Victoria’s Secret and the American Invasion

Victoria’s Secret Vancouver | BCBusiness
Despite the perceived competition, Vancouver boutique lingerie retailers are positive about Victoria’s Secret’s new store on Vancouver’s Robson Street.

The influx of American brands moving into B.C. continues with the opening of Victoria’s Secret’s flagship store on Vancouver’s Robson Street

It’s no secret that the past year has seen an influx of iconic U.S. brands opening stores in British Columbia, from Target rolling out 124 stores across Canada in 2013—18 of them in B.C.—to Marshalls, J. Crew and Michael Kors expanding their presence in the province. On August 27 one of the most highly anticipated fashion imports, Victoria’s Secret, opens its doors at Robson and Burrard streets in Vancouver. The flagship lingerie store will be one of the brand’s largest stores globally, when it joins the company’s existing YVR airport outlet and PINK teen Victoria’s Secret store, in Burnaby’s Metrotown mall.

Vancouver is a hub for U.S. brands looking to cross the border. Currently the upscale department store Nordstrom is under construction in the old Sears building at Robson and Howe streets, expected to open in 2015, and Microsoft is opening its third Canadian store in Metrotown to replace the current pop-up store.

“We are witnessing the virtual Americanization of our retail industry,” says Ian F. Thomas, chair of Thomas Consultants Inc., a firm that specializes in the planning and development of large-scale retail projects. “In every major category—department stores, warehouse hubs, fashion, electronics, home improvement, home accessory, toys and jewellery—we are witnessing U.S. dominancy.”

Thomas points out that supermarkets and drugstores are the exception, such as Sobeys taking over Safeway. Canadian Tire is another anomaly that continues to do well in Canada, but failed to penetrate the U.S. market. Another strong Canadian brand is the Hudson’s Bay Company, which recently purchased Saks Inc. for US$2.9 billion and is planning to open seven Saks stores in Canada over the next year.

“Victoria’s Secret’s parent company, Limited Brands, purchased the Canadian chain La Senza several years ago,” says Thomas. “Limited Brands are further penetrating the Canadian market with a two-pronged approach. The same situation arose when Best Buy bought Future Shop and then decided to operate a two-banner offering in Canada with separate Future Shop and Best Buy stores.”

There’s no denying the level of consumer excitement surrounding openings—when Target opens stores there are bargain-hunters lining up from 5 a.m.—but a recent study suggests that this initial enthusiasm has started to wane. Forum Research found that Target had the lowest customer-satisfaction rating among Canadian shoppers, ranking below Costco, Wal-Mart, Hudson’s Bay, Marshalls, Winners, Sears and Holt Renfrew. Shoppers cited lack of choice and higher-than-U.S. pricing as reasons for Target’s low rating.

“To survive, the remaining Canadian retailers must learn to adjust to the new reality or perish,” says Thomas. “What we’re witnessing is the displacement of our regional players by the wealthy U.S. retailers who can all afford to pay more rent, even if it means operating on lower margins, to ensure they get the best real estate. They can afford to run on tighter margins as they learn the lay of the land and simultaneously grow their presence in Canada.”

Local lingerie boutique owners are surprisingly positive about the opening of Victoria’s Secret in Vancouver.  “The opening raises the profile of lingerie shopping generally,” says Atsuko Ohara, owner of Scarlet Lingerie Boutique on Granville Street. “In the U.S., independent stores continue to thrive close to Victoria’s Secret due to the selection, quality, design brands and personal service a smaller boutique store can offer.”

Sandy Hosein, owner of Vancouver’s Bare Basics Lingerie Boutique Ltd., agrees: “I think Victoria’s Secret does an amazing job of marketing and their presence in the lingerie field brings great awareness to women of all ages. I don’t think they can hurt us; only help us.”

Lynda Barr, director at Diane’s Lingerie & Loungewear Ltd., also on Granville Street, agrees but thinks that cross-border shopping is a bigger threat than U.S. brands on Canadian soil. “Small business is disadvantaged by the sheer number of consumer cross-border shopping,” says Barr. “We need to lobby government to change importation taxes and level the playing field to keep our dollars in Canada and support local business.”

Thomas believes that the ‘U.S. invasion’ will endure even if this means higher prices for Canadian consumers. “In most instances, the Canadian division of their U.S. parent does exceptionally well,” he says. “The Americans are clearly here to stay and have adjusted accordingly.”