POSSIBLE SAKS FIFTH AVENUE LOCATION(S) FOR TORONTO

[Image Source]

It's confirmed that Toronto will be host to at least one Saks Fifth Avenue store, if no several. Toronto's first Saks store(s) will be located within existing Hudson's Bay store space, and purpose-built Saks stores could follow.

The following is our analysis both on potential shorter-term Saks Fifth Avenue store opening(s) in Toronto and some potential longer-term store locations. Longer-term stores could be newly built, including the possibility of one such Saks Fifth Avenue at the Yorkdale Shopping Centre.

So far, we know that Hudson's Bay intends to open two Canadian Saks stores towards the end of 2014. One will be in Toronto, the other in Vancouver. We expect both to be located downtown, with the possibility of one or more suburban stores to immediately follow. 

This is our analysis of possible Saks Fifth Avenue locations in the Toronto area:

Hudson's Bay, Queen Street, Toronto [Image Source]

1) Saks Fifth Avenue Within Hudson's Bay, Downtown Toronto, 176 Yonge Street (aka "Queen Street" store): We initially expected Toronto's Saks to replace Hudson's Bay's 342,000 square foot Yonge and Bloor store. Management we've spoken to are suggesting otherwise, meaning we could see Saks within Hudson's Bay's 851,000 square foot flagship 'Queen Street' store. It has room for a Saks store, though it would require an awkward reconfiguration of the store's current layout. Recently, the Queen Street flagship has added various concessions including a 19,000 square foot TopShop/TopMan, one of the world's largest women's shoe floors, and an outpost of the Drake General Store. In addition, it also recently announced that a 20,000 square foot Kleinfeld Bridal store will open next year on its 7th floor. Finding a contiguous 100,000-150,000 square feet for Saks within the Queen Street Bay may be challenging given the store's layout. In light of this, Hudson's Bay could create a series of "Saks departments" throughout its store, or Saks could occupy one or more entire floors at Hudson's Bay.

Hudson's Bay, Coquitlam BC. Uneven, dirty carpet and duct tape.

Hudson's Bay, Coquitlam BC. Broken glass, uneven/stained carpet and duct tape.

However, we think opening several "Saks departments" within any Hudson's Bay stores would be bad for the Saks brand. Saks' stores are famous for their customer service and upscale interiors, while Hudson's Bay is known for the opposite. The entire Saks brand could be devalued both for Canadians and Americans if Saks departments open in existing Hudson's Bay stores. Hudson's Bay Company CEO Richard Baker says that he'd like Hudson's Bay to be "Canada's Harrod's", indicating that he might consider merging the stores by opening Saks departments within Hudson's Bay stores. We think this would cause confusion for Canadian shoppers. We recently visited a Hudson's Bay store in Coquitlam, BC, where carpet was held together by duct tape, customer service was essentially non-existent, and mirrored pillars were broken (see images above). Hudson's Bay has a lot of work to do before Canadians can accept it as an upscale label in its own right, even if it inserts upscale Saks departments at several of its better stores.

Occupying one or more upper floors at the Queen Street flagship is possible but could also be a challenge. If located on an upper floor, Saks would lack a street-front entrance. We think it would be a disservice to Saks Fifth Avenue to deprive it of a glamorous street-front entrance, even if the store is only considered to be a "temporary" location before the opening a flagship further up Yonge Street.

Hudson's Bay, Yonge and Bloor, Toronto [Image Source]

2) Saks Fifth Avenue, Yonge and Bloor Streets: As mentioned above, Hudson's Bay's 342,000 square foot store at Toronto's Yonge and Bloor intersection could be converted into Toronto's flagship Saks Fifth Avenue store. If this happens, it's likely that the store's current concrete exterior would have to be substantially modified. Its bunker-like exterior and low ceilings might be remedied by selected demolition, though this would be expensive and challenging.  As we mentioned, Hudson's Bay wants Saks in Toronto by the end of 2014. A substantial remodelling of the Yonge/Bloor Bay would likely take longer. In the short term, a "temporary" Saks could open within the Queen Street Bay while the Yonge and Bloor store is properly renovated. Opening Saks at Yonge and Bloor would be strategic as it would go head-to-head with neighbouring Holt Renfrew, which will see a substantial expansion in the next few years. The area is also more "prestigious" than the areas near the Queen Street flagship. 

Hudson's Bay, Yorkdale (note: last week new 'Hudson's Bay' signage replaced the yellow logos in this photo) [Image Source]

3) Saks Fifth Avenue, Yorkdale Shopping Centre: The 303,000 square foot Hudson's Bay at Yorkdale has recently seen extensive renovations, including Canada's first full-sized TopShop/TopMan store. If Saks were to carve out, say, a 100,000 square foot portion of Yorkdale's Bay, that would still leave 200,000 square feet for the primary tenant. However, Saks would be up for significant competition at Yorkdale with a world-class renovation/expansion of the mall's Holt Renfrew store, the addition of a 188,000 square foot Nordstrom store and possibly the arrival of anchor La Maison Simons.

One or more "Saks departments" could be located within Yorkdale's Hudson's Bay on a more temporary basis while it secures space occupied by neighbouring Sears, which will close in a few months. Some have speculated that Saks could replace the entire Yorkdale Hudson's Bay store itself, though we think it's too large - there are no suburban Saks stores even close to 300,000 square feet in size.

Hudson's Bay, Square One Shopping Centre. Image: Google Streetview screenshot.

4) Saks Fifth Avenue, Sherway Gardens: The 223,000 square foot Sherway Gardens Hudson's Bay could see the inclusion of a Saks shop-in-store. A full-sized Saks is less likely here because even taking 75,000 square feet for a Sherway Saks would likely render Hudson's Bay too small. Opening Saks in Sherway could be a good move for Hudson's Bay, as competitor Holt Renfrew is expected to exit Sherway when it opens its Mississauga store in 2016. Nordstrom's 2016 Sherway Gardens arrival will boost the mall's popularity and Saks will more likely compliment Nordstrom than provide outright competition, given their limited brand cross-over.

Some are speculating that Saks could take over the entire Sherway Hudson's Bay store. We don't think this will happen, as 223,000 square feet is likely too large for a suburban Saks. Some also speculate that Saks could take over the 225,665 square foot Sears at Sherway and, again, we think it's too big. Subdividing Sherway's Sears for Saks and others is possible, though we're not aware of any such plans. 

5) Saks Fifth Aveneue, Square One Shopping Centre, Mississauga: The 201,000 square foot Square One Hudson's Bay could see a Saks shop-in-store. Despite Square One having Target and Walmart as anchors, Saks could actually fit in the mall now that Square One will include a 120,000 square foot Holt Renfrew store and possibly La Maison Simons. We're not sure how Saks could be configured into existing or new space, and we think Square One is the least likely of all locations discussed above to open Saks Fifth Avenue.

Our next Saks Fifth Avenue article will be on its Vancouver store opening(s).

[Hudson's Bay website]

[Saks Fifth Avenue website]