Officially, it was a bash to celebrate the 150th anniversary of Burberry, the English maker of upscale sportswear known for its iconic camel, black, red and white plaid. But unofficially, the Friday night gala at the Holt Renfrew & Co. Ltd. store on tony Bloor Street West was yet another A-list event for the Toronto International Film Festival crowd, who invade the city every September. As the usual bevy of Beautiful People walked into the luxury-fashion department store, they were greeted by the sight of male models standing on black pedestals ? wearing nothing but boxer shorts, suspender socks and busby hats. The juxtaposition of the lack of clothing on the human mannequins ? holding signs pointing to the “pub” and “disco” ? with the sumptuous garments hanging on the racks inside the Canadian luxury icon provided a touch of irony.
The action was on the third floor ? transformed into a trendy London pub, accented with pillows embroidered with the names of Tube stops and murals of subway maps stretched across walls ? guests were greeted with the best in food and drink: Grey Goose martinis, impeccably fresh sushi and bowls of “crisps” scattered about the black and white surroundings and tasting far superior to the garden-variety potato chips found in most supermarkets. The decor had an edgy feel intended to reflect ? and attract ? a new kind of Burberry customer: young, hip and energetic.
Working her way through the couture-draped crowd ? which included the likes of Dustin Hoffman, Diane Kruger (who played Helen, opposite Brad Pitt, in Troy), Shawn Ashmore (Iceman in the X-Men movie franchise) and Joshua Jackson, of Dawson's Creek fame ? was Caryn Lerner, the 48-year-old president of Holt Renfrew. Two years into her tenure, Lerner, who was formerly president and chief marketing officer for Escada (USA) Inc., has put the luxury department-store chain on a roll, growing sales from about $400 million, in 2004 to what will likely top $500 million, in 2006. Like most of her well-heeled guests, sporting clothes that cost more than a month's rent in Yorkville, Lerner looked splendid in a black cocktail dress ? Prada ? that she no doubt picked up while shopping her own store. After all, in many ways she represents what she views as the quintessential Holt Renfrew customer: Someone with a flair for where fashion trends are going. Someone who knows how to use them to best advantage. Someone with high expectations.
Earlier the same week, Lerner is sitting in her sleek, modern office, again wearing black ? this time, pants and a turtleneck sweater. She acknowledges she's had “a fabulous start” to her career at Holt Renfrew. She took over in September 2004 from Andrew Jennings, who as president for five years took the chain ? since 1986 part of the private holdings of Galen Weston, patriarch of Canada's second-richest family ? and gave it a new lease on life. (Jennings left for Saks in New York in 2004, and most recently left that post in September to head up Woolworth's in South Africa, where he had worked earlier in his career.) Jennings put Holt Renfrew back on track with strategies that included focusing more on exclusive high-end brands, improving private-label offerings and using better marketing and customer-service techniques.
Lerner took the foundation of what Jennings had done ? and ran with it. Says retail consultant Richard Talbot, based in Markham, Ont.: “Andrew started the process of rejuvenating Holt Renfrew, but Caryn has really built on it and taken it to a new level.” Certainly, Lerner's CV ? which includes stints at The Shopping Channel, Jones New York, Barney's New York and Bloomingdale's ? points to her wide experience. She started off on the stockroom floor and moved up the ranks, which gave her a bottom-up perspective on retailing.
With Lerner at the helm, there's been an incredible amount of activity at Holt Renfrew over the past two years. For starters, it has just about completed the first phase of a major renovation of the flagship Yorkville store ? its second reno in three years. (It underwent a $33-million facelift in 2004.) Earlier this year, it leased 16,000 square feet next door that had been occupied since the '70s by casual-clothing store Eddie Bauer. In September, it opened the main floor of the new space as part of an expanded cosmetics, accessories and handbags department. The 10,000 square feet upstairs will undergo a makeover starting in 2007.
But it's not only the 120,000-square-foot-plus flagship store in Toronto that is getting all the attention. The Montreal store, on Sherbrooke Street West, is undergoing extensive renovations, with a revamped jewelry-and-cosmetics department completed at the end of September. Meanwhile, the Vancouver store is being relocated to a new site within the Pacific Centre mall; it's set to open in April 2007. All the construction has been relatively stress-free, Lerner says. “We're on track,” she adds, “and on budget.”
Lerner says that the changes aren't just to the bricks-and-mortar aspects of the nine-store chain (three in Toronto, one each in Edmonton, Calgary, Vancouver, Montreal, Quebec City and Ottawa). During the past two years, she explains, the 169-year-old retailer has built on the momentum of her predecessor on branding, marketing and finding ways to attract new customers ? without alienating the tried-and-true Holt Renfrew shopper. Last year, it unveiled a new typeface and logo, along with a new colour of shopping bag ? glossy magenta ? updating its old cream-and-capital-letter packaging, which had not changed in about 30 years. It's part of a campaign to make it clear Holt Renfrew wants a lock on the luxury market. “It's not just about expanding the number of people shopping at Holt Renfrew,” says retail consultant Wendy Evans. “It's about getting more business out of the relatively small part of the Canadian population who can afford to shop anywhere.”
Holt Renfrew has been expanding the number of designer brands it carries ? one reason for the renovation binge. Lerner points out that competition in the luxury market isn't necessarily coming from “the store across the street” ? Holt's pretty much has the high end all to itself. But customers wealthy enough to shop there regularly are also well-travelled, which means they can shop in fashion capitals like Paris, London and New York. “Truly, our competition is global,” Lerner says, “and we've risen to the challenge.”
In growing a luxury-market business, Talbot says Holt's must walk the “very thin line” of pleasing traditional customers while attracting a new clientele and building a foundation for future shoppers. The chain, he says, seems to be holding on to its blueblood customers while making the stores more compelling to “aspirational” ? and younger ? shoppers, either those who are using debt to buy that must-have designer leather bag or who, by virtue of still living with their parents, have more disposable cash. (Talbot says that for research purposes, consultants like him have created a new demographic ? single people living at home ? to distinguish their greater spending power over single people living on their own.) The store has created quality private-label products that are less expensive than the designer equivalents but still have Holt's “brand prestige.” These private labels are meant to fill a particular niche, and are kept to about 10% of overall sales to make room for more designer brands. “We live in a branded moment,” Lerner says.
Her strategy for expanding designer labels is to accommodate both the traditional, more conservative, shopper and the fashionista with an edge. As well, Talbot says, Holt Renfrew is taking advantage of its connection with tony retail names such as Selfridges & Co. in England and Brown Thomas of Ireland, both also part of the Weston family's holdings. International connections give Holt's better buying power, and it can pick up some edgier vibes from the rejuvenated Selfridges. Starting next February, Holt Renfrew will part ways with Browns Shoes, which has been leasing space within the chain for the past 15 years. It's part of a plan to up the ante, fashion-wise, in the footwear department, to match the offerings in the apparel aisles. Browns ran the shoe division “wonderfully,” Lerner says, but it concentrated a lot of its business on private label at the same time that customers were demanding a deep assortment of recognizable brands in shoes ? think Jimmy Choos and Manolos ? to match the expanded assortments in clothing. The aim is to build up the shoe business so that it eventually represents about 10% of revenue, double the current 5%. The way Lerner puts it, expanding shoe brands within Holt Renfrew is a way to ensure customers aren't forced to go somewhere else. Accessories are another big area ? with many affluent and not-so-affluent willing to shell out big to buy a Gucci or Louis Vuitton bag, which they think of as an investment ? “something they can pass on to their children,” Lerner says.
Speaking of which: earlier this year the store launched itself into designer baby and children's wear ? Dior, Dolce & Gabbana and Diesel available for children ranging from infants up to 6X. The emphasis here is children's designer clothing for special occasions and as gifts. And for those teenage girls who can fit into women's-size clothing, Holt Renfrew even offers, as part of its personal shopping service, help for 14-year-olds going on 24 in finding an outfit for the Grade 8 prom that will look “hot” ? but not so vampish that parents will be mortified. The importance of these strategies, says Talbot, is that it helps create a customer base for the future. Aspirational shoppers who start off with the occasional purchase are lured into becoming devout Holt's customers; children growing up with designer clothing are trained in their designer labels by the time they become adults.
Though Holt Renfrew operates only in Canada ? and there are no plans to expand outside the country ? Talbot says the chain has ample opportunity to grow in key markets. Calgary, with all its new-found wealth, is a prime example. He suggests that while Holt Renfrew may not expand the number of stores, Canadian shoppers will most likely see current locations expanded or relocated to a more standard department-store size of 120,000 square feet. That would enlarge the range of products and brands available, and it would allow for more upscale services, such as personal shopping and a concierge desk.
Holt Renfrew's efforts seem to be paying off. Lerner says there's “healthy growth” in all of the retailer's businesses, and overall top-line sales are expanding at about 12%. Another sign that the store is on a roll is the number of sales associates that have sold more than $1 million annually. Lerner says that at the end of 2004, there were nine; last year, there were 34. And this year the chain is forecasting 54. Presumably, if they're working on commission, members of this growing “million-dollar club” can well afford to shop at Holt Renfrew themselves.
We're living in an era in which more people are willing to spend big to look, or feel, like a million bucks. The luxury goods market in Canada is growing, thanks to a combination of factors: rising house prices that make people feel rich ? at least on paper; an economy that keeps chugging along; and, in Alberta, an oil boom that's created a class of newly wealthy people. Add to this a strong dollar that buys a lot more than it used to, and it's easy to see why high-end retailers consider Canada a good place to set up shop.
Evidence of this trend can be seen along Toronto's Bloor Street West, near the flagship Holt Renfrew store. It's Canada's version of Rodeo Drive. Among the tony retailers there, some since the mid-1980s: Max Mara, Lacoste, Hermès, Chanel, Tiffany, Louis Vuitton, Prada and Mont Blanc. More recently, in early October, Toronto jewelry designer and manufacturer Myles Mindham secured the rights to sell the ultra-luxurious Swiss watches of Franck Muller, Geneve at his Avenue Road boutique, just off the Bloor Street strip. This makes Muller watches, which retail anywhere from $5,000 to $250,000, available in Toronto for the first time.
Conditions are ripe for cities like Calgary and Edmonton to attract the same big names. In Alberta, retail sales growth, at 16%, outpaces Ontario by more than a factor of three. “The rate of growth out there is really overshadowing more modest gains in the rest of Canada,” says Ed Strapagiel of Kubas Consultants in Toronto.
Still, luxury goods represent a small percentage of the Canadian market, perhaps only a fraction of the $369-billion-plus spent on retail trade here each year. But Toronto retail watcher Wendy Evans sees expansion, not only through attracting new shoppers but by enticing the carriage trade to buy locally. “People say there's not a huge luxury market here,” says Evans. “But if you consider many of these people are spending a lot of their money on these goods when they're in, say, Paris, New York, London or Rome, there's room to grow.” That, she adds, means making sure Canadians stack up with the best purveyors of la dolce vita anywhere in the world.