Can Saks Fifth Avenue Succeed in Canada?

Saks Fifth Avenue, the noted American luxury retailer, is taking its place among Toronto's top visitor attractions this week as it opens its first-ever Canadian department store at the iconic Toronto Eaton Centre. A second Toronto-based location opens at Sherway Gardens next week.

If successful, Saks could become a major draw for Toronto's record-breaking 4 million visitors. Toronto Eaton Centre is already a top destination for overseas travellers and the addition of a Saks could certainly drive more coveted luxury shoppers to the downtown area. 

Image courtesy of Saks Fifth Avenue Eaton Centre @ Queen St. Instagram

Shopping is an important activity for Toronto visitors. A recent Tourism Toronto study found that nearly 2/3 (65.6 per cent) of Toronto's leisure visitors participate in some form of shopping activity. That number catapults to 80 per cent when it comes to Chinese travellers, one of Toronto's top overseas markets. 

Shopping makes up about 17 per cent of the entire trip spend for Toronto visitors. Canadians and Americans spend 13 per cent and 12 per cent respectively of their entire trip budget on shopping; for overseas travellers, shopping accounts for 30 per cent of the entire trip budget. 

But the question on everyone's mind is, can Saks succeed in Canada?

The openings come just as Canada’s oil market is plummeting, the Canadian dollar has reached an all time low and many experts are reporting a global decline in the sale of luxury products. Milennials and the up-and coming Gen Z audiences are largely believed to be spending less on luxury, especially in the travel sector. Chinese tourists — an important travel market for Toronto — are also veering away from luxury items. 

Retailers are feeling the pinch. Even Saks' parent comapny, Hudson Bay Company has cut its outlook for 2015 and 2016. Theres's also the question of whether Saks Fifth Avenue can learn from the epic failure of U.S. retailer Target, which shuttered 133 stores less than two years after entering Canada, largely due to a lack of understanding of the Canadian mindset.

In an interview with Macleans, Mark Metrick president of Saks Fifth Avenue noted that Saks's relationship with HBC is an important key to the company’s success in Canada.

That Saks is debuting a number of first-ever service initiatives in Canada could also mean the difference between success and failiure with respect to the city's visitors. 

For a best-of-both-worlds experience, the Saks at Your Service program is “a shopping service that brings the best of Saks directly to a client’s home, office, or hotel, anytime and anywhere.” Ideal for those who hate shopping but still want to take home a Saks Fifth Avenue souvenir. Of course, Saks has a line up of personalized stylists and shoppers as well as professional make up artists who can help visitors prepare for a once-in-a-lifetime glamorous night on the town.

What might be Saks’ biggest draw, especially when it comes to the lucrative Gen Y and Gen Z audiences is its plan to roll out Saks Food Hall by Pusateri’s in both Toronto locations. Similar to the Harrod's Food Hall in London, the set up is all about “culinary stations” which sell prepared food options and an assortment of groceries from around the world. Saks also plans to open two restaurants. Beaumont Kitchen by Chef Michael Hay, serving West Coast cuisine, opens next week at Sherway Gardens, while Leña, a restaurant and bar concept by Chef Anthony Walsh, will open at the Toronto Eaton Centre in May.

While Saks' location in Canada's most-visited city could drive more Canadian visitors to Toronto, it will be particiularly interesting to see if the reverse border effect happens. Will Americans head to Toronto with their turbo-charged dollars to enjoy the Saks experience at Canadian pricing? 

What do you think? Are Canadians ready for Saks Fifth Avenue? Does the addition of Saks make Toronto a more appealing visitor destination? I'd love to hear your opinion.

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