environment as well. By the end of 2017, its Vancouver and Calgary locations will be home to a next-level "apartment style" luxury shopping area. I mean, why not, right? People love to be pampered. With that being said, this luxurious retail living-room concept is genius. First of all, it is something that you as a consumer do not get to experience on a regular basis. Something different. People love different...as long as it is comfortable. Well, we are talking about Holt Renfrew, so I'm sure that will not be an issue. This unique shopping dynamic will surely not be inexpensive to implement on Holt Renfrew's part, but the benefits that it will yield should far outweigh the costs, in my opinion, and most likely in theirs too. By providing such an environment, Holt Renfrew can expect to see its conversion rate, average transaction, and units per transaction increase; furthermore, this point of differentiation will trigger word of mouth marketing as well, so Holt Renfrew could expect an increase in traffic as a result of the "apartment style" experience beyond the increase in square footage.
On another note, Holt Renfrew is further exploring the e-commerce realm of retail. By revamping its website, the luxury retailer aims to hold onto its market share with a tight grip. The world of online shopping is a constantly growing industry, and with e-commerce of luxury brands becoming increasingly popular in the United States, Holt Renfrew as a company feels that it is in their best interest to hop on that train as well. Good call. Saks Fifth Avenue is already relatively established in the e-commerce department; in order for Holt Renfrew to maintain its success in the luxury retail market in Canada, it must establish itself as a front-runner in both physical retail stores and e-commerce. Holt Renfrew seems to be on track as the president, Mark Derbyshire, states that the website for Canada will be "one of the most innovative sites I can imagine."
Holt Renfrew is aiming to have the expansion renovations completed by the end of 2017.