Combined store rendering: City of Montreal

By Mounia Ayoub

Montreal's

Ogilvy

and

Holt Renfrew

stores will merge,

forming one of the largest department stores in North America

, slated for completion in late 2017. The Holt Renfrew store on Sherbrooke Street will close and the Ogilvy store located on the trendy Sainte-Catherine Street West will be revamped and expanded northward on the site of the former

Hotel de La Montagne

. It is the only Ogilvy/Holt Renfrew-merged store planned so far in Canada.

Ogilvy and Holt Renfrew are heritage brands founded in Quebec: Ogilvy in 1866 in Montreal, and Holt Renfrew in 1837 in Quebec City. Both now belong to

Selfridges Group Ltd

., owned by the

Weston family

of Toronto which also controls

Selfridges

in the United Kingdom,

Brown Thomas

in Ireland and

de Bijenkorf

in the Netherlands (and grocer

Loblaw Companies Ltd

. in Canada). The new department store will take the (long) name in French of

Ogilvy, membre de la collection Holt Renfrew & Co

.

The purpose of this merger is to boost sales in Montreal by combining and developing the strengths of both stores. As the Vice-President of Holt Renfrew, Joanne Nemeroff, pointed out

in an interview with

La Presse Affaires

, the decision to merge both stores was made after a market study (confidential sources) showed that the Holt Renfrew customers wanted a larger range of products with a new assortment of brands while the Ogilvy customers were asking for a new dynamism. Moreover, according to Mark Derbyshire, President of Holt Renfrew, the strategy of targeting the customers of both stores the same way remains consistent since these customers have a lot in common. “We think we can offer them something bigger in one place instead of two,” as M. Derbyshire stated in his interview with

La Presse Affaires.

Current Holt Renfrew store on Sherbrooke St. W. [

Image Source

]

Holt Renfrew opened its store in Montreal on Sherbrooke Street in 1937; historically it has been the go-to place for fashion addicts in search of unique contemporary designer clothing and modern luxury accessories. On the other hand, Ogilvy has the reputation of offering a range of much more classic brands. We will see in the future if the regular Holt Renfrew customers will accept to change their shopping habits and leave the luxury Sherbrooke Street district to make their purchases on the less fashionable Sainte-Catherine Street.

What is more, this merger of the two stores in Montreal should allow the group to arm itself for the coming luxury battle with the arrival of its next big competitor, the New York-based luxury department store

Saks Fifth Avenue

. Saks was acquired by the Hudson’s Bay Co. (HBC) last November and

7 or 8 Saks Fifth Avenue stores are likely to open

in Toronto, Montreal, Vancouver and possibly Calgary in the next few years. Two Saks Fifth Avenue stores should open in Montreal, one free-standing downtown store and one suburban store,

possibly at Le Carrefour Laval

.

Saks will be the main competitor of Holt Renfrew in Canada as it has the same luxury positioning, carrying the same prestigious brands, from

Chanel

to

Prada

to

Gucci

, including the same trendy designer labels such as

Christian Louboutin

,

Manolo Blahnik

,

Jimmy Choo

etc. Differentiation will therefore be difficult for both companies in Canada. We have reason to believe this Ogilvy/Holt Renfrew merger in Montreal is likely to facilitate the differentiation process as this new luxury megastore will add the classic, respected and well-established image of Ogilvy to the avant-garde spirit of Holt Renfrew.

Fortunately for the Selfridges Group, Seattle-based Nordstrom does not plan to open any high-end department store in Montreal so far.

It will open only in Vancouver, Calgary, Ottawa and Toronto

,

taking over the mall's Sears stores about to close in Canada

(the first Nordstrom store in Canada should be opened in Calgary in 2014).

[

Image Source

]

Besides the Saks issue, the other question raised with this Ogilvy/Holt Renfrew merger in Montreal is whether or not the market can support such a luxury megastore given Quebec's market. With 220,000 square feet, the new Ogilvy/Holt Renfrew department store will be the largest luxury department store in Canada. Yet, according to

EnvironicsAnalytics

, only 4.1% of the population in Montreal had an income of $200,000 or more, compared to more than the double in Toronto, with 8.4%, and 5.6% in Vancouver in 2013. Moreover, 16.8% of the households earning more than $200,000 a year in Canada were living in Montreal against 44.8% in Toronto and 13.3% in Vancouver in 2013. Therefore one can wonder whether or not there is enough demand for luxury products in the area to warrant such a huge department store in Montreal.

The point is many Montrealers are used to shopping outside the city, whether it be in Toronto, the rest of Canada, or the United States. According to Alecsandra Hancas, Fashion Industry Analyst at the

NPD Group

, cross-border shopping is a serious issue in Canada overall since it represented an estimated $1-billion loss for Canadian retailers in the year to May 2013

1

. Thus Ogilvy and Holt Renfrew’s executives expect that upscaling the luxury offering in Montreal will dissuade these customers from doing cross-border shopping and encourage them to make their purchases in this new Ogilvy/Holt Renfrew megastore instead.

In conclusion, this new Ogilvy/Holt Renfrew megastore will definitely change the luxury landscape in Montreal, and will probably contribute to the retention of the local customers who used to shop outside Montreal. The arrival of Saks in the next years will also upscale the retail market in the biggest city of the province of Quebec. In the meantime, this increasingly fierce competition in the luxury market will affect not only the department stores and their customers but also the suppliers, which will have to figure out how to distribute their collections without compromising past allegiances with Holt Renfrew or Ogilvy and without cannibalizing their current sales.

Mounia Ayoub is a luxury retail, fashion lover and a contributing editor for Retail Insider. Born in Paris and raised in Marseille, in the South of France, she is strongly attached to her Mediterranean roots. With a business background, she has worked for Marc Jacobs in Paris and contributed to consulting services at the French Trade Commission in Toronto for French luxury and cosmetic companies expanding their activities in North America. After living in Japan, New York City, Toronto and Paris, she has found in the multicultural city of Toronto the perfect pied-à-terre for now.

Ogilvy website

]

[

Holt Renfrew website

]