Nordstrom to close all 13 stores in Canada, lay off 2,500 workers by June | Hacker News Reader

Nordstrom to close all 13 stores in Canada, lay off 2,500 workers by June

wsj.com

60 pointsbookofjoe82 comments

Canada is basically captive to (comparatively) small canadian oligopolies that each have their little fiefdoms. It's very hard for outsiders to compete (there are obvious exceptions like Walmart), or even impossible because of regulation. American companies try every once in a while because superficially the market looks attractive, but then retreat. Same happened with Target less than 10 years ago.

What you're saying makes sense for things like telecoms, where the government is actively covering for the incumbents, but makes no sense for retailers.

Look at the grocery market. Lowe's is another retailer I just remembered. We have home depot, but last I checked Rona, Kent, etc represent the rest of the competition in DIY stores

So what? What about the grocery market? What does that have to do with the price of butter?

In the US it's also consolidating into a few giant incumbents. Do I get to blame that on government regulation, too? Which regulation?

Again, I understand why Canada has an uncompetitive telecom, banking, and airline sector. But exactly what government intervention do you think is responsible for Nordstrom and Target failing to succeed in it? What intervention and regulation uniquely and unfairly advantages retail incumbents?

Please be specific.

Supply chains are a massive part of retailing, and they are are not fungible across countries: All goods sold in Canada have to comply with Canadian laws. That typically means repackaging to comply with product labeling and language laws, but there are other things. Canadian consumers do not have the same expendable income as do U.S. consumers. The net effect is higher operating costs and lower margins at baseline. When the economy gets tougher that margin matters.

Edit: Note that I’m not saying whether this approach is good or bad for Canada as policy, but the idea that there are no policies that shape the retail landscape is simply not true.

> All goods sold in Canada have to comply with Canadian laws. That typically means repackaging to comply with product labeling and language laws, but there are other things.

From my experience, most items I purchase already have French labelling on them.

> Canadian consumers do not have the same expendable income as do U.S. consumers. The net effect is higher operating costs and lower margins at baseline. When the economy gets tougher that margin matters.

Why is that? 20% drop is huge.

Nordstrom isn't doing that well, even in the US though. And there's a general collapse of large retail stores in general, malls closing.

I think Canada is the 'canary in the coal mine' for some US companies. Struggling here foreshadows future struggles on home turf.

How are retail stores/chains being regulated, did that actually have an impact here?

Target was a bit more complex, a combination of issues with logistics and blindly taking over basically all of the locations of Zellers regardless of analysis meant they expanded quickly with not enough product making it to shelves, and not enough customer traffic.

They carried fewer of the products you'd come to expect in an American Target store. Also due to this cost, the prices weren't more attractive than established incumbents like Wal-Mart.

Target failed due to poor management, not regulation or entrenched competition.

https://hbr.org/2015/01/why-targets-canadian-expansion-faile... http://marketingmag.ca/brands/what-really-went-wrong-with-ta...

There was an interesting fight at the time over the Target trademark, someone noticed that there was a Canadian trademark for Target up for grabs from a failed company and bought it, anticipating Target coming into Canada. Target ended up settling in court [0]

[0] https://www.wsj.com/articles/SB10001424052748703643104576291...

relevant...

https://www.youtube.com/watch?v=k4hDGJ2FwDI

https://www.youtube.com/watch?v=ohXYR69UhxI

I don't think it's regulation, I think it's just a very hard market. Canadians have something like 20% less purchasing power than Americans, and I think a lot of entrants don't really appreciate that. Plus the country is large and sparsely populated with entrenched retail competitors.

It's quite sad that Target murdered Zellers (my grandma liked their restaurants!) but Target lost to Walmart (and its own ineptitude) not to any regulation. Walmart by contrasts entered pretty cautiously and fits well into the purchasing power disparity situation. I think if Target had entered cautiously they would have done much better -- open a few stores in the east near the border with easy logistics and grow from there.

Not only that, but most Canadians live near the American border, and can shop American stores in the states at lower prices. Why go to Nordstroms in Vancouver when you can hit the one in Seattle? Costco in Bellingham does brisk business with mostly BC license plates.

There is no way the exchange rate makes it work out to actually be cheaper to cross the border to shop these days.

Does it?

Our dollar sucks

Crossing the border is a bit of a PITA. A few years ago I took my kids to play in a youth hockey tournament that was split between the US and Canada. Our hotel was on the Canadian side. Crossing back and forth was a nuisance and even though beer was cheaper on the US side it was technically illegal to bring very much back across the border. I assume the same is true for other shopping.

People who doe this regularly will get a NEXUS card, which makes the process much easier. Bringing alcohol back is totally fine in any quantity if I recall correctly, you just have to declare it and maybe pay some tax either direction. Fruits/veggies are more restricted I believe actually.

My impression was the whole “go to the USA to shop because everything is cheaper” thing was illegal but I didn’t look into it deeply.

Totally legal, just be sure to declare whatever. We do it for ketchup chips (From Canada)

I live 2 hours from the border and our Outlet Mall parking lots are full of vehicles with Canadian license plates on the weekends.

Bellingham is one thing, but Seattle is a good 2.5h drive from Vancouver, or maybe even more depending on border crossing and traffic along I-5.

I can't imagine anyone deciding that they want to drive for five hours plus to save a little bit of money at Nordstrom, especially given the cost of gas, especially since folks who shop at Nordstrom aren't exactly penny-pinchers, and especially because Nordstrom is pretty high-end...so by the time you've spent enough money to have saved enough money to make all that worthwhile, you've blown past your duty exemption allowance.

Yeah, I've never heard of someone going to NYC for a weekend specifically to go shopping and taking empty suitcases on the plane. /s (feel free to fill in whatever city Paris, Milan, LA, etc)

People make shopping excursions all the time. Just because you don't do it, doesn't mean others don't. People drive from Houston<->Dallas specifically to go shopping. Yes, there's no international border to cross, but it is still a 5 hour drive one way. So a 2.5 hour drive from Vancouver to Seattle would be nothing for those that are into it.

I'm not saying no one does it (though, like I said, I can't imagine why), I'm saying there's a very good answer to OP's question of:

> Why go to Nordstroms [sic] in Vancouver when you can hit the one in Seattle?

Also...are you familiar with Vancouver or Seattle? New York, Paris, Milan, LA are shopping meccas in a way that Seattle isn't. Heck, Seattle isn't even a shopping mecca in comparison to Vancouver. I actually am having a hard time picturing someone going to Seattle with an empty suitcase unless they live in Yakima or something. Maybe an empty icebox, if they're real into fish.

You are sort of right about Seattle, but not Bellevue. Bellevue is a high end Nordtrom store (so is Seattle, but Bellevue has a lot more stuff these days). And Bellevue these days caters a lot to Indian and Chinese shoppers (like it does in Vancouver). There is also Seattle Outlet malls that is way north of Seattle and is pretty much just luxury brands with a bunch of BC plates in the parking lot.

>(though, like I said, I can't imagine why),

wow, that's a tough one to accept. surely, that can't be true, but my guess is you're limiting your imagination to shopping for essentials vs shopping for the experience or retail therapy type of shopping sessions. destination shopping is absolutely a thing. maybe not a thing you do, but it is an industry

I'm not sure if I'm expressing myself poorly or we just disagree on this point, but for the record: I understand why someone might destination shop in a place like NYC, LA, Tokyo, etc.; I can't imagine why someone who lives in Vancouver would destination shop in Seattle.

Ya, when I wrote this I though there was a Nordstrom in Bellingham, but found it closed in the 90s. They can still go to Macy's and Target, but...no longer Nordstrom. There is one in Lynwood, however, so not quite a 2.5 hour drive (and of course, the Seattle outlet mall north of Everett is mostly Luxury, though no Nordstrom).

My understanding is the Vancouver store is the only one that regularly hit its targets.

This reminds me of Car2Go being relatively well-utilized in Vancouver compared to other parts of North America.

My impression is that groceries are more expensive in the US. I didn't do an extensive research but I was camping for a week in WA and OR last summer and didn't get any groceries with me. I didn't find Costco, Safeway or Walmart to be any cheaper than in Vancouver.

Not sure about food, but diapers, in particular, are much cheaper in the states than in Canada.

It is a hard market but foreign retailers can be very successful if they have the right value proposition. Uniqlo and Decathalon (French) are both packed whenever I go.

They have very few locations though, which I think is a good takeaway - Target entered with a massive number of stores and failed. Minimum Viable Product people!!

Yeah. If American (or other) retailers just think of Canada as "Cold USA" they're going to have a bad time.

There are several impedance mismatches compared to doing business in America. Even several stores are positioned a bit differently from the US which make competitors not really fit in. Example: does Home Depot compete with Canadian Tire?

Walmart fits neatly because Canada has a niche for it and similar competitors like Loblaws.

Just to show my uncultured Americaness, but how is Canadian Tire related to Home Depot? Wouldn't Canadian Tire be more appropriately compared to Sears?

Canadian Tire doesn't have almost any clothing and it does have tools. It's definitely not as home-focussed as Sears. I mean I think Home Hardware competes more directly with Home Depot, but I'd say that Canadian Tire is the mid-point between Sears and Home Depot.

Sears in Canada was mostly a clothing store. 20+ years ago Sears did have more variety—tools and other products—but it was still fundamentally a clothing store. In my memory, Sears was nearly identical to the Hudson's Bay Company (The Bay), and my local mall had both.

Whereas Canadian Tire is first and foremost a tire store and an auto mechanic shop. The other half of the store is tools, sporting goods, household and kitchen goods, gardening tools and supplies, and a small selection of what a hardware store would have (plumbing, electrical, lighting). Canadian Tire also owns Mark's Work Wear House (now just "Mark's") that sells work clothes, and sometimes the stores are combined, but otherwise Canadian Tire doesn't sell clothes beyond some hunting and fishing gear. There's almost no overlap with Sears.

Home Depot in Canada is fundamentally the same as in the US. Home Depot and Canadian Tire are very much competitors for some things.

> Whereas Canadian Tire is first and foremost a tire store and an auto mechanic shop

I disagree. They have maybe 15% of their floor space dedicated to auto. Outdoors/sporting easily has 3x the floor space of tires and vehicles. They even have tons of stores that don’t offer mechanic work at all. 85% of the store is seasonal, outdoor, home, and tools. It is more the “family all-in-one” lifestyle store now.

If you count the auto mechanic shop and the parts counter as "floor space", and you should because that's a large part of Canadian Tire's business, automotive stuff is about half of the store. Most stores have an auto shop; it's only the stores in dense urban areas like downtown Toronto that don't.

I've definitely spent about ten times more on automotive stuff at Canadian Tire stores over the years than I have in the rest of the store, whether that's tires, wheel alignments, alternators and other car parts, brakes, snow brushes, paint, fluids, etc.

I haven’t checked their financial statements but I bet it breaks it down roughly and I would be surprised if their average customer spends more on automotive than the rest of the store. I bet it isn’t even close in the opposite direction. Maybe I’m wrong though! I am going based on their ads that dedicate very little space to automotive versus the rest.

I dunno, their flyer always has a couple of pages for deals on brake parts and tires, although the majority of the flyer is always other products. Even so, it's probably because flyers are focused on getting customers into the store, but no one impulse buys "cheap brake pads" and "discount oil changes", so why advertise for them? Also, auto parts can generally only have deals by category since there are so many cars on the road, which means they can only use generic images and price ranges.

I'm definitely not their average customer, but the average Joe that has settled on using Canadian Tire for routine car maintenance definitely spends more on automotive stuff, simply because cars are expensive to maintain. But I bet their household products are more profitable.

> Plus the country is large and sparsely populated with entrenched retail competitors.

A huge portion of the Canadian population is concentrated in a few small areas. Retail does not need to be evenly distributed over square area.

> It's quite sad that Target murdered Zellers (my grandma liked their restaurants!)

This is revisionist history. Zellers (Hudson’s Bay) was killing itself well before Target arrived (very briefly) in Canada.

Both Walmart and Target really misunderstood the Canadian consumer, and believed a product packaged for the U.S. market would operate largely unchanged in Canada, and they were terribly wrong. (Walmart had to abandon it’s “everyday low prices” approach because that promise alone didn’t motivate Canadian shoppers to visit.) Ultimately both retailers had to make big adjustments: Walmart ground it out, Target decided quickly it wasn’t worth it.

> and believed a product packaged for the U.S. market would operate largely unchanged in Canada, and they were terribly wrong.

Really?

I was under the impression cross border shopping told a vastly different story. Seems there's a lot of demand for American products by Canadian shoppers.

Not “American products” but “the retail product”, i.e. the experience of walking into a Canadian Walmart or Target and buying a good, as opposed to buying the same good from a different source.

As you noted, cross-border shopping by Canadians in the U.S. is a completely different “product” (retail experience) and there’s still a ton of demand. This was probably part of the calculation that enticed Target and Walmart into Canada in the first place. Whatever was “lost” when they tried to translate the U.S. experience directly to Canada included something that mattered (and still matters) to Canadian shoppers.

> the experience of walking into a Canadian Walmart or Target

> included something that mattered (and still matters) to Canadian shoppers.

What is it? From recollection, stores in Canada weren't that different than here in America.

Who knows? Could be the HST, could be the base prices, could be selection…

I disagree re the product. Target entered Canada and did not offer anywhere near the value proposition as in American stores. They also often had empty shelves indicating they didn’t invest in logistics properly - this is table stakes!

I think American companies enter Canada thinking they can half-ass it and succeed, and quickly realize that’s not the case.

The context of this thread is that there are Canadian policies that fundamentally make the retail landscape different in Canada, and there’s no way for a foreign retailer to come in and not have to change the way they do things even if they wanted to. If Canada adjusted it’s policies to match the U.S. then Target would look the same on either side of the border.

I agree that’s the context, I just don’t buy it at all. Also, Canadian retailers don’t have a great track record going to the US.

huge supply chain issues as well, with duties, tariffs, taxes and relative purchasing power. Canada is not the 51st state in your existing logistics & fulfillment process.

Agreed. Part of the huge demand for a Nordstrom's in Canada was to replicate the store and product offerings you encountered on cross-border shopping trips. The reality is/was that the products in a Canadian Nordstrom's or Target WERE NOT the same as in the US.

> The reality is/was that the products in a Canadian Nordstrom's or Target WERE NOT the same as in the US.

That's, to me, the puzzling part.

Did brands that managed to stay in the Canadian market change their offerings? Do they have "Canadianized" Apple or Ikea for instance?

>A huge portion of the Canadian population is concentrated in a few small areas. Retail does not need to be evenly distributed over square area.

Those clusters also happen to be very far apart, and compared to the US, not actually large in size other than the TO/MTL cluster. I think the geography of Canada matters to retail success. Retailers that try to cover the market, by, for example, opening a store in Edmonton like Nordstrom did, face real logistical costs. Holt Renfrew does not cover Edmonton, for example.

>This is revisionist history. Zellers (Hudson’s Bay) was killing itself well before Target arrived (very briefly) in Canada.

Zellers was certainly struggling, but I believe some version of Zellers would still exist today if not for the Target acquisition, but I guess it's not possible to know that.

Not disagreeing with you at all but another data point:

I live in Washington state and was getting groceries at trader joes last week. Randomly saw a car with a British Columbia license plate park and a group of young people got out and took a group photo in front of Trader Joes before entering - just gave me a laugh.

You need to read up on “Pirate Joe’s”

Haha I'm familiar with it, such a funny concept

I remember walking into a Canadian Target just after the winter olympics and they had a large clothing line dedicated to an American snowboarder (blasphemy!) and thinking wow does this company not know its audience.

Canadian here - Nordstrom offered outrageously priced goods. The luxury market here is small. Even when it's within reach for someone they aren't likely to chooes the luxury version over a more accessible version.

Fancy things aren't really viewed the same here. In many places having a really nice car doesn't make you "the man". It makes you come across as "flashy". Kinda like "what are they trying to prove?". Even if the person just likes the car, others make it out to be a thing.

tl;dr - they didn't stand a chance because they didn't understand the market.

As someone that lives in downtown Vancouver and was a regular Nordstrom shopper we have a very different view of Canadians. I think the real issue if the proliferation of high end brand specific stores, why buy buy a LV purse from Nordstrom when there is an LV store next door. The designer brands are just figuring out distribution themselves.

The luxury market is huge in major Canadian cities.

I'm one of the people who enjoy luxury goods. I'm from the Toronto area (Niagara really), lived in Ottawa for 8 years. Every time we go to Vancouver we go shopping. The density of luxury goods is the best in Canada.

I think being from Van has skewed your perception a bit. If you look at other countries around the world you will see higher availability of luxury goods, in higher density.

The watch market is a good example of this.

Part of me wonder if Loblaws is reason Trader Joes never tried to move to Canada, one of the few US chains most Canadians I know want locally.

Nordstrom is expensive and there's nothing at Nordstrom that is so fantastically better than available for far less at other retailers.

When I used to have money I shopped at Nordstroms. Now that I don't have money almost 10 years later around 40% of my closet is still those Nordstroms items. Between the better quality and better fit allowing them to look stylish longer, I would strongly disagree with your statement. I still get compliments on my almost 10 year old clothes.

The price to quality ratio may very well have been that way 10 years ago, but my experience is that is not the case now. I'm sure there are items in the store now that are worth the value, but in general I would say it isn't.

Love the stores, the flagship one in Seattle downtown is really great. I needed a tux for my wedding and a very sharply dressed older (Cuban) gentleman took just one look at me and the first tux he pulled fit perfectly, which isn't easy as I am skinny and most clothes are just too big and baggy. He then sent me one of his personal handkerchiefs to match the tie I had. Great service!

Now my children go to school with various grand and great-grand nordstroms. That family contributes to a community really nicely and is appreciated/

But back when Amazon bought Whole Foods I read some analyst that predicted that purchase and she was also suggesting that another Amazon acquisition would be Nordstrom. I bought on the rumor. As of right this very moment I am -43.63% on that position. Hmm. I'll hold.

I had a similar experience at that exact same store. Went along with a friend who needed a suit for a wedding. Got first class service, found a great suit off the rack, did some minor alterations, bought accessories. Total bill was ~$1500 (and this was over a decade ago).

If you didn't care for the brand name and service, you could get something of similar quality for 1/3 the price elsewhere. You could even get an online store to stitch something for you bespoke for cheaper. Ultimately that's why Nordstrom isn't making any money. Upper middle class consumers who will spend big money at departmental stores don't really exist anymore. Discount stores and boutiques catering to the elite are, on the other hand, both booming.

Nordstrom is one of those retail stores where I'd feel a loss if they went away. They're a pretty good company from a consumer perspective: their customer service is fantastic in my experience, and of course their return policy is legendary. I've even worked with them a little bit as a developer, and they seemed very cool.

I sat next to a Nordstrom exec on a flight once. He told me the proper Nordstrom stores are essentially loss leaders as high end branding for the Rack stores, where they make most their profits. Not sure if it was true or not but wouldn't surprise me.

That is interesting, I wonder if the same holds true for Saks and Saks off 5th.

Saks off fifth is notably the roughest outlet store I’ve been to. The one near me is dirty, all the shoes have been worn around already, and won’t even play music indoors. Where as the nordstorm rack across the street is lively and full every time I visit. I just assume Sakhs will disappear before I visit it next every time

My experience was the same. TJ Maxx on black friday was cleaner and more organized than Saks Off on any regular tuesday

Wow, that seems like such tail wagging the dog! Like, no one would shop at the discount store unless they had a luxury brand associated with it? Is that the reason for these department stores to exist now?

And I wonder what happened, as at one point the main store must have been a money maker. Just profits eroded over time?

Nordstrom can be overpriced but they are a good outlet for some quality brands. Plus the experience of clothes shopping in person beats online anyday.

Per their releases, core Nordstrom sales are 2x Nordstrom Rack sales and growing faster, so it was probably a more nuanced point.

Nordstrom's overall Gross profit is basically equal to Nordstrom Rack revenue, so it's nearly impossible for the majority of profit to come from Rack, unless they get their inventory for free.

If I had to guess, this was during the days when Rack was just starting and growing like a weed (back when execs and management probably thought it would be the next TJX), so it was the focus and what everyone assumed would be the core in the future.

For a variety of reasons (particularly the recent resurgence of designer brands due to social media), that never played out.

This seems true: https://www.retaildive.com/news/nordstrom-leans-on-off-price...

It's always hard to make these determinations. Sure on paper Nordstrom loses money and Nordstrom Rack makes money, but if you take the line item for the advertising budget of Nordstrom and put it under Nordstrom Rack, the situation will be reversed.

Our family really enjoyed Nordstrom stores, and were regulars at the Bazille restaurant in our location. Really sad to see this happen. I thought it was a fantastic place to shop that really showed what good retail could look like.

I guess I was wrong.

The Vancouver store is prime real-estate, overlooking the Art Gallery, Microsoft has two very nice floors just above them, and a few other tech companies have offices below.

As one of the Microsoft folks sitting above Nordstrom, I do wonder what will replace it.

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