December 15, 2014

Smart Moves

A lot has happened in the Canadian retail industry lately. As Jacob prepared to close down all of its 92 stores in Canada over the summer, American retailer Nordstrom made its first foray across the border to its Canadian neighbour. More recently, Reitman's announced it would be shuttering its Smart Set banner, and weeks later, Mexx filed for bankruptcy, a move likely to affect all of its Canadian stores. Yet at the same time, Quebec retailer Simons is set to expand across the country.

What is going on?

Many are blaming it on the rise of fast fashion retailers like H&M, Forever 21 and Zara, shouldering out retailers who can't keep up with the latest, greatest trends that have young hearts beating. It appears only the extremities at either end of the retail spectrum are staying well-afloat - cheap and chic fashion, or high-end luxury. There is no place for those hoping to occupy the precarious middle ground.

And I agree.  All three stores cater to the average woman; they offer basics that occasionally come in trendier guises, but overall, nothing too fashionable nor unique. Let's be clear: there is space in the retail world for the average woman looking for everyday, wearable clothing, but what there isn't space for is a retailer average in all aspects of price, quality and design.  All three stores obviously positioned themselves above the chaotic realm of fast fashion, but ultimately, they didn't offer much more than their (slightly) glossier entrance way.

Being not particularly high quality not fashionable, and not particularly affordable, Jacob, Smart Set and Mexx all occupied that tough space among (better) competitors that left them with a very halfhearted customer base. You cannot lure in loyal customers with average designs, average prices, and average quality. At least one thing must stand out. Cheap and chic fashion offers decent designs at low prices, and for that, consumers are willing to sacrifice quality.  Luxury retailers offer beautiful designs with exceptional quality, and for that, consumers are willing to pay the price. I think our three fallen retailers were fine with the price point they operated in, but if they had upped their quality or put more thought into design, I think they could have struck a chord with paying customers. But that's easier said than done, and perhaps why that murky middle ground remains the Bermuda Triangle of fashion retail.

Certainly I am saddened that such stores are finding themselves at a struggle, but at the same time, I think this will help push us towards better retailers. The free market mechanism - no matter whether you support it or criticize it - is showing us what the consumer truly wants. And the market must respond. To be frank, malls are filled with stores I (and apparently many others) hold no interest in. They are mere fillers. If competition is filtering out those who offer no value to consumers, then we may finally begin to see malls fill with stores that actually interest us. It's never a smooth and happy ride in business, but I think it can only lead to one thing: a better retail sector.

Image Source: Jacob, Smart Set, Mexx


  1. Was this post sponsored by the Ivey Business School?

    1. If you're saying it's good enough for IBR, then thanks. ;)