Does Toronto need more department stores? Simons says yes

Even for a seasoned retailer, Canada’s busiest mall can be a bit overwhelming. Navigating a high-traffic corridor at CF Toronto Eaton Centre often feels like a plunge “in the middle of a salmon river,” La Maison Simons chief executive officer Bernard Leblanc said.

Mr. Leblanc is happy to swim against the current, opening new large-format stores at a time when other retailers are scaling back their footprint in Canada, or failing to make it work altogether. The Quebec City-based chain announced on Thursday that it is spending $75-million to open new stores in two of Canada’s highest-profile malls.

The two new stores will fill part of the space formerly occupied by U.S. department store chain Nordstrom Inc. – which exited the Canadian market last year – in Toronto’s Yorkdale Shopping Centre and Eaton Centre. The locations, scheduled to open in the fall or winter of 2025 will significantly expand the 184-year-old retailer’s presence in the Greater Toronto Area, and represent a significant bet on brick-and-mortar retail.

“We’ve seen double-digit increases to pre-COVID levels in our stores,” Mr. Leblanc said, standing near the Eaton Centre construction site where the new Simons store will be built, as hammering emanated from behind a temporary hoarding wall. Simons had record sales of more than $650-million last year, he added. Roughly two-thirds of that comes from physical stores, and the company expects the two new locations to boost total sales by roughly 15 per cent.

“It’s going to be great for brand visibility. Proximity to our client is a big thing for us,” Mr. Leblanc said.

Simons began opening stores outside of Quebec in 2012, and currently has 17 locations in Canada. So far, it has opened just one in the Greater Toronto Area – at Square One Shopping Centre in Mississauga, Ont. Between that store and online sales, however, Toronto is already the company’s second-largest market. Mr. Leblanc noted that there is room to grow in other cities as well, such as Vancouver where the company has one store

Simons is making big investments at a time when consumers are in a slump. Retailers that stock the kind of non-essential goods Simons sells – such as fashion, accessories and home decor – have noticed shoppers being more careful with their money. Even with significant growth in the Canadian population, retail sales growth has stalled in recent years.

As that was happening, Simons was spending, upgrading its digital and e-commerce operations, building an automated fulfilment centre, and opening new stores in Pointe-Claire near Montreal and in Halifax. In total, the company will have spent $300-million over five years, including the investment in the new Toronto stores.

“Clearly, we see consumers are a little bit more frugal right now, but we’re still seeing year-over-year growth, more modest right now for the first quarter, but still slight growth,” Mr. Leblanc said.

The Toronto locations will be among the largest for Simons in the country, covering 118,000 square feet over two floors in Yorkdale and 110,000 square feet over three floors in Eaton Centre. The latter space is something of a department-store graveyard, having formerly housed an Eaton’s location, followed by a Sears and then Nordstrom.

“Department stores have been under huge pressures in the last few years,” said Charles de Brabant, executive director of the Bensadoun School of Retail Management at McGill University. “You look at Hudson’s Bay, or Macy’s or some of the American players, they have progressively over time gotten old, dusty, run for short-term financial gain or even real estate investments. And they just haven’t kept up with the times. The ones that are doing well, like Simons, are offering something distinctive to customers.”

Simons has a slightly different business model from a department store: it sells no furniture or appliances in stores (though it offers some furniture online), lacks the typical fragrance and cosmetics counters, and – while it stocks a number of name brands – the majority of its sales come from its private-label products. Its brands such as Twik, Contemporaine and Miiyu make up 70 per cent of the product assortment and roughly 60 per cent of sales volumes.

Simons is taking up some valuable real estate: Yorkdale and Eaton Centre are Canada’s top-two-performing malls, according to industry group the International Council of Shopping Centers. Last year, Yorkdale had $2,402 in sales per square foot, according to ICSC, while Eaton Centre’s sales were $1,457 per square foot. The company had been eyeing both locations for years, Mr. Leblanc said.

“When the space got vacated, the landlords were willing to make investments to make the space perfect for us,” he said.

Even with the rise of e-commerce, people are shopping in person at high-performing malls. According to owner Oxford Properties Group Inc., Yorkdale’s overall sales increased by 8 per cent in 2023, to a record $2.1-billion total.

Nordstrom’s exit left a large hole in both malls, which have been working to split up the space to accommodate new tenants. Eaton Centre owner Cadillac Fairview Corp., for example, recently announced that high-end food emporium Eataly would open in part of the space, and Nike Inc. will move its store from elsewhere in the mall to also occupy part of the space.

“For us, the top-tier retail environments are really what we’re looking for,” Mr. Leblanc said. “We need that density, we need that kind of high-traffic environment. … We’ll be patient.”