FOCUS: ATTRACTING CANADIAN SHOPPERS

Canadian shoppers set the tone for Western New York retailers

By Samantha Maziarz Christmann
Updated: 06/21/08 9:29 AM

Local designer Jimmy Lee swept his hand across a rack of simple, satin gowns.

“These dresses are classic and elegant — much more calm and subtle,” said the owner of dress boutique and tailor TT New York. “They’re not the big, beaded ball gowns we’re used to.”
Like any smart retailer, Lee has been studying and responding to his customers’ preferences. And like many of those along the U. S. border, Lee has noticed Canadian traffic influencing his decisions more than ever.

“Stores have to change to meet [Canadian] needs,” said Lee.
The influx of Canadian shoppers led Lee to places like Toronto, Hamilton and Mississauga to study demand in the Canadian market. He looked for popular styles (simple), sizes (small) and colors (purple, dark blue and red). Then he put what he saw into action with a line of Jimmy Lee dresses, designed specifically for Canadian shoppers.

“Business has gone crazy because of it. We can’t keep them in the store,” Lee said.

Thanks largely to the near parity of the Canadian and American dollars, TT New York’s sales are up 18 percent over last year. And while malls across the country scramble to fill holes left by closing stores, those in Buffalo Niagara, like the Fashion Outlets of Niagara Falls and the Walden Galleria, are actually expanding.

“We can see examples of U.S. export growth at any Buffalo area mall,” said Mikhail Melnick, assistant professor of economics at Niagara University’s College of Business Administration. “This certainly helps stimulate our economy.”
According to Melnick, retail sector employment grew by 1.2 percent last year, more than double that of overall private employment. In effect, the region’s proximity to Canada’s most populated region, the Toronto metropolitan area, acts as a buffer against hard retail times experienced elsewhere.

Variety is a lure
In order to continue riding the wave of incoming Canadian cash, retailers are watching what Canadians like and giving them more of it.
According to Julie Clark, marketing director for the Fashion Outlets, it is not only pricing that is attractive, but the uniquely American excess of variety.

“In general, the Canadian market is very limited to begin with,” Clark said.

What entices Canadian shoppers, retailers said, is the abundance of styles, sizes and colors available.

Barbara Pennock drove 90 minutes to the Fashion Outlets from Etobicoke, Ont., to find shoes she will wear in an upcoming wedding. Noting higher gas prices balance out the savings on what she calls the “incredible deals” to be had, Pennock said she is lured by the diversity of goods.

“There is way more stuff here — definitely more variety,” she said. “You can get it all here.”
Loreen Tellega drives in from Niagara-on-the-Lake, Ont., once a month for a change of pace. She makes a day trip of it, stopping for lunch with her sister-in-law. Searching for a dress to wear to her son’s upcoming wedding, she finally found it at TT New York.
“I had not seen that dress anywhere else and I had been looking throughout Canada,” Tellega said.

A love for labels
Besides selection, what Canadian shoppers want most are high-end labels, Clark said.
“The Toronotonian is looking for high-end designer fashions. That is why Coach, Michael Kors, Hugo Boss and Saks 5th Avenue Off Fifth do so well,” she said. “Toronto is the fashion Mecca of the North . . . they love designer names.”
This year, that love for labels manifested itself at the Walden Galleria with the addition of Italian shoe store Geox, hip clothier Bebe, luxury leather name Coach and cosmetics retailer Sephora, along with several upscale restaurants.
The Fashion Outlets invested a great deal in an upscale “Fashion Avenue” at its mall, and brought in such names as Kate Spade, Lucky Brand Jeans, Juicy Couture and Guess Accessories.
Canadian sports fans bring with them the desire for a different kind of name. Joe Laux, of the local chain Laux Sporting Goods, said the Canadian influx has filled the gap created by suddenly thrifty U. S. shoppers. He is happy to give them what they want.
“We definitely stock more Toronto Blue Jays, Maple Leafs and Raptors [items],” said Laux. “Nobody wants to say the word recession, but it’s here and [Canadian money] softens the blow. It has been a godsend.”

Research pays off
Nike researched Canadian demand before stocking its new store at the Fashion Outlets, according to General Manager Dan Sawall. Going forward, a core of executives will continuously watch the store’s inventory and respond to demand.
“The Canadian consumer is huge here. They’re going to be a big part of the business,” said Sawall. “They were one of the key things for us to come here.”
Steve Maniatis came from Oakville, Ont., to visit the Nike and Adidas stores at the Fashion Outlets. Noting the difficulty of finding extra-large clothing sizes in Canada, he said the combination of great prices and an array of sizes made the more than hourlong trip a no-brainer.
“The same [ill-fitting] jacket I would buy in Canada for $300 I can get here for $60,” he said. Yet, retailers deny the stereotype that super-skinny Canadians are causing more size 2s to appear on racks, leaving U. S. shoppers holding an empty clothes hanger.
“There are teeny girls in Buffalo as well,” said Kristy Soda, merchandise manager for Tony Walker and Company in Williamsville. “Canadians come in all sizes just like us.”

Holidays drive sales

Canadian demand not only affects what retailers stock, but how they do business.
Retailers at each of the major local malls all said they reinforce stock and roll out sales to coincide with Canadian holidays. The Walden Galleria even permanently extended its Sunday hours of operation to please early bird Canadians with limited time in the area.

While catering to the Canadian dollar has brought positive changes for stateside shoppers, some local experts fear the neighbors to the north could shape retail in a negative way.
“As U. S. shoppers, we get hurt by our Canadian competitors as they reduce any pressure for local stores to offer discounts,” said Melnick, who also noted that Canadian retailers, forced to slash prices to compete with U. S. deals, also suffer from cross-border shopping.

But Betsey Bonvissuto, marketing director at the Boulevard Mall, said local retailers still feel the push to offer great deals.
“Despite the fact that regularly priced merchandise is still considerably lower in price than they would pay in Canada, they specifically look for clearance merchandise and the lowest possible sale price,” she said.
Still, Melnick warned U.S. retailers against banking on a continued Canadian boost, estimating current conditions will last another two years at most.

While some expressed doubt local retail expansion will be able to support itself in the long run, John Ecklund, assistant general manager at the Walden Galleria, is more optimistic.
“Over the past few years, we have noticed a tremendous increase in the volume of Canadian shoppers,” Ecklund said. “Canadian traffic has been phenomenal and it continues to be strong.”