Quote:
Originally Posted by cllew
Looks like we don't have to worry about Nordstrom's coming to Winnipeg.
CBC is reporting today that they are closing down all 13 Canadian stores by late June and eliminating around 2500 jobs.
Like Target a few years ago Nordstrum said it does not "see a realistic path to profitability for the Canadian business"
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Common theme. Seems that between outrageous mortgage payments from rising interest rates, lower wages, high-ish income taxes, and high food costs, Canadians in general are becoming too poor for most luxury goods. Not enough money left over at the end of the month to justifying buying $200 shirts and pants.
Of course there are exceptions: Canada seems to have two groups of above-average middle class households that can afford luxury goods:
1) Boomers who bought their houses before 2001 and have paid the original mortgage, and now the value of their home has increased by 5 to 10 times the original purchase price, giving them access to HELOCS. This demographic would rather spend their excess cash on boats, RVs, Mustangs, and trips to Florida instead of buying luxury furniture or clothing. You can find this group across most major cities, but they are a dwindling number.
2) International students who bring in significant wealth from overseas. This is the group you'll find at the luxury stores in Toronto and Vancouver, but their number too small to sustain retail operations as we've seen with the closures.
After that, of course there are the 0.01% who have a tonne of disposable income, but again, too small a number to sustain luxury retail across Canada.
Canada lacks an "in-between" mid-life, high-income demographic that would be the main target for these stores. Sure, Vancouver and Toronto have a lot of 30 and 40-something high income earners from tech, law, and finance, but the vast majority of this group is too burdened with paying $2,500/month rents on skyboxes at Young and Bloor, $1,000 month lease payments on Audis, and then being broke at the end of the month after spending their remaining income on Skip/DoorDash/groceries to care too much about whatever luxury clothing brand is hot these days.
This group is much bigger in the states, and much more dispersed. If I was a luxury brand, the U.S. would be my main target obviously. Canada would be a tiny afterthought given the lack of disposable income in this country. Rents, housing prices, and food prices are way too high in this country and there isn't anything reasonable any one person can do about it.