STRATEGY
PRESENTED BY
LE CHATEAU: POSITIONING FOR
THE POST-BOOMER MARKET
Disclaimer: This case was prepared by William D. Taylor, Professor of Business at the John Molson School of
Business in November 2009. This case has been prepared for class discussion rather than to illustrate either
effective or ineffective handling of an administrative situation.
PRESENTED BY:
Le Château: Positioning for the Post-Boomer Market
When you think of the blur of all the brands that are out there, the ones you believe in and the ones you
remember, like Chanel and Armani, are the ones that stand for something. Fashion is about establishing an
image that consumers can adapt to their own individuality. And it's an image that can change, that can
evolve. It doesn't reinvent itself every two years. 1
-
Ralph Lauren
...you need to understand both sides of the business - the internal planning side and the external product
side. But to thrive ... a retailer needs to create a sense of excitement, something that gets people to spend
more of their money in your store than in your competitors'. 2
-
Herschel Segal
In December 2009 the executive team of Le Château, a leading Canadian specialty
apparel retailer, was considering how it should be positioned in the post-boomer market.
Addressing how Le Château’s brand should be positioned to increase market share was
particularly important to the firm given the many challenges the apparel industry in Canada faced
at the end of 2009. The Canadian economy had shown signs of recovery in recent months;
however, most forecasters predicted a slow recovery and how consumer spending for apparel
would change was uncertain. Significantly, industry analysts in many industries were starting to
pay attention to what has been termed the post-boomer market as the large baby boom cohort
(usually defined at those born in Canada between 1946 or 1947 and 1966) were starting to retire.
Successful repositioning was nothing new to Le Château. Over the years founder Hershel
Segal and subsequent CEO’s at Le Château had profitably moved the firm to take advantage of
trendy sixties, Carnaby-style fashions, and later moved the firm from an under 21 Saturday night
fashion focus to one with a broader assortment of day and evening wear for those over 25.
Specifically, the Board of Le Château Inc. has asked the executive team to make
recommendations about how the Le Château brand should be positioned to achieve the firm’s
revenue and market share growth objectives. In making these recommendations the executive
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team was well aware of the need to consider the firms financing, and the operational challenges
to the firm’s value chain that any repositioning would entail.
THE CANADIAN RETAIL APPAREL MARKET
Appendix 1 presents general statistics on the retail apparel industry 3. The Canadian
apparel retail market is large. In 2007 total revenue generated in this market amounted to $ 20.6
billion dollars with over half of this amount being spent on women’s apparel. In Canada the top
10 retailers account for about 50% of all retail apparel sales and the top five retailers (Sears, WalMart, The Bay, Zellers and Mark’s Work Warehouse) account for about 41% of sales. On
average about 50% of total Canadian retail apparel sales have been made in specialty apparel
retail stores and this half of the retail apparel market is quite fragmented.
With respect to drivers of demand, personal income levels (and thus demographics) and
trends in fashion are both key 4. Segments within the industry include family clothing, women’s
clothing, men’s clothing, children’s and infants clothing, accessories and footwear. Accessories
include items such as hats, scarves, belts, handbags, ties, and even wigs. Within a segment,
stores can sell a full range of products including clothing, outwear, and underwear. It is not
unusual as well to find stores that sell footwear, accessories and even makeup or perfume.
Clothing market segments can be defined by styles: casual, contemporary, professional, or
formal. Alternatively, they can be defined by occasions: resort, special occasion, athletic.
Importantly, markets can also be segmented by price tiers that target a special type of buyer:
fashion leader, follower, socialite, or fashion neutral 5.
THE IMPORTANCE OF POSITIONING
It has been stated that strategic market positioning is probably the most important
challenge of clothing retailers. 6 Constant monitoring of a retailer’s image and its distinctive
market position is critical. Industry analysts have noted that in the specialty retail apparel market
a business cannot be all things for all customers and must define its targeted market, or niche,
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very carefully. For example, the American chain Ann Taylor 7 historically targeted busy socially
upscale women (offering products such as classic black dresses and women’s power suits).
Abercrombie and Finch had apparel that was aimed at different groups:
men and women
between 18 to 22, girls between 10 and 14, high school boys and girls, and men and women age
22 to 25. Talbots Inc. targeted mostly women’s wear with classic sportswear, casual and dress
wear. Nike’s global brand team defined Nike’s target female customer for women’s fitness
(footwear, apparel and accessories) as “a 22-year-old, confident, slightly irreverent women who
wanted to work out hard and look good.”
Positioning is usually described as a mix of retail elements 8 including:
Target Customers
fashion leaders, followers, neutrals
Merchandising
range of items/styles and selection; quality and
price tiers
Reputation
management of brand image and consumer
perceptions (for example, limited distribution and
premium prices, or wider distribution with
accessible pricing)
Marketing
advertising in selected media (e.g. lifestyle
publications), other types of promotion such as
fashion shows or brochures etc.
Store Locations and
Layout
store size; mall, city centre, or outlet locations;
and in store atmosphere
Sales Staff
staff image, attitude of staff, helpfulness
Product Development
and Apparel Design
internal development versus licensing in.
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TRENDS AND DRIVING FORCES IN APPAREL RETAILING
Over the last few years, many factors have had an impact on apparel retailing in
Canada 9, 10. These include:
 Trade liberalization which had opened up both the US and Canadian retail markets to
textiles and apparel produced in other countries. The result has been that apparel
manufacturing in relatively high wage countries such as Canada have declined in
recent years. Between 2003 and 2006 the value of Canadian apparel manufacturing
shipments went down from about 7.89 billion dollars to 4.78 billion dollars which
represents a 39.4 % decline 11. Approximately 50 % of imported textiles and apparel
now comes from China.
 Retail consolidation which has created fewer but larger retailers with more bargaining
power. Often these large retailers have created their own private brands, or have
featured global brands at the expense of Canadian apparel manufacturers.
 The increase in market share of highly- focused, specialized apparel retailers who
have taken market share away from department stores and small independent apparel
retailers.
 Strong pressures throughout the apparel fashion value chain for lower prices and
higher quality. As well there is the growing need for innovative fashion products to
meet the demands of specialized market segments.
 The increasing importance of discounters such as Wal-Mart which have put
downward pressure on prices for apparel. Discounters such as Wal-Mart or Target
in the US have started to focus on fashion as well as low prices.
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 Increasing performance pressures due to “fast fashion’’ which has moved some
retailers away from a two season cycle to often a monthly fashion, or even shorter,
update cycle. The fast fashion business model based on designing trendy, inexpensive
clothes brought to the retail market at very fast speeds has been developed by
European apparel retailers Zara, H&M, and the British firm New Look.
 Growing social awareness on the part of apparel customers about eco-friendly
materials such as organic cotton, and concerns about labour exploitation and other
social issues in the apparel manufacturing value chain.
 Alternative sizing has grown; particularly in the United States were the number of
overweight people in the population continues to increase. Also known as “vanity
sizing” firms have adjusted their sizes to please customers (what use to be a women’s
size 10 is now a women’s size 6). Plunkette Research, an American market research
firm, states that the average adult woman in the United States is 5’4” tall, now weighs
155 pounds and wears a size 14 dress. 12
HISTORY OF THE LE CHÂTEAU CHAIN
Founded in 1959 13 in Montreal by Herschel Segal, a McGill graduate in economics and
political science, the Le Château chain started out as a men’s wear store which added a women’s
collection in 1962. The name Le Château was selected to identify with the French nature of
Quebec, an identification which became increasingly important after the start of the Quiet
Revolution in the late 1950’s and early 1960’s. While the business enjoyed some initial success,
it did not start to grow until Herschel Segal started to bring London’s street style into his stores.
In the 1960’s, London’s Carnaby Street was the focal point of a new fashion wave which was
epitomized by bell-bottom pants and a mod look. By 1972, his chain had grown to 10 stores
which were in metropolitan area shopping stores. This ability to translate key trends into popular
fashion apparel has been a cornerstone of the organization’s success over the years.
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During the mid-1970’s Le Château grew rapidly. By 1980 it had more than 50 stores
across Canada and its product line was more mainstream and more oriented to female clients.
Profits were steady during these years until 1977 when Le Château suffered its first loss.
The
firm rebounded rapidly from this loss and by 1983 made an IPO which raised approximately $
7.3 million to fund expansion, particularly to the United States. Growth continued across Canada
during the 1980’s and by the early 1990’s the chain had about 160 store locations.
Le Château’s first expansion into the United States in 1985 was not successful. Stores
were opened in Boston, New York, Chicago, Baltimore, and several other cities. In total 26 stores
were opened in the United States during this period. Similar to other Canadian retailers who have
tried to expand to the American retail market, Le Château faced tough competition. Analysts
attributed this lack of success to poor store locations and failure to adjust to American fashion
tastes. Eventually all of these stores, except one in Manhattan, were closed. As things worked
out, this Manhattan store (and 3 others in the New York/New Jersey area) continued to do well
for the next 20 years.
Le Château continued to grow in Canada and by the early 1990’s had about 160 stores.
During this period the company vertically integrated both designing its apparel, but also
manufacturing it at its own facilities. By manufacturing its own apparel Le Château reduced the
cycle time to bring new designs to market faster and lowered its cost of goods sold. The recession
of the early 1990’s was a difficult period for many Canadian firms, especially clothing retailers,
resulting in the closure of some large chains. Noteworthy was the Eaton’s department store which
after 130 years in business filed for bankruptcy in 1997.
Le Château suffered from poor sales during the late 1990’s and had a larger quarterly loss
in 1999. To correct its poor financial performance, Le Château made important strategic and
management changes in early 2000’s. Jane Silverstone was made vice-chairman and Emilia Di
Raddo, formerly Vice-president Finance, was made President. Changes were also made in quality
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control and inventory management during this period and Le Château enjoyed strong financial
and stock market performance in 2002 and 2003.
The repositioning of Le Château that took place after 2001 involved a number of
elements.
The chain moved a little upscale and upgraded quality.
Increased sizes were
introduced from 00 to 15/16 and clothes were adjusted to fit people who were a little larger. In an
interview with the Toronto Star 14 in 2004, Emilia Di Raddo, company president, stated that she
was convinced that more money could be made offering stylish clothes to adult women than
trendy teenage girls. “We’re a fashion company, not a teenage company,” noted Di Raddo.
“We’re a fashion company regardless of your age.” Di Raddo also noted that Le Château targets
the middle market which had a large number of soccer moms and career-oriented women that are
after the latest runway fashions, but in clothing that is wearable and of high-quality. In 2004 it
was estimated that 50% of Le Château’s clientele was 25 or older and prior to the 2001
repositioning only 25 % was in this category.
The chain strived to be unique and offer clothing that others did not have. Le Château
went after the Canadian market in smaller centers which were neglected by other retailers. To
reduce business risk by 2004 the chain had moved away from seasonal collections and rolled out
new apparel on a monthly basis. As part of its repositioning, Le Château also renovated its stores
to change the image from an emphasis on Saturday night “clubwear” to one of fashion for all
ages. By the end of 2005 about one half of the chain’s stores had been done over. By 2004, 12%
of revenues came from its men’s division, 8 % from junior girls and 7 % from footwear. The
new strategies put into place by Le Château were very successful.
The years from 2004 to 2008 were very good for the chain. In 2007, with its stock trading
in the $ 64 range, Le Château split its Class A and Class B shares on a four-for-one basis.
Appendix 2 presents the firm’s financial performance for the last five years.
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LE CHÂTEAU IN 2009
On its website, Le Château defines its mission as follows:
Our mission is to translate at lightning speed, the latest runway fashion and
global trends into must-have looks that clearly coordinate into a continuous
flow of new collections, quickly delivered to an ageless customer by our dynamic
sales team. 15
To accomplish this mission the Montreal-based firm designs, manufactures and retails
women’s and men’s apparel, accessories and footwear. The chain operates 218 retail stores in
Canada, 4 stores in the New York area of the United States and has licensed 9 stores to sell its
goods in the Middle East. Appendix 3 describes where these stores are located and the square
footage each offers. Le Château manufactures about 35% of the goods sold in its stores and
produces about 1.5 million garments annually. In 2009 it employed about 3000 people in its
organization. 16
The chain regards itself as a fashion forward label meaning that it is focused on fashion
trends and tries to anticipate new and upcoming trends rather than focusing on what might be
described as classic apparel. It attempts to achieve competitive advantage by being faster than
other firms in quickly identifying fashion trends and using its vertically integrated value chain to
get trendy apparel into its stores.
In 2008, Le Château’s Annual Report showed a profit of $38,621,000. Details on
geographic and divisional earnings and revenues reveal the following:
To Jan 31 2009 (53 weeks)
Canadian Sales ($CAN)
US Sales ($CAN)
Total Amount
To Jan 26, 2008
339,660
328,688
5,945
7,382
345,614
336,070
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To Jan 31 2009 (53 weeks)
Canada Net Earnings
US Loss
Total Amount
To Jan 26, 2008
39,259
34,705
(638)
(2110)
38,621
32,596
With respect to sales revenue by division the results showed increased revenues in men’s
clothing and accessories:
To Jan 31 2009 (53 weeks)
To Jan 26, 2008
Ladies Clothing
190,676
191,738
Men’s Clothing
57,847
52,053
Footwear
38,562
39,579
Accessories
58,529
52,700
345,614
336,070
Total
On September 10, 2009 Le Château reported its unaudited earnings results for the first six
months of 2009 17. Net earnings for the six-month period were $12.9 million or $0.53 per share
(diluted) compared to $15.5 million or $0.61 per share the previous year. Earnings before
interest, income taxes, depreciation and amortization (EBITDA) for the first six months
amounted to $28.3 million or 18.5% of sales, compared to $31.0 million or 19.5% of sales last
year. Sales decreased 3.8% to $153.2 million for the six months ended August 1, 2009, compared
to $159.3 million last year. Comparable store sales decreased 7.1% versus the same period a year
ago. During the first six months of the year, the Company opened 5 stores, closed 1 and expanded
3 existing locations, resulting in the addition of 37,000 square feet or 3.5% to the Le Château
network, bringing the total floor space at end of period to 1,085,000 square
feet.
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POSITIONING FOR THE FUTURE
In analyzing its current position in the Canadian retail apparel market and potential
changes to that position the Executive team was aware that it needed answers to two questions:
1.
How would changing Canadian demographics affect retail apparel sales?
While one must be very cautious about generalizing about various generations,
categorizations of the buying habits of various age cohorts are common. The baby boom
generation (roughly defined as those born between 1946 or 1947 and 1965 or 1966) was now
entering retirement years (Appendix 4). This large age cohort had dominated marketing attention
in North America for 50 years and with boomers having more limited disposable income in
retirement there was great uncertainty as to how their spending habits would change in the next
few years.
The boomer generation was often described as the “I want all there is” generation. Many
retailers had noted that once the baby boomers reached 30 years of age they defied typical life
cycle purchase patterns, and their purchasing behaviours were sometimes very hard to predict. It
was known that they would spend on products that made them look and feel younger. They also
like better quality and would search out better quality products if that quality could be
demonstrated. Accumulating assets and financial resources has been important to many baby
boomers as a sign that they were successful.
Born after the baby boom (roughly 1966 to the late 1970’s) Generation X came of age
during much more difficult times than the boomers. Generation X members are more likely to be
raised by single parents. They are more research oriented in their shopping behaviours and are
often very sceptical in assessing advertising and other retailer claims. They are just now coming
into affluence and are starting to become more materialistic and more prone to personal luxuries
(luxury homes and luxury apparel) at the same time that baby boomers are downscaling their
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lifestyles. Generation X has moved more quickly to mass merchandisers than other age cohorts.
Interestingly they like denim (jeans) more than either baby boomers or Generation Y.
Generation Y (roughly defined as those born between the late 1970’s and late 1990’s) also
has unique buying habits. They are very comfortable with technology and they usually live at a
very fast pace, although they can get distracted at times. Individuals from Generation Y love to
shop whether it is at the mall (the term “mallrats” had been used by some to describe them), or
online.
They also have spending power with some studies showing that they spent a lot more
than their parents at the same age. Importantly, for them retail establishments have become
social locations as illustrated by the success of Apple Inc. stores and some trendy retailers. They
like it when products are made available so that they can touch and sample. Unlike baby
boomers, Generation Y use shopping to a greater degree to define their personal identity.
An article in a cotton textile trade publication reported the results (Appendix 5) of surveys
which looked at how Generation X and Baby Boomers, as well as the generation that preceded
the boomers, got their clothing ideas in 1995 and later in 2004. What were the sources of ideas
for the purchase of apparel? The only area that remained at the same level of importance between
1995 and 2004 was the category - getting your ideas as to what you wanted to buy from what you
already owned.
Noteworthy is the decline in store displays, people you see regularly,
salespeople, catalogues, and commercials and ads for baby boomers. For Generation X similar
declines took place although store display did not decline as much as with the Baby Boomers
while people you see regularly declined even more as a source of fashion ideas.
The impact of demographics has not gone unnoticed by fashion retailers who have noted
the large buying power of Generation X women who often had gone ignored. Appendix 6
presents an article written in 2005 about the strategies of some fashion retailers to respond to this
segment.
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2. Which firms would represent the greatest competitive threats if Le Château either
stayed in its current retail position, or altered that position?
Le Château faced many large and small competitors in its markets. To be able to
understand the impact of any potential repositioning it is necessary to analyze the competitive
positions of many businesses. Appendix 7 gives a list of many firms which to varying degrees
either compete with Le Château or potentially could compete with the chain. The Executive
Team realized that it must analyze the competition in making any decision about its market
positioning.
REPORTING TO THE BOARD
The task given to the executive team by the Board was clear. The Board was not
interested in plans that called for international expansion or specific product line introductions.
The team knew that it must make a clear recommendation about how Le Château Inc. should be
positioned in the post-baby boom market. The team also understood that it needed to be cautious
not to alienate its current Baby Boomer clients or the rest of its current market. In addition, it
would need to make recommendations about operational strategies and financing that would be
necessary to ensure the success of whatever position it would put forward.
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APPENDIX 1 – Canadian Apparel Retail Market
Estimated Revenues Canadian Apparel Retail Market (billions $)
Source: Trendex North America (http://www.trendexna.com/annual_retail_sales_information.htm)
2000
2001
2002
2003
2004
2005
2006
2007
18,443
18,627
18,757
18,700
19,216
19,742
20,393
20,660
Estimated 2007 Total Canadian Apparel Retail Market by Category (billions $)
Source: Trendex North America (http://www.trendexna.com/annual_retail_sales_information.htm)
Women
Men
Girls
Boys
Infants
TOTAL
10,954
6,646
1,318
1,170
578
20,660
53%
32%
6%
6%
3%
100%
Estimated 2003-2007 Canadian Apparel Market By Retail Channel (%)
Source: Trendex North America (http://www.trendexna.com/annual_retail_sales_information.htm)
2003
2004
2005
2006
2007
Department Stores
22.2
21.3
20.7
19.8
19.7
Apparel Specialty Stores
49.1
49.5
50.3
50.8
48.0
Discount Stores
19.8
19.7
20.0
20.1
23.0
Sporting Goods Stores
4.0
4.4
3.8
3.9
3.8
All Other Stores
4.9
5.1
5.2
5.4
5.5
100.0 100.0 100.0 100.0
100.0
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APPENDIX 2 –
Selected Financial Highlights
Le Château Inc. Annual Report 2008
In thousands of $ except for share data and ratios
Fiscal year ended
Results
Jan 31, 2009
(53 weeks)
Sales
Earnings before
income tax
Net earnings
- per share basic
Dividends per share
-ordinary
-special
Average shares
outstanding
2
Jan 28, 2006
Jan 29, 2005
336,070
50,523
303,879
38,406
279,064
35,963
241,131
24,336
38,621
1.56
32,596
1.30
24,751
1.02
23,513
.99
15,886
.74
.625
.25
24,796
.50
24,978
.28
.75
24,181
.20
23,812
.16
21,448
85,620
142,414
216,431
74,384
133,605
206,876
45,928
108,174
185,709
60,491
105,245
166,236
47,781
85,244
128,198
3.03
1.75
0.20:1
2.55
1.59
0.17:1
1.75
1.08
0.14:1
2.52
1.63
0.20:1
2.61
1.62
0.16:1
54,691
50,125
40,374
36,311
25,291
21,467
24,091
27,701
27,655
16,491
221
209
195
185
174
1,047,529
385
965,077
408
853,767
407
762,093
416
686,830
394
Financial Ratios
Current
Quick
Long Term Debt to
Equity 1
1
Jan 27, 2007
345,614
57,706
Financial Position
Working capital
Shareholder’s equity
Total assets
Other Statistics
Cash Flow from
Operations (in `000)
Capital Expenditures
(in `000)
Number of Stores
at Year End
Square Footage
Sales per Square Foot 2
Jan 26, 2008
Including capital leases and current portion of debt. Excluding deferred lease inducements.
Excluding Le Château Outlet stores.
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APPENDIX 3 -
Le Château Profile
Stores and Square Footage
Le Château Inc. Annual Report 2008
January 31, 2009
Stores
Square Footage
January 31, 2008
Stores
Square
Footage
69
330,986
62
296,280
24
109,308
24
102,055
7
34,254
7
26,428
5
12,292
4
16,200
2
9,203
1
3,480
Ontario
Quebec
BC
Alberta
Manitoba
Nova Scotia
New Brunswick
Saskatchewan
Newfoundland
PEI
73
65
27
26
7
7
5
4
2
1
352,214
319,762
128,768
117,321
35,575
28,083
19,323
16,200
9,203
3,480
Total Canada
Total US
217
4
1,029,938
17,591
205
4
947,486
17,591
Total - Le Château
221
1,047,529
209
965,077
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APPENDIX 4
Projected population by age group and sex according to a medium growth scenario for 2006, 2011
2006 (thousands)
2011 (thousands)
Both sexes
Male
Female
Both sexes
Male
Female
32,547.2
16,115.9
16,431.3
33,909.7
16,786.7
17,123.0
0 to 4
1,697.5
868.2
829.3
1,724.7
884.1
840.6
5 to 9
1,842.6
943.1
899.5
1,780.8
910.7
870.1
10 to 14
2,084.6
1,068.1
1,016.5
1,916.4
982.1
934.2
15 to 19
2,164.8
1,109.4
1,055.5
2,170.4
1,112.5
1,057.9
20 to 24
2,252.9
1,152.8
1,100.2
2,295.3
1,171.1
1,124.1
25 to 29
2,226.1
1,124.9
1,101.2
2,330.2
1,178.3
1,151.9
30 to 34
2,222.6
1,121.5
1,101.1
2,354.8
1,183.2
1,171.6
35 to 39
2,351.1
1,182.7
1,168.4
2,327.1
1,172.3
1,154.8
40 to 44
2,698.3
1,356.6
1,341.7
2,409.3
1,209.8
1,199.4
45 to 49
2,671.5
1,334.7
1,336.9
2,711.2
1,361.6
1,349.5
50 to 54
2,363.9
1,170.1
1,193.8
2,651.5
1,321.1
1,330.4
55 to 59
2,082.5
1,028.5
1,054.0
2,327.4
1,144.4
1,183.0
60 to 64
1,583.3
777.8
805.5
2,027.9
991.2
1,036.7
65 to 69
1,227.3
590.5
636.8
1,513.1
731.6
781.5
70 to 74
1,044.2
489.9
554.3
1,130.8
530.7
600.1
75 to 79
878.0
387.2
490.8
907.6
409.2
498.4
80 to 84
638.3
249.1
389.2
692.2
286.1
406.1
85 to 89
342.8
115.0
227.9
422.2
148.4
273.9
90 to 94
137.3
37.8
99.4
169.2
48.2
121.0
95 to 99
33.1
7.2
25.9
42.4
9.2
33.2
5.4
0.9
4.5
All ages1
100 and over
4.7
0.9
3.8
Source: Statistics Canada Cansim Table, 052-2004 - Appendix 5
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APPENDIX 5
APPENDIX 6
Source: Lorrayne Anthony, Sudbury Star, Life Section,
Retailers clue in to fashion needs of gen-X women, published on July 23, 2005, B9.
(…) Women aged 35-44 have considerable buying power. Was a generation overlooked by the
fashion industry? Clothing manufacturers catered to boomers and helped their kids replicate the
sexy Britney look. But what about gen Xers? Not completely comfortable wearing the midriffbaring fashions of teens, they weren't prepared to embrace the mature look of their moms either.
They spent their dollars trying to bridge the gap. Suddenly, confronted with statistics, retailers
are realizing the purchasing power of gen-X women -- now aged about 35 to 44.
"The women's denim market is an estimated $579.7 million-dollar annual business, 52 per cent
of which is driven by women over 35," said Kaileen Millard, director of fashion for NPD
Canada, a division of the NPD Group.
And it's not just jeans. NPD figures show women aged 35-44 spent almost $2 billion on apparel
in Canada in the 12 months ending this past May. That's an increase of more than $300 million
from a decade earlier. The biggest spenders are women aged 45 to 54, with those 35 to 44
coming in a close second. Canadians under 25, often thought to be the focus of much of today's
marketing, are the least active shoppers, reported the study by NPD Canada, which tracks
consumer behaviour.
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There is a higher percentage of 35-to-44-year-old women working than ever before, and they
need to spend money on clothes, said Len Kubas of Kubas Consultants, a Toronto firm that
specializes in retail and marketing. Finally, the industry's radar is picking up on the fashion
needs of the almost 2.5 million women in that age group, with companies such as Liz Claiborne
Canada, Gap, Boutique Jacob, Mango and Le Chateau targeting them.
"It's finally time for us," said Jamie Lee Goulakos, fashion director at Yzza. With teenage kids,
Goulakos said she no longer wants to shop at stores that cater to the 20-something crowd. More
than 60 Yzza (pronounced ease-ah) stores are expected across Canada over the next five years.
The new chain, the creation of Montreal-based Mexx Canada which is owned by Liz Claiborne,
will cater to the 35-plus woman.
The Montreal-based Boutique Jacob will open five stores this fall targeting women over 35.
Department stores such as the Bay have catered to the diverse figures of women over 35 by
carrying designs in sizes 4-16 in petites, regular and above average. But the new numbers are not
lost on them. In August, the Canadian retailer will be introducing a new line of denim, Code
Bleu, for the over-35 crowd.
While the 35-45 demographic may be the flavour of the month for national chains, independent
clothing stores have been serving these women for years. "We have always geared our product
to the 35-year-old market," said Deb Shortill, owner of Hannah's, a not-so-small clothing store in
Erin, Ont.
"It seems to me that the younger gals look forward to the maturity and confidence of the 35-yearold. Those 35 to 45 are already confident and comfortable with who they are," said Shortill, who
has been in business more than 15 years.
APPENDIX 7 - Some Firms in the Canadian Retail Apparel Market
Source: http://cobrands.hoovers.com/global/cobrands/proquest/factsheet and other assorted other sources
Aldo
Aldo Group knows the value of cheap chic; heck, its founder practically tripped over the concept. Aldo
Group runs some 1,500 shoe stores, including about 1,180 under the Aldo banner and another 335 shops
under the Spring, Little Burgundy, First, and Globo names, among others. The company has stores in
Canada, the US, the UK, and some 40 other countries worldwide. Aldo Group entered the US market in
1993 and has grown to more than 200 stores here. Globetrotting Aldo's international sales now outpace its
business in Canada. Plans call for more expansion in Europe, the Middle East, Africa, Asia, and the US.
The company was born with the 1972 opening of four stores by Moroccan founder Aldo Bensadoun.
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Fairweathers
Initially part of Dylex one of Canada’s largest apparel clothing chains, Fairweathers’ targeted the career
and casual clothing sector. With the breakup of Dylex in 2006 it was acquired by a private Canadian
investment consortium. As a specialty retailer it offers offering contemporary fashion apparel and
accessories to style-conscious women. The brand’s success is built on quick identification of and response
to fashion trends through the use of design and product development teams. Fairweather sells brand name
merchandise, and exclusive brands Beechers Brook, and Majora.
The Gap
The ubiquitous clothing retailer Gap has been filling closets with jeans and khakis, T-shirts, and poplin
since the Woodstock era. The firm, which operates about 3,150 stores worldwide, built its iconic casual
brand on basics for men, women, and children, but over the years has expanded through the urban chic
chain Banana Republic and ailing budgeteer Old Navy, launched in 1994. Old Navy entered Canada in
2001 and since then has grown to over 60 stores. Other brand extensions include GapBody, GapKids, and
babyGap; each also has its own online incarnation. All Gap clothing is private-label merchandise made
exclusively for the company. From the design board to store displays, Gap controls all aspects of its
trademark casual look. Gap was founded by Doris and the late Don Fisher in 1969.
Hart Stores
Hart Stores started at the coast and is advancing like a retailing army, determined to conquer the heart of
Eastern Canada. The fast-growing retailer operates about 90 mid-sized department stores (26,000 square
feet on average) in smaller markets under the Hart, Bargain Giant, and Géant des Aubaines banners; the
stores are found mostly in Québec, but also in Ontario, New Brunswick, Newfoundland, and Nova Scotia.
Hart Stores sells national brands and its own brand of apparel, footwear, gifts, home furnishings, linens,
small appliances, toys, and more. The company is run by the Hart family, which controls about 58% of its
shares.
H&M
H&M Hennes & Mauritz targets the Hip & Modish. The firm designs cheap but chic clothing, mainly for
men and women 18 to 45, children's apparel, and its own brands of cosmetics. Fast-growing H&M
operates about 1,800 stores in about 35 countries and has direct sales operations in selected areas.
Germany is H&M's #1 market, accounting for about 25% of sales. About 60% of its clothing is made in
Asia; the rest is manufactured primarily in Europe. H&M opened its first women's clothing store in 1947
as Hennes (Swedish for "hers"); it later bought the hunting and men's clothing store Mauritz Widforss.
H&M is controlled by the family of chairman Stefan Persson (the billionaire son of founder Erling
Persson).
The Bay
Here's a company that's traveled a fur piece from its 17th-century roots. Hudson's Bay Company (HBC) is
Canada's largest department store chain. Founded in 1670 as a fur trading enterprise, HBC is also Canada's
oldest corporation. Its Zellers chain is the country's #2 discount department store (behind Wal-Mart
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Canada, with some 290 stores. HBC also runs about 100 the Bay department stores, some 120 Fields
general merchandise and apparel stores in Western Canada, more than 60 Home Outfitters superstores.
La Senza
As their name suggests, the company targets women age 18 to 35 with its underwear, loungewear, and
sleepwear, which are sold through La Senza and Silk & Satin stores. The manufacturer and retailer caters
to the 'tween market with its La Senza Girl stores and Web site. Overall, La Senza owns and operates
more than 300 stores in Canada, and licensees run another 500 stores in 45 other countries.
Loblaw (Joe Fresh)
Like other sellers of "fast fashion," Joe Fresh draws from the latest runway and red carpet designs. The
clothing is made in Asia, which keeps the prices down, with new designs arriving in stores every four
weeks. The concept is similar to that used by Fairweather, Reitman's and Le Château. But where Joe
Fresh differs is its milieu -- a grocery store. Sales were estimated to be $ 400 million dollars in 2007 and
in 2007 Loblaw predicted that it would have $ 1 billion in revenues.
Northern Reflections
Northern Reflections wants its customers to light up and inspire, like the Northern Lights. The company is
a manufacturer and retailer of specialty apparel for women. Its garments include jackets, slacks, tops, and
warm-up outfits in a variety of patterns and fabrics, under the Northern Reflections brand. The company
operates more than 160 mall-based Northern Reflections stores throughout Canada, 10 shops in four US
states (New York, Massachusetts, Pennsylvania, and Vermont), and an online store. Northern Reflections
is owned by the Canadian affiliate of York Management Services, a New Jersey-based investment and
management advisory services company.
Sears Canada
Sears Canada Inc. more commonly referred to as "Sears") is a retailer, headquartered in Toronto, Ontario,
that operates in all provinces and territories across Canada with a network of 188 corporate stores, 180
dealer stores, 67 home improvement showrooms, 112 Sears Travel offices and a nationwide home
maintenance, repair, and installation network. The firm has its own transportation and logistics services
and which comprises 620 trucks, 3,700 trailers, and 900 associates with terminals located throughout
Canada. Sears also has a general merchandise catalogue with over 2,200 catalogue merchandise pickup
locations. There is a Sears location within a 10-minute drive of 93% of Canadians. About 50,000
associates are employed throughout the company.
Wal-Mart
Retail giant Wal-Mart Stores made its blanket coverage of North America complete with the 1994
acquisition of the 122-store Woolco division of Woolworth Canada. Like Wal-Mart de México, its sistercompany south of the US-Mexico border, Wal-Mart Canada has since grown into a major retail force in its
home country with more than 310 stores, including about 60 and supercenters (which sell groceries and
general merchandise under one huge roof), nationwide. Wal-Mart Canada's discount stores offer up to
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80,000 products, including apparel, household goods, hardware, toys, sporting goods, health and beauty
aids, food and other merchandise. In-stores services include vision centers as well as tire and auto centers.
Zara
Trendy Zara is the flagship brand for Europe's fastest-growing apparel retailer Industria de Diseño Textil
(commonly known as Inditex). Zara, the cheap-chic subsidiary of the Spanish fashion giant, runs about
1,520 stores, including some 230 Zara Kids shops, in more than 70 countries worldwide, including China
where is has about two dozen locations. Zara has about 40 shops in the US and 60 in Mexico. The chain
sells women's, men's, and children's apparel and also offers plus-size and maternity lines to clothe its
larger customers. Zara Home, which sells home fashions, has about 250 stores, in about 25 countries. Zara
is Inditex's principal chain and accounts for about two-thirds of its parent company's sales.
Winners
Winners is a chain of off-price Canadian department stores owned by TJX Companies. It offers brand
name clothing, footwear, bedding, furniture, fine jewellery, beauty products, and house wares. All
merchandise is 20–60% below regular department and specialty store prices. The company operates over
200 stores across the country. Winners’ is modeled after its American sister store Marshalls.
ENDNOTES
1
http://www.evancarmichael.com/Famous-Entrepreneurs/1895/Ralph-Lauren-Quotes.html
Dana Flavelle. 2005. Excitement a half step at a time. Toronto Star. April 20, A19.
3
This section was adapted from http://www.trendexna.com/annual_retail_sales_information.htm.
4
http://www.hoovers.com/clothing-stores/--ID__182--/free-ind-fr-profile-basic.xhtml
5
Jane Lin. A new look: retail clothing in Canada, http://www. statcan.gc.ca/pub/11-621-m/11-621m2003006-eng.htm
6
Michael K Mills, Strategic retail fashion market positioning: a comparative analysis. Journal of the Academy
of Marketing Sciences, Summer 1985, vol. 13.
7
Will the Real Ann Taylor Please Dress Up? Case Study, in Dess, Lumpkin and Eisner, Strategic Management.
Fourth Edition. 2008, McGraw Hill Irwin, C98.
8
Christopher Moore; Grete Birtwistle. The Burberry business model: creating an international luxury
fashion brand International Journal of Retail & Distribution Management; 2004; 32, 8/9;
9
Plunkett Research Divulges 10 prominent Trends in the Apparel and textile Industry. June 10, 2009.
http://www.plunkettresearch.com/AboutUs/News/tabid/408/Default.aspx
10
Canadian Retail Trade Industry. The Structure of the Retail Trade in Canada of www.ic.gc.ca/eic/site/retracomde.nsf/eng/h_qn00171.html
11
Industry Canada. Overview of the Canadian Apparel Industry. http://www.ic.gc.ca/eic/site/apparelvetements.nsf/eng/ap03295.html
12
Plunkett Research.Ibid.
13
This section has been adapted from http://lechateau.com/ir/corporate/history.html and
http://www.fundinguniverse.com/company –histories/Le-Chateau-Inc
14
Carrie Tait. At 45 le Chateau is aging gracefully. Toronto Star. July4 2004,C04
15
http://lechateau.com/ir/corporate/mission_statement.html
16
http://lechateau.com/ir/fact_sheet/LeChateau_FS_April09_EN_v5.pdf
17
http://lechateau.com/ir/index.html
2
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