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Saks to Expand Off 5th in Canada

Luxury retailer Saks Fifth Avenue is slated to settle into to Canada next spring, and the company is eyeing expansion of its Off 5th discount chain, possibly in non-outlet mall locations.

Saks has always separated its mainstream and discount stores to avoid cannibalization, but according to Canada’s The Globe and Mail, the retailer may be rethinking that strategy in response to consumers’ changing shopping habits.

Jerry Storch, CEO of Hudson’s Bay Co. (HBC), which operates Saks, said today consumers shop both high-end and value stores depending on the occasion. So Saks is considering new options for Off 5th, like downtown locations or spaces near its core Saks stores, to draw a wider array of customers.

“It’s a meaningful growth platform,” Storch told The Globe and Mail.

And Saks may be wise to boost its off-price business, especially as other high-end retailers, like Nordstrom, nod to their lower-price platforms to satisfy deal hungry shoppers.

In its fourth quarter report, HBC noted that same-store sales at its Off 5th outlets increased 12.1% compared to a much lower 3.2% (excluding foreign exchange effects) at HBC overall.

The Canadian invasion remains underway though some retailers, like Target, didn’t fare well there.

Walmart is slated to add roughly 1.6 million square feet of retail space above the border, tapping into Target’s abandoned locations.

Japanese retailer Uniqlo also announced plans to expand into Canada in 2016 with two stores in Toronto to start.

Saks opened an Off 5th store in downtown San Francisco last month, an untypical city location. Storch told The Globe and Mail that while the company used to think separating its off-price stores from full-line locations was important for avoiding competition, it has found instead that the near-located stores are “additive” and “reinforce each other.”

The first three Off 5th stores will open in Canada early next year in Ontario, one in Ottawa, Niagara-on0the-Lake and Vaughan, a city just north of Toronto.

HBC said it plans to open up to 25 Off 5th stores and seven Saks stores in Canada.