Vancouver's Nordstrom store was the entire company's best-performing location

Mar 9 2023, 1:07 am

No, Vancouver. It’s not you. You’re capable of sustaining nice things. This time around, blame the rest of Canada — and Nordstrom’s problematic Canadian expansion strategy.

Even with the current economic conditions and pandemic-time induced changes in the retail market, Vancouver was likely well capable of sustaining its flagship Nordstrom department store on its own, but it was weighed down by the rest of Canada and the bankruptcy requirements in its court filings for withdrawing from the Canadian market.

Nordstrom opened its first international location in September 2014 with a 140,000 sq ft department store location at CF Chinook Centre mall in Calgary’s suburbs.

Almost a year later, it opened a 230,000 sq ft flagship department store at CF Pacific Centre in downtown Vancouver.

It then went on to open four more department stores in Ontario — another flagship store in downtown Toronto, and smaller department stores at CF Sherway Gardens and Yorkdale Shopping Centre in Toronto’s suburbs, and at CF Rideau Centre in downtown Ottawa — and seven Nordstrom Rack stores, including one in British Columbia, two in Alberta, and four in Ontario.

It has been known for years that Vancouver’s Nordstrom flagship at CF Pacific Centre was widely regarded by the company as an immense success. And as it turns out, according to experts in the retail industry, it was by far the best one. The company has about 100 full-line department stores in Canada and the United States, which does not include the numbers for Nordstrom Rack.

“The Vancouver store blew all other Canadian locations out of the water. This was the top store in the company, even beating out Seattle and Chicago which were the other top units,” Craig Patterson, the founder and publisher of retail news publication Retail Insider, emphatically told Daily Hive Urbanized in an interview.

Vancouver’s store even performed better than the 2019-opened, 320,000 sq ft New York City flagship in Manhattan, which has since seen its performance tank to the same level as a suburban location.

“Vancouver was performing almost triple more than the second-best store. It was really the only store that was doing absolute gangbuster sales,” he said.

This aligns with what several current and former Nordstrom Pacific Centre workers have told Daily Hive Urbanized under the condition of anonymity — their location was consistently within the top three performing department stores company-wide on both sides of the border.

Martin Moriarty, the senior vice president of investment and leasing for Marcus & Millichap, also told Daily Hive Urbanized that the “Vancouver Nordstrom was always the top performer across Canada and one of the best performers in the entire chain.”

Daily Hive Urbanized reached out to Nordstrom, but they said they were unable to comment on these performance matters.

However, Nordstrom’s bankruptcy filings last week provide some hints on the performance of the store locations, based on the number of employees relative to store size.

Downtown Vancouver’s 230,000 sq ft flagship store at CF Pacific Centre has the most employees for Nordstrom’s Canadian locations with a total of 596 positions, including 498 full-time and 98 part-time.

The downtown Toronto flagship store at CF Toronto Eaton Centre, similarly sized at 220,000 sq ft, has 335 positions, including 284 full-time and 64 part-time.

Suburban Toronto’s CF Sherway Gardens’ 140,000 sq ft store has 230 employees, including 156 full-time and 74 part-time, while Yorkdale Shopping Centre’s 188,000 sq ft store has 348 employees, including 284 full-time and 64 part-time.

Downtown Ottawa’s CF Rideau Centre has 236 positions — 180 full-time and 56 part-time — for its 157,000 sq ft space.

And suburban Calgary’s CF Chinook Centre store with 140,000 sq ft has 263 positions, including 225 full-time and 38 part-time.

For the ratio of employees to store floor area, CF Pacific Centre has one employee per 386 sq ft, followed by CF Chinook Centre with one staff per 532 sq ft, Yorkdale Shopping Centre with one per 540 sq ft, CF Sherway Gardens with one per 609 sq ft, CF Toronto Eaton Centre with one staff per 657 sq ft, and CF Rideau Centre with one per 665 sq ft.

Such ratios provide a possible indicator of just how busy each store is, based on the level of staffing needed to adequately serve shoppers, especially with Nordstrom’s renowned high standards for customer service. Employees who directly interact with customers in sales receive commission.

Overall, Nordstrom’s Canadian enterprise — both department stores and Nordstrom Rack stores combined — has a total of 2,333 positions, including 643 in British Columbia.

In explaining its shutdown in Canada, Nordstrom’s court filing cited reasons including the impact of high operating costs, stagnant sales growth, unfavourable exchange rates, and the effects of the COVID-19 pandemic. Nordstrom claims its Canadian division has generated negative cash flows and losses during each year of operation since it expanded into Canada, and it was only able to stay afloat over the past eight years because of the “significant financial and operational support” of the US division.

The filing also notes that the Canadian division’s “lack of brand awareness has contributed to the overall poor financial performance of the Nordstrom Canada Entities’ business.”

But this likely was not true for Vancouver.

“Nordstrom at CF Pacific Centre had a local affinity with shoppers in Vancouver, and was doing very well… this was a really successful store,” emphasized Patterson.

Patterson said he first heard rumblings weeks ago about Nordstrom’s imminent announcement on its decision to fold its Canadian business and initially thought the CF Pacific Centre store would be maintained given that it is an outlier for performance. However, this is not possible for both legal reasons under the Companies’ Creditors Arrangement Act and entrenched supply logistics.

This is not to say Vancouver’s retail market, particularly in the luxury sub-market, has not weakened amidst the changing dynamics relative to the pre-pandemic period.

“I think we’ve seen a downturn in high-end retail sales in Vancouver, but sales at Nordstrom were still pretty strong,” said Patterson.

Patterson says there are a range of factors, triggered by the pandemic, that have changed Vancouver’s retail landscape, including fewer visitors from China, which previously fuelled a significant portion of Vancouver’s luxury retail sales.

This includes fewer visitors who travel to and stay in Vancouver for an extended period of time to see their kids and real estate and would be spending on retail as a result. The federal government’s new foreign buyers’ ban on real estate has also had an impact on Trans-Pacific travel.

Other factors include Chinese travellers going elsewhere such as Singapore and Australia, which are now cheaper and more accessible to reach than Canada.

International brands found in Vancouver have also been opening locations in China over the last few years, which reduces the need for Chinese travellers to come to Canada to shop.

Patterson also suggested that Vancouver lacks the breadth of global attractions to attract and sustain more tourist spending in the post-pandemic reset of the retail market, including the loss of tour groups that would bring visitors to malls and stores.

But with all things being relative, according to Moriarty, “Vancouver retail has enjoyed strong success against comparable cities across Canada with consistently strong consumer spending across all retail sectors.”

“We have seen great momentum in downtown Vancouver’s retail environment, especially in the last six to 12 months as we enter a post-COVID-19 world with vacancy rates plunging to historic lows.”

Nordstrom’s full exodus from Canada is still months away, set for late June, and given that it occupies significantly sized commercial properties in central locations of Canada’s largest urban centres and at major shopping malls, there is much speculation over what will fill these spaces.

Patterson believes Nordstrom’s CF Pacific Centre store, spanning three levels, will be subdivided. The ground level could theoretically turn into an expansion of the mall with a corridor cutting through it to serve small store units, while the upper levels could be dedicated to larger format stores.

He suggests La Maison Simons would do very well in the space but is unsure of the Quebec-based retailer’s financial capacity to further expand at this time.

“Park Royal was the wrong location for Simons. It’s not doing well there, and it’s not doing well in a lot of cities,” he said. “They picked many bad locations in my opinion, and they should have chosen Richmond first.”

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